Billing Q&A with Jim O'Neill

Q—Revenue assurance is becoming increasingly important in billing. Can you elaborate on what it means to a carrier?

A—Many years ago, there was a famous bank robber named Willie Sutton. After being caught and sent to jail repeatedly for bank holdups, someone asked him why he robbed banks. His answer: “Because that’s where the money is!” Accurate and timely revenue assurance functions are valuable to a carrier for the same reason.

It wasn’t too long ago that consumer choices in telecommunications were very limited. For most consumers, local service was flat-rate, and long distance was so expensive that it kept most people from spending a lot of time on the phone. The monthly local charge was bundled, meaning that it included the access charge, rental of the phone itself, the use of the wire installed in your home or office, a government-imposed universal service fee and a pretty good-sized local calling area. So, except for itemizing long-distance charges, it only took a few lines to list monthly charges and taxes on the bill.

That began to change as competition was introduced—first in the long-distance area, and later for wireless. To meet the competition, telcos introduced long-distance rate plans that offered discounts based on monthly minimum charges. That minimum charge included a bundle of minutes for a fixed fee, plus additional charges for the total number of minutes used in the month. Some plans offered additional discounts to reward consumers who used more minutes. This created more complexity in the billing systems, because charges could not be determined until all the usage for the month had been collected and guided to the calling number.

Later on, MCI introduced the Friends and Family plan, which gave discounts to callers within a calling circle. Any calls to numbers not on the list were priced at a greater rate per minute. That added complexity to MCI’s billing, because the telco had to determine charges for each phone based on the specific numbers subscribers called. And that was just the beginning.

Cellular telecommunications was competitive in most markets right from the start. Carrier marketing people stayed up nights imagining various new rate plans to gain the competitive edge. In the United Kingdom, Orange—an early competitor to British Telecom—launched its one-second-billing offering, meaning that there would be no rounding up to the full minute. Some wireless carriers offered sub-minute billing in the United States as early as 1992. Other carriers started taking advantage of the ability to charge based on where a customer initiated a call. It could be one (lower) charge on underutilized cell sites, and another (higher) on cells in the central business district. Additional discounts for the time of day and day of the week were added, and billing became even more complex.

Each of these developments made it more difficult to ensure that customers were billed accurately for the services they used. There was great room for error.

Other factors began to drain revenue:
· As competition continued to expand, pressures mounted to deploy new services more quickly.
· Staff shortages have led to overworked staff, sloppy work habits and billing mistakes.
· Regulatory separation of the wireless industry from the landline segment resulted in new kinds of switches and nonstandard call detail record formats.
· And the biggest reason of all, the per-minute rate has continued to decline in all measured services.

These factors forced carriers to take a closer look at the performance of their networks and billing systems. Some industry analysts have estimated that between 4 and 6 percent of all calls never get billed, either through the switch’s failure to record them, or failure to properly identify billable events when they are processed in mediation or at the front end of billing systems.

So, how can a carrier cope with these problems? Some companies call it “billing production review,” others “quality assurance”; but more recently, many are using the term “revenue assurance” to remind everyone that they are talking about real money—in some cases, millions of dollars.

Revenue assurance teams use simple tools and techniques. The real trick is to use them consistently. Here are some of the approaches that have been used with success:

· Adopt a team approach. Employees of small companies may have multiple duties, but it is critical to have ongoing focus, responsibility and accountability. The skill sets on the team should include customer care, accounting, IT—especially mediation and rating knowledge—and bill processing, or actual production control knowledge.

· Set up a test database that includes a cross-section of all kinds of customer and product offerings, including a fixed sample of raw usage data. Be sure to include both large and small users. Each time there is a change in switch software, or programming changes that affect the collection of usage or the rating engine, run the new programs against the test database. Any major new rate plans should also be tested in this environment.

· For each live bill cycle, set up a similar list of selected customers. Print sample invoices and revenue reports immediately after processing is complete, and compare the invoices and reports to the customer records in the online system. Any unusual or unexpected results? Find out why before the bills are mailed.

· Look at message processing reports. Do you have a report that shows call volume by time of day and day of week? Do your reports confirm sequential file numbers? Are there any measurable gaps or fluctuations in call volume? Why? Did some usage not get recorded on the switch? Or was usage recorded, but not included in the bill run?

· Compare traffic volumes on the switch to billed revenues. Is traffic going up, but revenue down? Why? Are you losing usage information, or just decreasing rates? · Look at reject or unbillable call files. These are records that appear to be usage, but cannot be processed based on your business rules. Do you know what your business rules are? What is the percentage of billable to unbillable calls, month to month? Did the unbillable percentage increase this month? Why? Was there a software change at the switch? Is the number of calls that cannot be guided to a subscriber record increasing? (Maybe someone is turning on service without completing service orders.) Are the number of unidentifiable usage records increasing? Is there a new feature or service turned on in the network that the billing system does not recognize? Is the number of calls increasing that cannot be rated because your system does not recognize the called number? How about new area codes, end offices or country codes? Where is your tariff information coming from, and why is it not timely? Carriers get six months’ notice on new codes in North America, so there is no excuse for this kind of dropout.

· For wireless carriers that bill based on a cell list: Verify that usage and billing data are marching together What controls are in place to ensure that billing and the switch are kept in sync for changes?

· Reevaluate your product offerings. Do you have too many rate plans to perform such analysis, with even more added every day? Does your company have a policy of product review and approval that ensures profitability before products are sold? If not, you could be losing lots of money.

These are but a few of the questions that revenue assurance analysts must ask before improving the bottom line. If your company does not have some sort of similar program, I guarantee you are losing money.