Pre and Post-Pay Wait for a Convergent Architecture

For many years now, billing vendors have been talking about convergence of post- and pre-pay capabilities. Despite that, one is hard pressed to find actual implementations of truly hybrid solutions enabling such services.

Perhaps that will change, now that billing is going through a transformation as operators employ IMS strategies. Inevitably, interaction between OSS and BSS will have to happen in real time, as most services will have to possess the flexibility to operate in both batch and real-time modes—whether traditional phone calls, downloads or MMSs.

It’s evident in emerging promotions that “control,” “self-management” and “choices” are the buzzwords of next-gen services. That means billing and customer management will have to evolve rapidly so that parents, enterprise managers and individuals finally get the control they want over their accounts.

The message to consumers will have to be one about lifting restrictions on certain customers and allowing all to realize the full customer experience. In other words, carriers will have to truly “empower” all their customers, not just certain segments of their customer bases.

“All customers in RFPs want to handle all services, without differentiation between wireless and wireline, or post- and pre-pay,” says Howard Woolf, group president of converged billing solutions for Comverse, which acquired Kenan for the very reason of converging pre- and post-pay functions. “Customers don’t want to grapple with different services, promotions, discounts or CSRs.”

Whether carriers may soon start to demand the capabilities mentioned in RFPs remains to be seen. It’s more likely now, as yesterday’s stigmas are being wiped away by unexpected trends. The pre-pay subscribers that used to be deemed high-volume, low-margin customers are now today’s high-margin teens, whose texting and SMSs have helped carriers to increase margins. That development means carriers and operators have other untapped markets with a lot of spending potential, such as adults interested in “budget controls.”

The fact is the lines between pre- and post-, wireless and wireline are indeed blurring. Bell Canada’s 2005 Q2 reports, for example, indicate that pre-pay ARPU had increased by 45.5 percent over the same quarter in the previous year, and that year-to-date pre-pay activations were up 52 percent over the first half of 2004.

“The easier you make it for people, the greater the possibility they will sign up for new services,” says Yankee analyst Paul Hughes, who believes carriers will ultimately offer all methods of payment—whether pre- or post-pay, bundled subscriptions, credit card payments or any combination thereof.

For example, post-pay parents complain they still cannot share their minutes with children operating in pre-pay mode. They also voice concerns over their lack of control over content received by a child, whether video, or MP3 or anything else. Similarly, enterprises want accounts to shift from post- to pre-pay after business hours so that SMS, MP3 and other non-business transactions are billed immediately to users.

Some people believe carriers are dragging their feet, because they can generate more revenue from the content than from control over that content by parents or business managers.

Also putting carriers off is the inevitable complexity of managing pre- and post-pay convergence with multiple types of traffic. Once a blend of data and video comes into play, carriers will have to get into charging for the value of a download rather than minutes. That means they will need even more intelligence to handle the switch from pre- to post-pay, as there will have to be recognition of what the transaction consisted of and in what mode it took place—whether pre- or post-pay, or wireless or wireline.

As usual, it’s a chicken-and-egg scenario. Carriers claim the solutions aren’t there, and vendors claim the demand isn’t there for the solutions.

For now, carriers are just starting to simplify such processes as topping up accounts. In Asia and Europe, they are making use of kiosks and storefronts. Motorola has even issued handsets that are now being used as point-of-sale credit cards in some locations abroad.

But for truly convergent services to come to fruition on a global basis, there must be truly convergent solutions. “As carriers push the technology to create integrated services, they will have to integrate the service delivery platforms in the back office to facilitate convergent applications,” says Hughes.

Since most of the traditional billing systems used for post-pay applications are IT-oriented rather than network-oriented, they generally lack the real-time session control necessary for convergent services. Also, pre-pay IN-oriented solutions tend to lack the flexibility of post-pay solutions for managing large, complex account structures.

That means interim solutions might bolt together pre-pay and post-pay systems running separate databases. However, that approach could create a problem down the road, hindering a single view of the customer—if data resides in two different databases, it’s difficult to determine when usage data came in. In a parental plan, for example, the system would not know to cut the call off if it’s the daughter running over, but to charge to the post-pay account if it’s the mother.

