Wireless Revenue Assurance

Launching new services and products is like trying on a new pair of shoes. Everything feels great at first-but two miles down the road, you're not sure you'll ever walk again.

For many of today's wireless carriers, this story may sound familiar: Excited marketing teams push out new services, the back-office systems are tweaked and tested, and the new services are launched. However, if revenue assurance isn't addressed from day one, the impact to the business can be dramatic-in a not-so-pretty way.

Competition, for starters, is making wireless providers sit up and pay attention to the revenue assurance issue. Where companies used to face two competitors, they are now facing up to eight, industry experts estimate. Providers struggle to capture new customers by burying themselves in mountains of new rate plans. They launch exciting promotional campaigns to hype new services and try to hook customers on to value-added services.

Yet revenues are falling, because some other company is out there in their market doing the same thing for less. Companies are under pressure from investors to keep the numbers climbing. If they can't do this by tacking on new customers, they will look inward to tighten their laces and make sure profits are not slipping through the cracks.

No More Loafing Around

In the wireless industry, comparable to wireline, revenue leakage is estimated at 3 to 11 percent, according to Comarco Wireless Technologies (CWT), a company that provides revenue assurance software, hardware and services to wireless providers. Others figure that losses could be as high as 15 percent, sending shivers down the spines of accounting gurus and catapulting this urgent reality to top-level management's attention.

The complexity that carriers face is daunting. Michelle Teofan, senior manager for revenue assurance at KPMG, notes that a typical wireless company could have 8 to 13 different organizational departments and 6 to 12 different technology platforms involved in providing a single service to a customer. This complexity poses many opportunities for leakage, and thus many control points that carriers must monitor.

Who Is Responsible?

Probably one of the biggest challenges within an organization is determining which department will handle revenue assurance. A Deloitte & Touche revenue assurance survey found that 75 percent of its respondents handle the issue within the finance department. Customer billing ran a close second, with internal audits, network operations, customer care and a dedicated revenue assurance department falling in behind. Less than half the respondents had a designated revenue assurance function, while provisioning and marketing were far behind in involvement, ranking at 39 and 32 percent respectively. But there is a changing attitude within the industry. Increasingly, companies are building out dedicated revenue assurance shops and training employees specifically to handle this area.

Most will agree that marketing needs to be more involved in revenue assurance from the first mention of a new service. It's a matter of translating this into each department's own language, says Kirsten Bailey, general manager for revenue assurance at CWT. Marketing departments "are measured to a large extent based on the return from their new products," she says, "and I think if they understood that their new products might not bring the return that they should because it's not being done properly, all of a sudden they might understand [the importance]."

Communication between departments in a wireless company is critical. "Unfortunately, the reality is, if I'm a young carrier and I'm just starting out, my engineers are up to their ears just trying to build a network," Bailey points out. "If I were running that type of company, I would try and build awareness of the importance of revenue assurance from the start, but I might honestly also have to be realistic to know that we're not going to have any revenue to assure if these engineers don't get the network built."

Message Processing

Yankee Group Senior Analyst Jason Briggs says the number one area for a company to watch should be message processing-how the call record is taken from the switch to the bill, without dropping it anywhere in between. If a company relies on different silos in the organization to monitor message processing, a lot of revenue will likely slip out of the system. He says specific groups must be involved inthe reporting function-engineering, mediation and the group that pulls the data off the system-and their reports must tie into one another. "That in itself is a huge mess," Briggs says.

A Switch in Time

At the beginning of message processing is the switch. "A lot of things in the switch can go wrong," notes CWT's Bailey. "If somebody picks up a phone and makes a call, and for whatever reason it doesn't get recorded at the switch, the carrier is never going to know that call happened and obviously is never going to be able to bill that call. That can happen enough to be a material amount."

If something relatively small goes missing for a long period of time, it can lead to huge amounts of revenue. Typically, companies find leakage is caused by something very specific-a certain call type that is not getting billed at all, or is being billed improperly.

Many times, duration or time is not calculated correctly because the different time stamps for calls are based on the time in the switch. "Often, surprisingly, somebody goes in everyday and checks the time on the switch and manually adjusts it," Bailey says. "If it's off by 10 minutes or an hour that could mean calls are being billed as peak when they are off-peak."

Another potential problem occurs if the customer ends the call and the switch does not get that ending message for a long period of time. This would result in overbilling. Similarly, the network could do a handoff from switch to switch, yet the call information might not be read from the second switch. This would yield only the duration that is gathered off the first switch. The duration from the second switch would not be calculated.

