Technology Providers Share Perspective on Their Customers' Progress

In this issue, Billing World and OSS Today gathers leaders from four competitive service providers to discuss their views on technology hype, new service introduction and go-forward strategy. We also have asked their technology providers to talk about the hurdles their customers face when introducing new services and their progress in adopting capabilities like personalized marketing, content settlement, and revenue distribution and allocation.

Don Culeton, President and Founder, Info Directions
Don Culeton is founder and president of Victor, N.Y.-based InfoDirections, a provider of billing, care, sales and ordering software that serves largely Tier 2 and 3 landline and mobile providers. He is credited with developing one of the first, if not the first, desktop billing software application.

BWOT: When you help customers launch new services, like VoIP or TV, where do you see them struggle the most from a billing, bundling, marketing or customer education perspective?

Culeton: Clearly the first thing that gets in the way before billing is just having the in-house expertise. I’ve seen that with folks who’ve gotten into the wireless space. They don’t have people on staff who really understand that space or the partnerships, or understand how to manage those partnerships. That’s the biggest thing they face. They have to find someone with experience in the market they are moving into.

The next thing that hits them is “How are we going to bill for it?” It’s totally different to them. Their system may or may not support the new service. And all of them are looking to do bundling. If you have X and Y you get this other service for free, or you get X minutes for free in mobile, but want to do that on the landline side too. They want to have a seamless offering regardless of the product so they can have a significant marketing plan.

We’ve invested a lot of money in our .NET product, so that with each release we have had a lot of new features that deal with bundling and discounting, etc. Our customers come to us to help in the early decision making process when we have experience in these new markets they want to get into. They ask us, “What are the workflows? What are the interfaces? What can you bring to the table to help me get into this market? What do I have to know about to handle relationships with folks I might be buying handsets or devices from?”

BWOT: Are you hearing requests to account and bill for value-added services where multiple parties will be compensated?

Culeton: Yes. One of the requests that we have been addressing lately is presenting one invoice to the customer, but breaking up the accounting among old product line and new product line. We just had to develop this whole new capability in our general ledger feed, and we used a CFO focus group to test it out. That enhancement comes out early next year, and it is designed to deal with questions like “How do I want to recognize various revenues, and which markets do I report it in?” and “How do I know which services I’m making money on?” What they want is to be able to keep track of the fact that they are buying from a carrier, then have an agent selling their product, and have end users they are billing. You need to keep track of each of those parties and understand what the margins are for each relationship and in each channel.

As far as education goes, I haven’t seen people do a real good job of planning ahead to educate their channels and align everything in their product launches. Rather than proactively working with a well thought out business plan, these guys tend to be more entrepreneurial and react very quickly in some situations, which can become a problem.

For example, in order to combat triple play by a cable company, one of our ILEC customers started selling satellite service. As the phone company they have a certain quality reputation, but they signed up some bad partners. In satellite you don’t always have companies delivering the same service quality, and they had some problems with that up front.

BWOT: What do you think about the idea that unified services and communications is really the next big step or killer feature?

Culeton: I would say most definitely this is where we are headed. Everything is just starting to come together here. You have the personal hassles of dealing with landline, cell phone, computer, getting entertainment from my TV. My wife and I are fans of “The Office” and we ended up huddling around our computer with a 19-inch monitor and downloaded episodes from iTunes. Why couldn’t I have sent that to my TV?

Jim Norton, Vice President, Communications Practice, Exstream Software
Exstream Software is a bill output software provider that has grown in the market very rapidly, and Jim Norton is among the people credited with that success. The company specializes in producing customizable, personalized invoices that incorporate marketing messages and graphics directly on them. It now supports several Tier 1 carriers, and Verizon Wireless customers can see Exstream’s handiwork in their newly redesigned invoices. Exstream also supports EATEL, a CLEC with roughly 100,000 customers that Norton says is one of the more innovative and aggressive users of Exstream’s marketing technology.

BWOT: As your customers launch all kinds of new services, what’s really happening in terms of messaging, education and personalized marketing in customer communications?

Norton: First off I’ll give you some background on our customers—AT&T and AT&T long distance and their 17 million bills; Verizon Wireless just switched over in October; TelMex; and Rogers Cable. Sprint-Nextel just purchased our technology, as did Vodafone three or four months ago. We also work with KPN, Orange, and we also have EATEL, with around 100,000 customers.