Because of the mergers the past few years, carriers face a massive undertaking in trying to consolidate customer and product data. Today’s carriers don’t have the huge labs they used to for testing new environments. For that reason, changing IN platforms or bolting pre-pay functionality onto post-pay systems is expensive and time-consuming.

Because normalizing data within systems is arduous, up-and-coming solutions will have to be able to map both pre- and post-pay streams to an internal standard established by the carrier. And for that to be possible, pre- and post-pay solutions have to come together in a truly hybrid model.

Breaking the Mold

Carriers will need to have the flexibility to process charges and rate calls in batch mode or to have real-time session control at a network level.

“For that reason, CRM players have to work more with leading billing vendors to integrate product catalogs, business workflows and customer management among CRM, ERP and billing systems,” says Oracle’s Marc Stolte, senior director of telecom applications.

He believes convergent pre- and post-pay billing functions will most likely reside in suites or combined offerings that unite billing vendors with ERP, CRM and other BSS. In other words, tighter OSS-BSS integration will take place. “More interaction between OSS and BSS will be necessary if balances or service availability are to be checked,” Stolte says.

Tighter integration is made possible as standards like Diameter (see “Standards Watch,” p. 24) make AAA functions among IN vendors and billing/OSS players possible for integrated call control and application flexibility. That will be important as carriers merge technology stacks to realize cost benefits.

Already, partnerships have grown among CRM vendors and back-office solution players that manage post-pay billing processes, as well as vendors offering real-time platforms.

A variety of post-pay vendors—Convergys, Portal, InfoDirections, BCGI and others—are already working with IN companies to “embed” billing functionality into IN solutions.

By joining with players possessing the business and application-level technology, IN vendors add flexibility to their existing strength of high availability and performance.

For example, Portal has preintegrated with Oracle’s infrastructure to “productize” an integrated version between billing and CRM. “We believe that business process integration between CRM business flows and billing flows will enable product catalog synchronization,” says Bhaskar Gorti, senior vice president at Portal.

Convergys and Intec have also worked with Oracle to integrate product catalogs and customer management, as well as business flows between CRM, ERP and billing.

Additionally, CRM players are partnering with IN vendors like Ericsson, Alcatel and Siemens—all of which are building convergent rating capabilities for pre- and post-pay. Because these IN vendors have the pre-pay functions, mediation, provisioning, convergent rating and pre-billing applications for aggregating usage, CRM players consider them key to achieving real-time interaction.

By integrating into IN vendors’ service delivery platforms, call control for pre-pay is possible. So going forward, IN vendors may play a key role for call control and call completion. “However, at the end of the day, people don’t want to muck around with the network, so the flexibility fostered by post-pay systems is still a necessity,” says Stolte. “It’s the applications and business systems that have to engender flexibility, so that marketers can create different price plans. It’s the ability for product managers to look at usage patterns that helps them to decide what new services to launch in any give time frame.”

Not only do companies like Oracle hold large pieces of the overall BSS puzzle, such as CRM and ERP, but they also possess AR functions that manage post-billing processes around customers. For that reason, there are complements between such systems and those of a post-pay vendor, whose expertise encompasses bill run, collection and post-billing functions. “That’s why we thought we should have those functions available in our E-Business suite,” says Andrew Quixley, industry director for telecoms and media at Oracle.

Portal’s Gorti sees it the same way. “Combining our core competency with the mission-critical characteristics of Oracle’s RAC [real application clusters] and its customer-facing capabilities from Siebel, we feel we can extend bill cycle management as we know it today,” Gorti says.

By connecting to IN nodes for pre-pay through Oracle’s E-Business suite (which includes CRM, ERP, supply chain management and procurement), both parties believe real-time interaction is truly possible. “We think an integrated solution is the way to go, as a pre-pay system and a post-pay system using separate customer databases can’t really work over time,” contends Jennifer Kyriakakis, director of product marketing at Portal. She, like others, believes pre-pay and post-pay systems have to be integrated if customers are going to do things like share balances under the same account. “If a post-pay account is to allow a pre-pay mode of charges under the same account, the systems have to know that two separate people are the same account, with the same pool of minutes. Only then can the system know to perhaps cut off the account when the minutes run out, but charge the post-pay account if it’s the mother,” says Kyriakakis.

