Editorial : Revenue Assurance, IP Services and the Laws of Physics

If you believe that only the strongest telecommunications service providers will survive and all services will migrate to an IP network platform, then this thought piece is for you, because the key to profiting from IP services is mastering the science of revenue assurance.

Consider that today almost all service revenues come from rather simplistic circuit switching and TDM transmission infrastructure, up to 7 percent of revenue is lost due to a lack of robust revenue assurance programs, and another 4 percent is lost due to the lack of comprehensive fraud control programs. The bottom line, if you are a Tier 1 provider (revenues greater than $10 billion per year), then you are probably losing up to $1 billion through faulty revenue assurance.

With an IP-based infrastructure and service portfolio, things will get even worse. IP is complex, and executives lack good models or visions when it comes to creating revenue assurance programs. Today, it doesn’t matter, because almost all IP services are flat-rate priced and best effort. You lose packets but not revenue.

The future will be vastly different with all IP. After the regulators have their say, VoIP will not be flat rate from a provider’s perspective. VoIP providers will have to pay network access charges, pay taxes, contribute to E-911 funds, etc. Regarding flat-rate and best-effort Internet service, its days (or years) are numbered. Spam alone will kill flat rate. Bill Gates is not alone in calling for a fee per email sent as a way to kill spam. Also, the days (or years) of e-commerce without e-taxation are numbered.

But wait, there’s more. Telecom CEOs and CFOs now have to deal with Sarbanes-Oxley. Are your revenues for real? Meaning can you or an outsider audit them?

Why Read On?

Understanding revenue assurance for IP-based services is difficult at best and impossible if you don’t have a vision of what’s going on in IP networks. So here’s the test for why you should read the rest of this editorial piece. If you have interest in or responsibilities for revenue assurance (RA), then do you understand the meaning of these 10 assertions?

1. IP RA programs must be scalable.

2. IP RA will continually become more complexover time.

3. IP service billing will be abstract and require usereducation.

4. IP service is probabilistic, and service levelagreements will reflect this.

5. IP signaling and content are inseparable, thereby adding new dimensions to RA, fraud control and lawful intercept mandates.

6. RA programs must address the fact that IP services are unstable.

7. Uncontrollable outside forces can affect IP service assurance.

8. IP data can disappear and nothing can be doneabout it.

9. The majority of IP infrastructure is abstract and not likely to even be understandable to a service provider.

10. The winner or last IP service provider standing will have an end-to-end revenue assurance view of their network.

If you feel uncomfortable about these RA assertions for IP-based services, understanding these 10 laws of physics, or a physicist’s way of looking at things, should help. Having a good vision of IP infrastructure and services is just the first step toward creating an IP RA program. (Editor’s Note: Jerry Lucas holds a Ph.D. in theoretical physics.)

The Laws of Physics?

You should be buying off the relationship with IP service and revenue assurance. But what do the laws of physics have to do with IP services and the challenges of RA?

First, physicists are far superior at creating models or visions than engineers or computer networking scientists. Physicists, in order to survive (get funding or publish papers), have to take extraordinarily complicated things and communicate them, often in layman’s terms. Engineers sell new ideas that can be prototyped (demonstrated) or propose to do something that’s better, faster, cheaper or smaller than something that is already out there.

Second, not only are concepts developed by physicists that model or add vision to our universe, but many IP network concepts came from the world of physics. For example, the familiar IP term “packet” was introduced to the technical world in 1900 by Max Planck, who proposed that energy was carried by electromagnetic waves in tiny “packets.” This observation started the quantum physics revolution. More to the point, however, is there were some physics types working at the Rand Corporation think tank in the early 1960s, funded by the Department of Defense, who came up with a better way of sending data over networks. They borrowed the “packet” model from physics. As for other physics trivia, everyone has heard of Ethernet right? The term “ether” was coined by some physics types at the Xerox Palo Alto Research Center who created Ethernet. They got the term from an incorrect 1900s theory called Aether, which was supposed to be a hypothetical substance providing a medium for light to propagate like packets would over LANs.

Finally, models and visions are important for communication. What’s going on in nature could also be said for IP. Rather than invent new models of IP networking and services appropriate for creating an RA program, why not look at the models or visions used in creating today’s laws of physics to see if they fit the bill.

Laws of Physics, IP and RA

Below are 10 laws of physics and/or theories that reveal things that are vastly different than common everyday experiences. You have probably heard of most of these theories, and even if you have never taken a course in physics you will still be able to follow along. So here are my top 10 laws of physics that every RA professional should understand.

1. The Big Bang Theory

About 14 billion years ago a little nugget of energy matter, measured in centimeters, exploded (in concept) sending stuff in all directions and creating the universe as we know it today. Not only is the universe still growing, as astronomers tell us, its rate of growth is accelerating, creating new stars among the trillions already present.

IP networks as we know them today started some 20 years ago with a few hundred routers, thousands of terminals and hundreds of thousands of addresses. Today routers are measured in the millions, and IP addresses will soon be measured in the trillions.