As a small CLEC, one of the reasons EATEL chose our technology was a threat from Time Warner moving into their territory. They wanted to improve their customer communication. The average consumer spends 78 seconds over a bill. The information that comes out of the billing engine is very valuable to the big guys. It describes the interaction they are having with their customer. After it goes out of billing it comes to us, to our Dialogue product. Using a rules-based engine, they can put a rule in that says, “If a customer has these services but not X, put a message on their bill offering them X.” So every month they can offer to their customer a different service or promotion until they take advantage of it.

Our customers are predominantly using our technology for production of personalized and relevant marketing on their bills. Then the second thing they can use us for is direct mail. What we provide is like desktop publishing with the robustness of high-production print. These guys have huge databases of customer information they can segment, and they run promotional mail pieces. What you’ll start to see from Verizon Wireless is that you won’t receive bill stuffers, because the consumer opens their mail over a trash can. I know I do. We do produce the inserts as well, but less and less customers are going to do that, and instead they will put the message on the bill, because you will look at the bill. There is also some talk, but it’s only talk right now, that you’ll eventually see other brands on the bill.

BWOT: You mean something like, “Your Verizon Wireless bill brought to you by Starbucks”?

Norton: Well, yes—except that there is a lot of concern about this. You don’t want to make the bill so marketing-heavy that people throw it away and don’t pay it. There is some fear from finance that they’ll turn people off with marketing and also not collect the money.

Another example of how customers use this technology comes from EATEL. After they implemented our technology they were hit by Hurricane Katrina a few months later, and they were able overnight to change messaging to provide public service notifications to their customers that were receiving mail telling them how to find shelter, food and services and letting them know they didn’t have to worry about paying their bill right away.

Jeffrey Boozer, VP Sales and Marketing, Martin Group
Martin Group, founded in 1970, is among the leading billing, customer care and OSS providers for Tier 2 and 3 ILECs and CLECs. With offices in Rapid City and Mitchell, S.D., and Missoula, Mont., the company lives and breathes rural LEC realities. Those realities, surprisingly enough, reflect many of the same issues facing massive carriers like Verizon and AT&T.

BWOT: What challenges do your customers typically face as they introduce new services?

Boozer: First and foremost there is always a product model problem of some sort. The services we’re trying to build and bundle now almost require an abstraction of the product or some ability to manage services or offerings as components that can be put together like building blocks. That requires a lot of thought and work in any billing and OSS system.

Our experience is the biggest hurdle isn’t educating the customer, it’s provisioning. That’s an issue with defining the product catalog or model, in that often today … a new service offering is highly likely to include something that is rented or acquired, or isn’t necessarily sitting in the network. You’re partnering to offer content or application-based features or services, … and it’s coming from third-party sources. We’ve run into several scenarios with carriers where the challenge to the BSS and operations ended up being how to account for and accommodate an essential component of the product that has to be re-rated and fed into the process from an outside source.

We have Tier 3 players working with third-party wireless offerings. They bundle in the offering, but the partner is a reseller. It has its own billing and rating mechanisms that are fed back to the carrier, who then has to deal with whether it’s doing a flat-rate plan, yet getting per-minute rates coming through the wireless partner. We’ve seen that at a number of customers. That’s been a challenge, to find out how they can offer, manage and monitor profitability and A/R. We’ve developed products to allow them to do those things and offer those services.

BWOT: Do your customers recognize that their billing capability can give them leverage as they form new content and service partnerships?

Boozer: What I am seeing in my customer base is a desire to leverage what they think is a core competency, which is their ability to bill and allocate. I’ve got a number of people talking about getting into the business of providing a platform to partners or customers that allows them to process transactions, and in particular to take and aggregate things and then settle. I have customers out there looking at their billing platforms and their network offerings and are outsourcing communications services to other entities--in total. Basically, they are becoming private-label network or private-label billing applications, in particular to complementary industries like municipal water. We’ve got a number of customers who do things like that.

BWOT: Is anyone doing any work yet to deal with content settlements or royalty payments?

Boozer: We have customers who have spoken with content providers and want to use a CABS-like setup to manage royalties, but we haven’t seen anyone turn it on yet. It’s not a far-fetched idea for incumbents to have some of that capability. But as these guys get more into on-demand content delivery tied to broadband service or access, they are going to go there anyway. When you look at Tier 2 or 3, whether they are competitive or incumbent, they are investing in fiber. There are many Tier 3 guys making those investments, and in order to make them pay off, they are basing that payoff on content—video, music, and on-demand services. So they are being forced into that scenario to bill, allocate, reconcile and settle for all of those things, and we’ve seen a lot of that for 18 months.