The mobile industry is banking on Internet services as a new source of revenue to counter the declining average revenue per minute from traditional mobile voice services.
Today, mobile service providers are deploying 2.5G networks such as general packet radio service (GPRS) and CDMA-1x and launching mobile Internet services via their mobile portals to increase revenue. However, subscribers can consume Internet services offered on the portal—the so-called “walled garden”—or they can consume services elsewhere on the Internet.
Once a subscriber leaves an MSP’s portal, its revenue options are often limited to charging for Internet access. The only information the MSP will have is how long the subscriber accessed the Internet or Intranet, the volume of data transferred, or the quality of service (QoS) provided.
The challenge for the MSP is to keep its subscribers on the mobile portal where the MSP has an opportunity to price services based on value (for example, a timely stock quote for 5 cents) rather than charging only for access.
It is quite likely that MSPs that charge based on value for services within a mobile portal will waive or hide any access charges, while subscribers who leave the mobile portal will be charged for access. The access charge for leaving the mobile portal may be priced at a premium to act as a disincentive, making the mobile portal more “sticky.” The MSP controls the pricing of services on the mobile portal, as well as the price of leaving the mobile portal.
Services that will be offered on the mobile portal will also involve content/application and commerce partners. The MSP will likely collect the revenues for any services offered over its mobile portal and settle revenues with its portal partners based on the business relationships. Many MSPs are also looking for third-party advertising sponsors for their portals, so that subscribers and/or sponsors cover the cost of the services.
However, pricing based on value, revenue sharing, settlements or even volume is where existing billing systems lack functionality. Even if the price for a mobile Internet service is generated externally—for example, an m-commerce price generated by a merchant’s commerce server—additional business logic will need to be applied to revenue sharing or sponsorship rules, using percentages or fixed monetary amounts.
This type of functionality is being introduced in conjunction with rating systems. The application of revenue sharing or sponsorship rules is essentially another layer of rating after the transaction or service charge has been determined. An event record is passed into a rating process to calculate the price of the transaction to the subscriber, and then to calculate any business logic (such as for revenue sharing or sponsorship). Once the rating system processes the event, the information is held within the appropriate accounts (the subscriber’s account and any revenue sharer or sponsor accounts).
This second layer of rating logic appears to be the most reasonable way to achieve flexible, accurate support for these partnerships. One possible method for addressing this requirement would be to duplicate the transaction or service record, such that one copy is used to determine the charge to the subscriber, and other copies are used to determine the portions owed to partners. However, this approach is considered more of a workaround for existing systems and is not considered optimal, given the performance implications of duplicating the number of records that a rating system must process.
Billing Implications
Many MSPs attack their mobile Internet billing requirements by installing complementary IP billing systems to run parallel with their current voice systems. The incumbent mobile voice billing systems continue to support the mediation, rating and billing for mobile voice services (see Figure 1). These voice services are generally delivered over second-generation (2G) mobile networks such as GSM, CDMA and TDMA—circuit-switched networks. The IP billing systems generally support the mediation and rating of mobile Internet services offered over 2G networks; however, the intent of launching 2.5G networks is to support these services (see “2.5G: The Steppingstone”). Billing mobile Internet services is often integrated with the incumbent voice billing system to offer subscribers a “converged” bill for both voice and Internet services (although the billing systems themselves for the two services may still be distinct and not converged).
Consumers Buy Services, Not Technologies
Most subscribers will neither understand nor care which network technology delivers their mobile services. This fact will cause MSPs some marketing issues. Will a voice call placed from a city suburb (likely a 2G network) be priced differently from a voice call placed from downtown (likely a 3G network)? Will mobile Internet services offered on an MSP’s mobile portal be priced differently based on the network technology used to access the portal? Will accessing the Internet or an intranet (leaving the walled garden) be priced differently just because the subscriber is in a large city that does not have a 3G network versus another large city that does?
The general thinking is that subscribers buy services, and as such the service should be priced the same regardless of underlying network technology. But there are limits to this rationale. Subscribers have come to expect differences in pricing when roaming; however, the coverage issues of 3G networks will be more pervasive and less understandable to subscribers. For example, if a subscriber hasn’t left the local calling area but the network technology changes, the pricing for a service should stay the same.
In a 3G environment, mobile Internet services will generate information from a variety of network elements such as charging gateways, wireless application protocol (WAP) gateways and application servers. Information about content and commerce for a mobile Internet service will come from the same network elements regardless of the mobile network technology. The mobile network is the transport or bearer of content and commerce services that are routed via gateways and housed within application servers (such as a merchant’s commerce server or a content provider’s server).
