Switching to Offense with Convergent, Real-Time Services

Telecommunications companies can sit back and wait for the onslaught from Internet/search and media and entertainment companies encroaching on traditional telecom turf, or, they aggressively can lobby their vendors to go beyond the status quo and lead the charge toward convergent real-time services.

If service providers are serious about taking the fight to the competition, there is no time to waste. They must consider speeding the delivery of offerings, such as personalized advertising, policy controls for parents and businesses, mobile wallets, and presence-enabled services. By offering real-time services in prepaid or postpaid models, marketing departments can be more creative with tiered discounting and cross-promotional offerings.

The key to enabling this offensive is the real-time rating and charging of converged services. The ability to merge prepaid with postpaid services would help service providers make real-time decisions about the type of rating to apply and when to apply discounts and certain taxes.

"For there to be true convergence, there can be no silos," says Pat McCarthy, vice president of marketing for Telcordia Technologies Inc. and working member of the Global Billing Association (now part of the TM Forum.) He adds that since such decisions must be made in milliseconds, there has to be a way for portions of charging, rating and authorization to come together as real-time functions.

Telcordia's Grant Lenahan

Until that happens, service providers of all sizes are trying to seize momentum with hybrid plans comprised of online charging and rating and are experimenting with ways to increase ARPU. For example, small prepaid providers want to get deeper into family plans, account hierarchies, and prepaid and postpaid converged services. "They can, for example, build on an ordinary family plan by offering a postpaid location service that finds a child through prepaid messaging and notification interactions," explains Vinay Mehta, general manager for rating and billing management at Convergys Corp.

Jim Levine, CTO of Telespree Communications, a San Francisco-based provider of mobile self-care solutions, agrees that by building on existing plans, real-time capabilities will help carriers tap into revenue streams they currently are missing, especially from data-centric services, for which many people don’t want to commit to a two-year plan.

So service providers have to get used to offering services on the customers’ terms, like pay-as-you-go Wi-Fi at the airport, Levine says. "This can open the door for postpaid versions of the service if the customer ends up traveling frequently, or if the customer comes to trust the service and the consequent charges."

In addition to giving customers what they want, real-time convergent services potentially would give service providers what they need to survive in the future — and that future may include Web 2.0-type services. "Playing in the Web 2.0 arena would build customers’ opinions of operators who could, in turn, build customer loyalty in the same way airline, automotive, credit card and hospitality industries do," says Joe Hogan, CTO of Openet. "If we as an industry begin to devise marketing strategies that, in real time, reward customers the more they use our services, then we can get customers for life."

Some companies such as Google and Amazon.com are anxious to play in the Web 2.0 sandbox, where supposedly every grain of sand could represent yet another possible niche and potential revenue stream. "And they don’t have the turf wars between IT folks and engineers whose careers have been built around five-nines reliability for many years," says David McNierney, vice president of market development at Highdeal.

Service providers may indeed be able to leverage that five-nines reliability as well as their robust billing and customer care systems and their principles and standards around real-time/online services, but other challenges remain.

The Challenge of Real-Time

In a real-time or online environment, the flow of transactions depends on whether or not the usage information is accurate. If it is, tiered volume discounting or other actions can be taken. If not, errors cannot be corrected by re-rating, as they are in batch or offline environments. While building a hybrid of real-time and batch processing may help by periodically rating to discover and correct out-of-order data before billing takes place, it is a mere Band-Aid on a more critical problem.

There is also an ongoing debate about whether rating should reside in the network or be combined with mediation solutions. Some believe rating should remain part of billing, while others believe rating should stand alone.

How can something as simple as computing a charge become so complicated? The problem is that a real-time service requires proximity to the network and the network requires flexibility and scalability to accommodate the huge volumes of events generated by these services. Something will have to give, as rating engines are required to handle an increasingly complex array of event variables and to have intimate knowledge of the network so that charging, discounting or promotions could be based on variables such as quality of service.

Service providers also struggle to merge prepaid and postpaid silos. They tend to create integration points among the silos to make them palatable for hybrid plans, says Grant Lenahan, executive director and strategist for service delivery solutions at Telcordia. "Over time, such high levels of integration could make it difficult to maintain consistency in pricing and rating, which would make balancing checks or real-time balance transfers more difficult."

The inconsistencies of interfaces, data formats, processes and data flows are exacerbated by the thousands, or even tens of thousands, of different rate plans — each possessing its own stockpile of customer histories and built-in rules about discounting and promotions. As time passes, it will become more difficult to extract the appropriate subscriber profile data from postpaid billing systems for use by charging systems.

With so many concerns, it’s no wonder these issues may drive a wedge between the once-inseparable charging and billing processes, while drawing together charging and rating.

In the interim, network operators are finding ways to evolve. Some are using a middleware charging layer among different network session controllers and charging engines. The middleware removes charging from the network and makes determinations about the identity of the user, the account balance, whether to grant the service and with what service features.