Most real-time rating engines have in-memory based databases, so that there exists a single repository for customer data involved in real-time transaction processing. Preintegration can enable synchronization between the relational database and databases on the disks, or application clusters.

It seems to be a growing belief, as IN vendors such as Ericsson, Siemens and Alcatel have all made some preintegration arrangements to foster pre- and post-pay convergence.

Siemens, for example, has partnered with Convergys, which has also moved some of its assets into Siemens’ IN platform. Highdeal’s rating engine is embedded at a network level through a partnership with Nokia and Ericsson. LHS in Germany works with Ericsson and HP to support pre-pay applications. Additionally, Formula Telecom has done implementations in conjunction with Comverse.

“In all of our 140 mobile and fixed carrier customers, real-time cost control is something they consider as essential for the early adoption of innovative services by pre- and post-pay users,” says Alcatel’s Paul Burton, senior systems engineer.

To answer that need, Alcatel, in February, joined up with Oracle to market a solution for “convergent charging and receivables.” Touting it as a convergent billing solution, Alcatel hopes to provide all network-related facilities, including access types, network provisioning, session supervision, online/offline mediation, as well as a real-time rating engine and billing aggregation product. “Putting our real-time rating engine in billing workflows and Oracle’s user-centric E-Business suite will help us to capture the billing and CRM info from the service providers,” Burton says. “While we do the rating and charging and billing cycle management, Oracle will apply the local taxes and discounts.”

“The goal is to enable operators to take action when consumption thresholds are reached, such as disabling service, applying bonuses, or real-time access to account history and balances,” says Johanne Mayer, Alcatel’s director of marketing.

Waiting for the Silos to Fall

Does all this preintegration mean that a separate standalone billing system, in the traditional sense, would no longer be needed in the future?

Deciding whether to trust a traditional billing footprint to tack on pre-pay functions, or to rely on a pre-pay system that caters to both, will depend on each carriers’ long-term strategy.

As operators get deeper into 3G and IMS, the hope is that interaction between OSS and BSS will happen in real time—and for that to happen, there must be interaction between OSS and BSS.

Already, a trend in that direction is evident, as cooperation is growing between the CIO and CTO functions at carriers.

“We find that more and more, the CIO and CTO function are coming together or at least reporting to one another. We take that as a sign of convergence,” says Oracle’s Stolte. “If you suddenly have to take network-related and billing-related services as one stack, you need to know what capabilities in billing are needed to bring out the IMS services in the time frame necessary.”

Despite that trend, many CIOs and CTOs are still very focused on how to leverage content as a revenue driver, rather than on creating truly hybrid pre- and post-pay offerings.

So, what will it take for the silos to fall?

“It is an architectural decision, which means it’s not easy to undo down the road,” admits Stolte. The CIOs have to guess where the network and services are going, and determine whether real-time or batch systems should be the key in billing’s next life cycle. “In my opinion,” he says, “most RFPs are talking of convergent solutions with real-time capabilities, because multi-service flexibility is the key.” Stolte believes that preintegrating CRM and billing will help carriers achieve a more unified footprint and roadmap.

According to Kyriakakis, there are three steps to convergence. The first is using one system for pre- and post-pay to reduce operational costs and redundancy in separate customer bases.

The second is enabling pre-pay customers to access the same services as post-pay customers. There can be a single system for both customer bases, but simplistic IN charging cannot handle complex value-adds and charging known to be part of post-pay content and MMS services. That means there still is a separation of pre- and post-pay customers, even though information might be in one silo. Pre- and post-pay customers use the same portal to access MMS and content, but there is still a one-to-one relationship between customers and their payment methods.

The third level is the true hybrid, where pre- and post-pay customers utilize a single portal system to access MMS and content. They access the same rich content bundles, but switch between pre- and post-pay methods. What’s possible is a blended experience where certain services are pre-pay and others post-pay on the same account. Members of corporate and family accounts can share minutes under the same bundle—some in pre-, others in post-pay mode.

Currently, the market is approaching the second phase. As carriers figure out how to balance the flexibility needed to create new services with the availability and performance for fool-proof networks, the industry will move into the latter stages of the evolution.