Handle with Care

Companies change software on the switch all the time, and they must constantly test these changes, Briggs says. If the switch manufacturer gives the carrier a lot of new software and the carrier fails to test every permutation, it runs the risk of revenue leakage, possibly not even creating records for calls.

"We were installing a second switch in the market," Briggs says, "and at one point we discovered that incoming calls for prepay records were all failing. They weren't being charged. I think we quantified it as somewhere in the neighborhood of $1-$2 million a year in revenue that would have been lost."

But how does a company ensure that changes at the switch do not affect its revenues? "You're going to have to rely on the viewpoints of engineering to assure you that the software change is major versus minor," Briggs says. Often, engineering will perform a number of software changes and the revenue stream doesn't go down every single time. But if they believe a change could greatly impact the message processing stream, testing should be required. A company must perform end-to-end testing, making calls to ensure that they pass through the whole system and end up on the bill correctly.

The Domino Effect

Problems at the switch can occur when any change, no matter how small, is made. "You make a change in one line of code and you fix the thing you're supposed to fix, but inevitably you break something else," Bailey says. "If you don't test the whole product, then you're not going to know what you broke in fixing the thing that you fixed." Yet Bailey suggests that if a company knows its system well enough, it can usually guess what else it's going to affect. "But sometimes you can't," she adds. Even just one department asking for changes on the switch to address customer complaints can be a source of problems. Changes involving enhanced services can especially go unnoticed. For example, say a network person changes the data format of call waiting, which causes those calls not to be billed. These calls can be rejected or the records could be created improperly, so for some period of time call forwarding might not be billed, or one leg of call forwarding might not be charged. "I've seen just about every permutation of that kind of thing, and it usually leads back to some change in the network," Bailey says.

Roaming Issues

In roaming, records from one company must be passed to another company, so that company can bill for services. Among a number of possible problems, record formats may be different and must be rectified.

In roaming, if a company misses an opportunity to bill, it is actually paying money out because it still must pay the roaming partner for use of its network. "If I don't bill it, now I've really lost," Bailey says. "I've paid out money and I haven't brought in money." If a company has a customer that makes a call on its network and then it fails to bill it, the company has not paid an additional incremental cost on that call, because the customer is just using the company's own infrastructure.

In addition, another set of validation, testing and post-release validation must occur to ensure that your billing system is charging carriers correctly, Briggs says. And testing is more difficult than traditional wireline testing because of logistical arrangements. A carrier has to get its equipment into the place where the roaming is occurring before tests can be run.

"There is a whole other level of entry and input that goes into programming your switch to recognize a wireless carrier-a roamer on your network," Briggs says. In a GSM network, this involves setting up the IMSI-the identification number given to every subscriber so that customer can be identified. The switch must recognize another roaming partner's IMSI, so that when a customer of that roaming partner comes on the network and turns on a phone, the switch knows how to validate and authenticate the customer. Otherwise it will refuse service.

Duking It Out

"The process [roaming] itself is going to be different, because you are going to have to reconcile what you say I owe you with what I think I owe, from carrier to carrier," Bailey says.

PWC partner Randy Browning, revenue maximizer services group, says, "If you can't dissolve the dispute to your satisfaction, you have a potential problem there."

"It's sort of a match up between the charge that you get and how much you then bill-if you, in fact, are even billing roaming charges," he adds. The industry is moving away from billing for these charges, according to Browning, and moving more toward nationwide plans. With these, roaming is turning into a cost problem rather than revenue problem, because in many cases cost is not being passed on to the user anymore.

Trying to figure out who owes whom what in international roaming is even worse, Browning believes. Companies in different countries can have difficulties providing the data that is necessary, and often there are delays sending the data back to another company. "You have a customer roaming in a different country and you want to bill them next month," he says, "but you may not get the information for five months, depending on what company in what country."

"I've worked on a couple projects where there were certain countries that their customers could roam in. But the billing never took place because they just never got the information from a country, and they had to make a conscious decision: 'We either let them [customers] roam and, no, we're never going to get any revenue from it, or turn it off.' They make the decision to let them roam because it's a service, and then it truly becomes a cost of doing business," Browning says.

But Browning believes this situation will get better with increased competition. "There are other carriers out there. If a company wants to be the choice for the roaming partner, then it's got to be able to provide the roaming information on a timely basis, and it's got to be able to do business and settle disputes on a timely basis," he says. "I definitely think that over time it will become easier."

Interconnection Agreements

Similar to wireline carriers, wireless providers must grapple with interconnection agreements. Briggs previously worked at Aerial Communications, a wireless provider that has since been acquired by VoiceStream Wireless. Aerial had begun designing a system to settle for interconnection on a monthly basis.