Like the Big Bang, the IP universe is not only getting bigger; its rate of growth is accelerating. The Big Bang take-away regarding IP-RA is scalability. Future IP billing systems will be rating trillions of IP events at a fraction of a cent per event. Several years ago, the RA practice in many service provider shops was to print out unrated call detail records and rate them manually. Scalability will have a different meaning in the IP network era.

2. Second Law of Thermodynamics

The second law of thermodynamics says that on average, entropy of a physical system will tend to rise from any given moment. Entropy is a measure of disorder. The higher the disorder, the greater the entropy. For example, suppose you are sipping a scotch on the rocks, and you take one of the ice cubes and place it on the table. That ice cube will melt into water, spilling all over the table, the floor, your clothes or whatever. Watch for a few more hours and the water will evaporate into the air, sending vapor all over the room, house and neighborhood. Entropy is increasing like the second law of thermodynamics says it would. IP networks are also increasing in disorder and entropy. In the distant past it was terminal to mainframe, then client-server, then peer to peer and soon IP device to IP device. And again, new IP applications and services are being added.

The take away from the second law of thermodynamics regarding IP-RA is growth and complexity. What IP events you gather and rate today will be far more difficult to make sense of in the future. The myth promoted by IP equipment vendors and engineers is that migration to an all-IP platform will simplify networking operations and the roll-out of new services. That may be true, but it won’t make revenue assurance any simpler. RA will forever more continue to be more complex because network usage will be more disorderly over time.

3. Quantum Mechanics

In the late 1920s, physicists came to grips with the behavior of atomic particles and concluded that you can only predict the probability of future events. Identical subatomic experiments will yield different results with some having higher probability than others. Also, part of quantum mechanics (the Heisenberg Uncertainty Principle) says you can’t know both the position and velocity of a particle with precision.

Substitute “particle” in the quantum world with “packet” in the IP world, and the above applies. When you send an email, (broken into packets) over the Internet, say from McLean, Va., to San Francisco, you don’t know if those packets at a point in time are in Chicago heading south or Dallas heading east. There is only a probability that your packets are at a specific point in time, just like quantum mechanics says about particles. You could send 1,000 emails (think quantum experiments), and the transport experience over the Internet would be different each time.

The quantum mechanics take-away regarding IP-RA is the IP service experience for each event is not only different, but the user (man or machine) experience or quality of service can only be guaranteed within a limit and with a probability of acceptability. The bottom line in terms of service level agreements with customers is that there is only a probability they can successfully be met. More vexing is there is only a probability (hopefully very high) that the QoS the IP customer sees is the QoS the service provider measured. A new era of non-repudiation will be ushered in with IP services and new challenges for any revenue assurance program.

4. String Theory

A starting point to String Theory is the famous equation from Albert Einstein: E=mc2. It says that you can convert mass into energy. This equation is at work everyday when you see the sun shine and more. But if you can convert mass into energy then you should be able to create mass from energy. String Theory says that matter (particles) is nothing more than vibrating filaments of energy.

String Theory models the world’s particles with 10 physical dimensions plus time as the eleventh. Most everyone can perceive the three spatial dimensions. You are sitting in your office building at the corner of 8th and Vine Sts. (two dimensions), and you are on the 32nd floor (height, a third dimension). If you are to meet someone at 2 p.m., it requires a fourth dimension (time) to synch up. But String Theorists can only explain physically where particles are with 10 spatial dimensions and time. It’s understandable mathematically, it is extremely successful, and it’s the closest vision available to describe things at both the sub-atomic and the galactic levels.

What do the 10 physical dimensions one can envision plus time have to do with IP networks? The answer is describing quality of service (QoS). Not only is QoS in an IP world problematic, it is also abstract. Today people talk about QoS in terms of round-trip delay, packet loss percentage, jitter, etc. But end users may not rate service quality with these parameters. Take voice quality for example. In the Martha Stewart trial, when the government’s star witness, Douglas Faneuil, described how Martha sounded over the phone (like a lion roaring underwater), he wasn’t talking about ITU mean opinion scores ratings (one to five) for voice quality.

The bottom line: Creating a metric for IP QoS, applying it to a service event, rating the IP detail record (IPDR), sending the IPDR to a billing system and presenting the results to a customer will be challenging. If you can’t explain the charges and credits on a bill, the customer may not want to pay it, and that’s a revenue assurance problem.

5. Particle Wave Duality

If radio (electromagnetic) waves have particle-like properties (photons), then physical particles should have wave-like properties, and they do.

You can demonstrate that by having a physicist shine light through closely spaced slits in a card, which will display an interference pattern, but so will electrons if they are subjected to a similar experiment. Matter has two faces: It can look like waves or like particles.

In the IP world, packets also have two faces. They can look like (or carry) content or signaling—content being part of or an entire email and signaling being the forwarding and return IP address, etc.

In the circuit-switched, non-IP world, content and signaling are separated in switch-to-switch communication. Signaling goes over an SS7 network. This has advantages over IP networking in two key regards. First, you can gather all information on call set-up and take-down, ensure proper rating (local or long distance) and provide a backup to a failed billing system for revenue assurance purposes. Second, you can support two kinds of lawful interception cases; first, who called whom, and second, wiretapping a specific target.