OCS: Unifying Charging and Rating

Orange's Doug Melbourne

Charging and rating have been handled separately for years, but the principles of the online charging system (OCS) under IMS seem to be gaining acceptance by the industry. "Although many of us could be drawing on our pensions before IMS hits wide-scale deployment, the concepts behind it are already helping to bring together rating and charging," says Openet’s Hogan.

The OCS has a charging trigger function (CTF) that interrupts a service when balances go too low or users run out of credits. There also is an account balance management function (ABMF) that stores and updates the amount of credits on a user’s account and a rating function that determines the cost of service usage according to tariffs.

Already, there are network operators that have begun to integrate charging and rating to handle the thousands of charge events coming in per second. BT, for example, has chosen to integrate an Openet charging platform with its own databases so that data can be replicated to the charging system, which, in turn, can make thousands of decisions per second without disruption to monolithic billing systems. As more carriers follow suit, 3GPP standards like DIAMETER will become more prevalent.

Persistence Pays for Telkomsel

Telkomsel, an Indonesian GSM provider, makes it an imperative that vendors and billers work closely. In 2003, Arman Hazairin, vice president of IT at the time, says he became a thorn in the side of Convergys and Nokia Siemens until the two collaborated on converging online and offline charging as well as prepaid and postpaid billing. In 2004, the vendors completed the first deliverables for a platform migration, and in 2005, the Convergys Rater was integrated with Siemens IN (Hosted Rater). Last year, the companies completed a three-phased initiative and since have productized a solution that includes Convergys’ Infinys rating solution integrated with Nokia Siemens’ charge@once platform.

In 2002, Telkomsel had gone through a billing migration and was concerned about its ability to offer sophisticated services, such as mobile wallet and micropayment services, to prepaid customers. "Rather than try to put different charging mechanisms in for different prepaid or postpaid services, we wanted one configuration to accommodate voice, data, IMS and other service types in any payment environment," says Hazairin, now vice president of customer interface management in the commerce division.

Using IMS as a template, Telkomsel consolidated the charging infrastructure and converted it to a convergent online charging platform, on top of which IMS, 3G, GPRS, content and service delivery would work. "Now we only have to manage one configuration because all services utilize the same charging infrastructure," Hazairin says.

"You can choose to get the best out of your vendors, or allow them to be separate, and get the worst. I’m so pleased with the fact Convergys recognized [Nokia Siemens’] strength and conversely, [Nokia Siemens] recognized the value of Convergys."

Telkomsel is using its new-found flexibility to provide an incentive for the lower segment of the market to consume more. If they spend enough to reach a pre-set debit minimum, the company extends the life of the service. The more the customer uses, the longer the service lives. Telkomsel claims to have gained more than a 60 percent market share with 50 million subscribers — 2 million of which are now postpaid. That is significant, since most people in APAC regions are prepaid customers. Today, however, Telkomsel prepaid customers have access to the same robust data and content services, bonuses and discounts available to postpaid customers.

With charging issues resolved, Hazairin believes the next challenge is deploying new service logic. "That is something our partners are working on within the 3GPP. It’s their job to understand the burgeoning technologies and standards, and it’s our job to test the knowledge and communicate what works and what doesn’t."

Orange Removes Ambiguity

Orange, the primary brand for France Telecom, also sees a future of hybrid models with prepaid and postpaid services. Key to the success of these services will be their richness and the settlement capabilities around them, according to Doug Melbourne, product marketing manager of billing at Orange.

A few years ago, Orange started a program called "Content Billing," which was supported by Portal’s Infranet (now Oracle BRM) solution and offered a hybrid billing service that did rating for ringtones, photos, games and other content that both prepaid and postpaid customers wanted. It was an adjunct to Orange’s existing legacy systems. The company since has updated to a newer billing system based on a later version of Oracle BRM.

"We are currently building a platform to replace all legacy billing so that prepaid and postpaid convergent services are handled with a single architecture," Melbourne says.

Melbourne believes that more than network, billing and rating systems have to be considered in the process and that billing hierarchies should be reflected in CRM systems. If not, then customer support will falter, Melbourne says. "You aren’t finished re-architecting the OSS for a real-time architecture if you aren’t realizing the full benefit by taking care of the customer."

Melbourne anticipates the impact of IMS will erode the boundaries between GSM and fixed-line services within a few years and that customers are ready for either traditional postpaid services, or to use credit cards, m-commerce or prepaid services.

One of the keys for succeeding with real-time services and the variety of emerging payment options will be clarity regarding charges on a bill. Those users reluctant to risk a surprise at the end of the month may be more likely to purchase data services if they can prepay for them and be able to check their account balances in real time.

As Orange evaluates a prepaid model for subscriptions and more complicated video services, it wants customers to have the option of spending their Euros using either model.