"We were in the process of establishing a system by the time we were purchased by VoiceStream," he says. "Even though we didn't have a billing system [for interconnection], we had an agreed-upon method to estimate what our usage would be with our various carriers. It was kind of rudimentary at the time, but once that system came up and got up and running, our monitoring responsibilities would increase proportionately."

"Other companies that we were talking to just had no systems at all, from a wireless perspective. It's still pretty much 'green field' territory, as far as I'm concerned, in newer wireless carriers," Briggs believes.

The Rate Plan Quagmire

Every time a company introduces a new rate plan, it is introducing a new element into its rating stream. One wireless company admits to having more than 300 rate plans-but this is nothing, comments Bailey. The rate plan implementation process should involve verifying the rate plan setup, input and entry, and then post-validation as well to make sure that nothing else happened after it was implemented.

Managing the Change

For the wireless industry, change is just a fact of life. Having to manage the change and assure revenue through it is an even uglier fact of life.

"I don't think anyone would really admit that the problem rests in their shop. The billing system folks won't, the mediation systems folks won't, and the engineering folks won't as well," Briggs says. "But in reality, there is no one system that causes the bottleneck or that is the Achilles heel of the system. It's kind of the interoperability of all systems together."

The impact of mergers and acquisitions often hurts companies trying to institute revenue assurance processes. Every time a company builds in such processes, a new company is added to the mix and they all change.

Bailey, however, believes that the industry is actually becoming stronger from consolidations. In an instance where three companies may join, one with a strong revenue assurance organization may affect the others with less of a focus on this issue. The strong assurance policies can improve the overall management of revenue leakage between the three.

While the major concern is losing profit, companies are starting to grasp the impact of poor service on their revenue dollars. They are adding customer relationship management into the revenue assurance mix.

Dealing with time-to-market issues and increased competition, wireless providers are beginning to improve their posture on revenue assurance. And their benefit is that, as a young and evolving industry, wireless carriers can more easily work this into their systems from the beginning. They can walk around a bit, and make sure their processes fit right. After all, they can't afford any slippage when they're trying to keep up in a tight race.

[SIDEBAR]

BellSouth Cellular: Making Revenue Assurance a Part of the Process

Revenue assurance is not a function typically born into the operational processes of a company. Many times it is an afterthought, a safeguard built into a system only after disaster has caused company executives to look more closely at the issue.

One company that has come a long way in building revenue assurance into its daily practices is BellSouth Cellular Corp. (BSCC), a company that serves 5.5 million subscribers in 30 different markets in the southeastern United States. Altogether, the company has 140 billing cycles a month and 37 switches. At the TeleStrategies Revenue Assurance 2000 conference, BSCC officials explained how the company looked more closely at its revenue assurance processes to prevent profits from seeping out.

In just the last five years, BSCC has dramatically increased its efforts to monitor systems for possible revenue leakage, focusing on four main areas: switch integrity, message processing, roamer verification and billing verification. The company increased its headcount of professionals addressing the problem and also increased communication between various departments, especially the information technology and engineering departments. "We didn't get there overnight," acknowledges BSCC Billing Services Director Derek L. Calhoun.

BSCC now performs 140 call audits to demonstrate all possible scenarios that could happen on a switch. It then processes and cuts bills for those calls to verify their accuracy from end to end. Today, BSCC has an automated build of its call test plans, whereas in 1995 these were built manually. The company is striving for automated call processing in all markets and is at 50 percent currently, up from the completely manual call processing practices five years ago. Revenue assurance employees in each market do monthly call audits on the top three price plans as well.

The company has built in many Web-based tools and has automated near real-time transmission of AMA data, as opposed to the manual creation of magnetic tapes containing this information that used to be prepared and express mailed to headquarters.

In message processing, the company now performs switch-to-billing audits in all of its markets and has automated airtime balancing to measure calls on the switch and record what happened to them. In 1995, calls not billed went to one of two files and were left for employees to figure out what went wrong. Now, detailed rejected and unguided reports are created with auto-ticketing. Trending is automated for all record types and is performed around the clock.

In monitoring its roaming costs, BSCC uses numerous Web-based tools. The company measures clearinghouse rates against those reflected in marketing plans.

"In billing, small problems add up quickly," Calhoun notes, so BSCC upped its billing verification. The company estimated that failure to bill two call records for each customer could cause a leakage of more than $1 million over a year. Today, headquarters no longer has the sole responsibility for billing verification. Instead, about 30 percent of billing verification is completed by people in the markets who know the nuances of the particular segment they are measuring. Bill selects are automated and targeted with multiple analysts per billing.

"We had to admit," Calhoun says, "that the revenue was not going to assure itself."