The take-away here for revenue assurance is that it is difficult in IP because you don’t hypothetically separate signaling from content. There is no single nature of traffic like in the switched world.

But revenue assurance people take heart. Eventually security, fraud control or lawful interception mandates will require IP service providers to filter out signaling for monitoring purposes. The bottom line, some other department will likely be picking up the bill for infrastructure requirements that can be used for revenue assurance.

6. E=mc2

The darker side of Einstein’s famous equation, E=mc2, is that it’s the basis for atomic and nuclear weapons. Before this equation came to light, no law of physics could be used to deploy a device that could blow up the planet.

The same fragile nature exists for IP infrastructure. It’s not a bomb but IP viruses, worms and Trojan horses. IP networks can be in effect annihilated, even if only for a short while.

The take-away here is that the total network infrastructure that’s generating revenue can cease to operate. That’s a revenue assurance challenge you don’t see in the legacy circuit-switched world (one rare exception was an SS7 software bug that took down part of AT&T’s network over a decade ago).

7. Quantum Entanglement

Quantum entanglement is a property of particles such that if they were created together (e.g. have like quantum states), and are separated by distance (even a galaxy apart), what happens to one will instantly affect the other regarding change in the quantum state. Even Einstein didn’t believe in quantum entanglement. This was one of the few times he was proven wrong, as it can be experimentally demonstrated.

So what’s the relationship with IP services? It’s not entanglement with particles, but with routing tables and IP addresses. Without anything happening in your network, a change in a database somewhere can instantly cause your customers’ incoming IP traffic to go somewhere else.

So what is the take-away on IP revenue assurance? You may think that you have total control over your customers and only problems can occur under you watchful eye, but it’s not the case. Someone at a distance can make a change in a routing table that affects some or even all of your customers. Remote chance? Not at all. It happens, but you don’t hear about it. Note: If this happens to ISPs, they don’t have to report it to the FCC. Only telecommunications providers have to report massive failures (failures that affect more than 20,000 users) to the FCC.

8. Black Holes

A black hole is an object whose gravitational field is so strong that it gobbles up anything that gets close to it—even light. You can’t observe them, because they don’t give off light. Astronomers know they exist because their gravitational fields hold distant galaxies together.

IP networks also have “black holes” that gobble up (or throw away) packets. Routers drop packets when they get saturated, firewalls destroy them rather than letting them in a secure network, etc.

The revenue assurance take-away from this is that there are network elements out there you can’t see (or send traffic or probes to) and traffic usage data that just disappears, never to be seen again.

9. Dark Energy

If you believe Einstein’s General Theory of Relativity and run the math on the total universe, something really big is missing. Ordinary matter (this magazine, billing systems, you and the stars) makes up only 5 percent of the total universe’s matter. Black holes make up another 25 percent. That leaves 70 percent of something else—tagged as dark energy.

So where does dark energy fit with IP networks? Most of what IP service providers deal with and is touchable is only a small fraction of the Internet. Outside the carrier boundary is customer premises equipment (routers, terminals, LANs, unbundled fiber networks, etc.) that far exceeds the hardware/software transport mass controlled by service providers.

The take-way regarding RA is usage collection can’t be done every step of the way in an end-to-end sense, only at an interface point into and out of the IP network sense. There are network elements out there (dark energy) that you won’t be able to understand and may act counter intuitively (i.e. anti-matter).

10. Unified Theory

Einstein spent the majority of his time as a physicist trying to develop a unified theory of physics that could explain or model everything: electromagnetism, nuclear forces and gravity. He didn’t succeed but neither has any other physicist as of yet.

Unifying disparate theories is where you get the biggest bang for the theoretical physics dollar. In the mid-1800s, physicist Maxwell unified the theory of electricity and magnetism and mathematically described their relationship. From that, the world as we knew it was never the same. Anything electrical has its roots in applying Maxwell’s “unifying” equations.

IP networks are successful in tying together computers into networks that allow elements to exchange data ever so efficiently because of the IP platform model (layers of TCP, routers, LANs, circuits and others).

The take-away here is the IP platform or model is as useless as a unified model of physics would be in designing a revenue assurance model for IP. Only the vision or model that describes everything has extreme value. Anyone who gives presentations on revenue assurance has their slides showing a flow from order management to provisioning to call record mediation to rating to invoicing, etc. However, in practice, service providers are limited to a view of a single box (mediation, rating etc.) and not a unified view of the whole process (or end-to-end) from a revenue assurance perspective. Just like having one view of both the electrical and magnetic properties of nature paved the way to creating today’s electronic, computer and telecom gadgetry and how the IP layered model created one view of data networking creating the all-powerful Internet, the same can be done for IP revenue assurance.

If you agree or disagree with me on revenue assurance or even physics, feel free to email me at jlucas@telestrategies.com.

If you want to learn more about IP revenue assurance without the laws of physics spin, plan to attend TeleStrategies’ Revenue Assurance Conference from September 27-29, 2004, in Scottsdale, Ariz.

Editor’s Note: If you know of any academically trained physics who found their career in the telecom industry and felt they never got to apply what they learned, they will probably get a charge out of this article. Point them to www.billingworld.com.