Service providers are creating new partnerships to expand their offerings and develop new revenue streams. These partnerships have great value, but are not without their pitfalls. Service providers must put the controls in place to identify billing and settlement errors, fix order-fulfillment problems, and maintain a strong customer experience as more players enter the value chain and introduce more opportunities for miscommunication and error.
The shift toward multiservice offerings from telcos and cable MSOs has prompted an expanding variety of new service partnerships. Incumbent providers may have advantages like high-speed network infrastructure and recognized brands, but they need their partners increasingly to produce, package, distribute, install and enable the digital services and conveniences their customers want. Partnerships allow these carriers to maintain the speed-to-market they need, and help them to meet larger revenue-per-subscriber goals while focusing on their core offerings. Despite these benefits, companies that share subscribers, supply chains and revenue face formidable operational, financial and customer service challenges that often were not contemplated when the partnership agreements were formed. These challenges likely will increase as on-demand applications and content mashups become more prevalent. Carriers embracing the partnership service model can take measures to bridge gaps and mitigate the risks inherent in intercompany processes while realizing the business goals behind their new multiservice offerings.
CHALLENGES OCCUR POST AGREEMENT SIGNING
The partnerships between a carrier and an Internet, wireless, programming, digital content or other type of service provider depend on partner companies’ adjacent back offices interconnecting directly, or at least exchanging records with each other. As is often the case, quick product rollouts may not have allowed for extensive planning, engineering, constructing and testing of these key operational handoffs. The result is that the intercompany interfaces aren’t terribly smooth or seamless; they can be more like road abutments, with patches being placed regularly to repair larger potholes and gaps.
Inconsistencies in how partners identify subscribers and service types, define order steps or process bill cycles can be concealed until they manifest in bigger downstream service and bill collection troubles. For example, in one recent market rollout, the service-delivery partner responsible for creating and providing charge records was on one bill cycle, and the carrier partner responsible for processing and billing these same subscribers was on a different bill cycle. The mismatch wasn’t found and reconciled, causing tens of thousands of end subscribers to be double billed one month and then have no charges the next month. These data discrepancies and lack of operational coordination between partners created unnecessary, negative and expensive customer service issues.
New types of orders and greater order volumes will further complicate the joint supply-chain model. Fallout usually is symptomatic of data integrity problems that exist, to some degree, within all service providers. These problems can be compounded, however, when forcing different back-office processes together. Data integrity problems frequently are not identified and analyzed until after services are launched, when stopping to create robust checks in the delivery process isn’t possible without prohibitive costs. Moreover, addressing the identification, diagnosis, reconciliation and prevention of fallout isn’t very efficient and sometimes can become contentious when involving multiple companies and their internal departments.
Intercompany invoicing and settlements are critical areas to examine. If no one is concerned about what’s happening here, it’s because someone isn’t paying close attention to what’s being billed and paid. Typically, there are gaps between the original partnership agreements and what’s being invoiced or collected. Agreements often are based on variables, such as the type of subscribers, how they were acquired, billable and non-billable transactions, partner services rendered, and schedules.
Keeping track of subscriber acquisition, installation fulfillment, service activation, billing and equipment warranty fees requires an operational framework and levels of transparency that normally don’t exist between partner companies. It can lead to confusing scenarios. For example, a partner can be compensated for bringing a new subscriber to the relationship, but should that partner’s reimbursement be credited if the subscriber leaves prematurely? These details easily are lost and not accounted for in complex supply chains, and in the aggregate, can erode financial performance. Consistently overcounting and undercounting bill transactions or partner services also often can grow to become a large dispute or revenue write-down.
ENDANGERING THE CUSTOMER EXPERIENCE
Finally, although partnerships are formed so that carriers can broaden and differentiate their offerings, increase value and convenience for their customers, and decrease churn, the relationship can have the opposite effect. If a partner in the service-fulfillment process doesn’t meet installation or maintenance intervals, delivers less than expected service features or creates errors on monthly billing, existing customers will choose to go with another multiplay offering. Over time, a poor-performing partner can do harm to a company brand.
In one case, a carrier responsible for billing the end-customer’s standard service package partnered with another company to provide feature enhancements to the base service. During a reconciliation of the carrier’s commission and subscriber billing for the add-on features, it was discovered that the partner regularly was overcharging and undercrediting the end-customer’s monthly billing. The incident then could be linked to a rise in customer trouble reports, uncollectibles and customer defections. Unlike the single service provider model, partners need to consider the risk that a partner’s performance can have a negative impact on service to their customers and to their brand images.
PREDICTING CHANGES AND CHALLENGES AHEAD
Clearly, telcos and cable MSOs will deliver more Internet content, video programming, gaming and interactive services. Many are creating distribution platforms or digital storefronts with partners who are trusted publishers, distribution providers, advertisers, and suppliers or aggregators of digital items. These services will require even higher assurance capabilities for activation, delivery, billing, collection and settlement regarding amounts owed between suppliers and any third party for a demanded program, purchased digital items or even per click. The subscriber revenue stream may become further apportioned, with a growing number of parties becoming part of the service supply chain.
Specific considerations need to be addressed in the next phase of service partnerships, including:
- Defining practical processes and mechanisms for enforcing editorial control for the selection, placement, removal and pricing of digital content;
- Contending with on-demand, or interactive services, where traditional broadcast network providers will need to rely on a two-way distribution system for determining billable transactions;
- Identifying third parties that are not meeting basic customer service and quality levels required so that carriers reasonably can determine whether their brands and the performance of their services are being jeopardized;
- Securing proprietary information among partners and protecting the rights of the content owners;
- Determining whether partner upselling will be allowed, and whether there will be controls to detect whether a service being sold by a partner is competitive to the carrier or otherwise inappropriate.
RECOMMENDATIONS FOR THE FUTURE
Current and evolving partnerships require unique capabilities for data exchange, monitoring, tracking, reconciling and reporting between multiple players for the services they are partnering to supply, distribute, buy, sell or license with each other. As with the approach to delivering new services, it is best carriers not tackle this endeavor alone. Emerging within the industry are specialists in partnership assurance, able to quickly deploy and manage a service program that provides essential functions for carriers with third parties to deliver multiplay service offerings. Many of these operate on configurable data-management platforms with analytic tools that enable accurate, timely visibility of subscribers, service options, fulfillment details, billable and nonbillable transactions, and order fallout crucial to the operational health of the multiparty relationships.
The programs can measure reconciliation, provide control over operational handoffs and assure needed verification of intercompany invoicing, commission payments, settlements and financial reporting. Some system solution providers go a step further to reconcile partner payments for data by tying into existing billing systems. They then allocate revenue generated from sales of a game, say, to the service provider and the content developer.
In order to normalize third-party offerings from performance, intelligence and operational perspectives relative to their own offerings, carriers should consider putting partnership-assurance controls in place. In the end, this actually will allow carriers to accelerate their efforts and achieve their expected gains with minimal impact to the efficiencies they already have realized.
Tom Nolting is senior director of financial assurance for Vertek Corp. He can be reached at email@example.com.