Among the finding of a new, quite comprehensive survey of wireless operators around the globe by PricewaterhouseCoopers, this week was an indication that new revenue streams from next generation platforms, combined with declining capex investments, are accelerating their risk of revenue leakage.
As a result of the survey, PWC is urging operators to re-examine their revenue management strategies, a suggestion echoed by the TM Forum’s Tonia Graham this week.
PWC said large operators need to look beyond familiar problems in core billing systems and identify leakage throughout the business, a requirement made more urgent by the economic downturn.
The report, “Beyond the Horizon: 2008 Global Wireless Industry Survey,” is based on analysis of a survey of 18 large wireless carriers in the U.S., Canada, Europe, Asia-Pacific, and South America. It is the first of a planned annual poll that takes up where the company’s previous North American Survey left off. It also reflects on what PWC says is the importance of the U.S. and Canada adopting International Financial Reporting Numbers.
The goal of the report is to help operators understand industry performance measures and will address general financial accounting and reporting practices. Identifying revenue leakage problems was just one result.
The very steps operators take, such as workforce reduction and reducing spending, can exacerbate the problem of leakage. The 50 percent increase in data revenue year-over-year may not mean so much if too much of it is being lost.
Pierre-Alain Sur, partner at PWC, said in a statement that “in this new environment, companies must recognize that the opportunities and risks go far beyond billing and servicing of voice and data access and they need to prevent and capture revenue loss across the entire revenue cycle, including R&D, sales and customer care.”
PWC defines revenue leakage as failing to capture all the revenue they have earned in a manner that is timely, accurate and complete. While 65 percent of the respondents view revenue management as very important to the business and 35 percent view it as important, two-thirds have 10 or fewer resources dedicated per $1 billion of revenue, and these resources are primarily focused on billing and servicing of network activities.
The survey suggests that companies look closely at their human assets before curtailing staff, and perhaps expand the scope and scale of revenue management across the entire revenue cycle to include the research and development, sales and marketing functions.
Billing, however, still gets the sharpest look. Most operators surveyed viewed "unbilled access charges for content" (e.g. games, advertising, TV) as the leading opportunity for revenue management projects.
“In this multi-service era, characterized by a maze of different pricing plans, rapid introduction of next-generation services and content, tighter regulations and zero customer tolerance for billing errors, carriers need to re-evaluate their revenue management strategies across their own enterprise and with their content partners,” said Paul Rees, Global Communications Industry Leader, PricewaterhouseCoopers. “Carriers need to ensure that they have the strategies and tools in place to capture all mobile transactions, accurately reimburse third-party partners and properly bill the consumer.”
With 63 percent of operators saying they have had some sort of merger in the last three years, a lot of integration is still underway. Until these are completed, revenue will be leaking all over the space between the merged companies’ processes.
The full report is available here and contains trending information on a variety of reporting areas and breaks them down by revenue and other categories.