There is, however, a difference in the information available over various mobile network technologies. Access information for a mobile Internet service (volume of data, QoS, cell site, duration, etc.) is collected from different sources, depending on the underlying network. A 2G circuit-switched network will generate information about access from a mobile switching center (MSC). This will include information on the start-stop times for a session, from which duration can be calculated. The MSC does not capture data service metrics such as volume or QoS, since this is a circuit-switched network where such attributes are not generally available.
In the 2.5G/3G networks, network elements within the operator’s domain capture access information such as volume of data and QoS—these include SGSNs/GGSNs/charging gateways (GPRS), PDSNs/AAA servers (CDMA-1x) and media gateways. If a user accesses a mobile Internet service over a 2G network via the operator’s portal, data service metrics such as volume likely can be captured via the operator’s mobile portal infrastructure. But if the user accesses a mobile Internet service outside the operator’s portal, it will be very difficult to capture this information, because the operator does not have access to servers outside its domain.
Operators are considering intermediary servers that can capture information such as data volume when services are being consumed through 2G networks. These devices would ensure that operators could capture data service metrics when the underlying network cannot provide the information necessary for consistent rating. Such devices will not be required for 2.5G/3G networks, because billing for IP traffic has been included in the standards from the initial design stage.
To price services regardless of underlying networks, MSPs must consider the information available from each network and its consistency. They must also consider whether it is practical for them to price regardless of the underlying network, because network resources used must be reflected in the price charged. For example, billing by data usage on a 2G network the same way as on a 2.5G/3G network may not be practical, because the rating metric (data volume) is not directly rated to the usage of the network (the time a circuit is held up).
MSPs often use an IP billing system to support their Internet services while their incumbent mobile voice billing system continues to support voice services. The two billing systems are lined up against the networks that support either voice or Internet services. The voice billing system interfaces to the 2G circuit-switched networks via a voice mediation layer. The IP billing system interfaces to the 2.5G packet-switched networks via an IP mediation layer. The voice and IP billing systems are often integrated at different points, such as for billing and prepaid services.
When service are processed by separate billing systems, there is a risk that the rating and discounting of each system will generate slightly different results. The rating and discounting logic may be slightly different, and/or the systems may be reduced to the lowest common functionality. Stepped pricing—in which different rates apply to reach threshold and go-forward traffic—is impossible in dual systems, as it is based on a moving aggregate, not month-end totals. The aggregation of information from separate systems makes month-end discounting a challenge.
There are two general methods for getting call detail records (CDRs) or service detail records (SDRs) from different networks into a common billing system for pricing. In the first method, a convergent mediation layer collects information from all network types and has the intelligence to pass the record to the appropriate billing system. This ensures that records for a given service are all treated the same for rating, regardless of the network the service was delivered over. Mediation and billing systems, however, are aligned with particular network technologies, preventing seamless pricing for services accessed over different networks.
The second method of ensuring a service is rated seamlessly regardless of network type is to have a convergent billing system. A convergent billing system removes the requirement that the mediation layer is intelligent enough to route CDRs/SDRs to the appropriate billing system because there is only one billing system, which supports all mobile services. Such a system can support seamless rating of services even with multiple mediation layers, because they will all interface to a common billing system.
The notion of converged billing systems is not new, but the introduction of mobile Internet services over 2.5G/3G networks has rekindled interest in it. Yet MSPs are not likely to replace their incumbent customer care and billing systems for voice in the short-term, given that these systems generate the majority of their revenues. For a while, voice and IP customer care and billing systems will run parallel.
This approach offers short-term benefits, but it may not be ideal or cost-effective in the long run. Two systems often require two databases, two mediation layers, two product-catalogues and two service management functions. Having two systems with varying degrees of integration (integrated billing, integrated prepaid, integrated CSR) is not efficient. What’s more, the maintenance costs associated with supporting two systems will compound as new services and networks are introduced.
A converged system, in contrast, offers many advantages, starting with one complete view of the subscriber. All information for a particular subscriber is stored in a central spot for data mining, customer care and self-care. Such a system also enables MSPs to offer true cross-product discounting, consistent rating regardless of network technology and a common balance for prepaid subscribers.
Given that MSPs want to price the service and not the underlying network technology, analysts are suggesting that the 3G environment will provide a powerful incentive to adopt convergent billing systems.
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