Early indications from the mobile data arena may not be giving any definitive messages about which applications will drive the market but one theme can be heard loud and clear — users want content related, value-based billing that is easy to understand and above all predictable. Catherine Haslam talked to Dr Jens Trötscher, vice president of SchlumbergerSema Business Support Systems unit, about how this can best be achieved.
Mobile Europe: A number of operators have been running high profile data services for over six months now, what are the early lessons being learned about billing for data services?
Dr Trötscher: Operators are beginning to get feedback from their users and this is clearly showing that billing rationales impact on the user’s willingness to use services. Firstly, the majority of services are billed on a byte basis and customers are simply not interested in this. They want a billing structure that is relevant to them and that means relevant to content.
Looking at it from the other side, the operators want to encourage data usage. However, the open-ended nature of charging for each event is putting people off exploring new services, while price advice delivered prior to every action merely acts as a reminder of the cost and as such creates a barrier to further use.
Mobile Europe: There are clearly problems with the functionality that many billing systems currently offer but is there a better option?
Dr Trötscher: Billing must be for content with a clearly defined price and no separate charge for traffic — furthermore we believe that these content services will need to be bundled together and offered simultaneously as packages. These would comprise a number of music downloads, picture messages, location-based services, or whatever else operators believe will appeal to their customer bases. Customers would be able to pre-subscribe to the package, know what they are getting and understand what they are paying for without being constantly reminded that they are spending money. Some data bundling is done now but it is byte based and therefore difficult for users to understand.
Mobile Europe: There may be benefits for the customers but what about the operators?
Dr Trötscher: All operators are looking to increase ARPU and they are looking to data services to do this. What bundling does is provide the customer with a clear and predictable view of what they receive for their money. It removes the cost barriers perceived by the user when they are charged for each and every transaction and therefore also encourages a certain level of usage.
Furthermore, in addition to driving data usage and ARPU up bundling also has advantages for an operators internal processes. Service and tariff definition processes were built for people with high levels of technical expertise. But with the introduction of many more and new data-based services, this has to change as it needs to be easier for marketing departments to access and create pricing definitions.
Mobile Europe: Does this mean that marketing is taking over the billing function?
Dr Trötscher: Absolutely not. It is still necessary for the billing systems as a whole to capture the traffic levels and meter the transport layer but this needs to be de-coupled from the marketing functions.
It’s about building in a layer of abstraction which allows marketing departments to work from the functionality that exists in the network and use pre-defined tariffing and service building blocks to create compelling service bundles. This is something we are providing via the Product Center function of our Business Support and Control System (BSCS) which provides the flexibility to deliver new, innovative bundles quickly and effectively. If the content already exists in the operator’s portfolio, it can take as little as a day to set up.
In effect the marketing department will have the freedom to create new bundles, run promotions etc but within strict boundaries; they will operate within their own sandbox. The technical divisions will still be responsible for the system configuration which must remain separate, as well as collecting information from all the network elements and the reconciliation of that data.
Mobile Europe: This all sounds sensible and simple in concept but how easy is it to implement?
Dr Trötscher: The simplicity is created at the end for the customer because it needs to be that way but, as is often the case, the simpler it looks in the end, the more complicated it is early on. Information necessary for billing has to be gathered from the operator and partner network elements and this is far more complicated than it has been in the past.
To this end, we have now included an end-to-end content charging capability in version 8 of our BSCS product which interfaces with the billing system and partner settlement processes.
Mobile Europe: Is this not the job that rating and billing systems have always done? How does it differ?
Dr Trötscher: The strict definition between the responsibilities of the rating engine and the billing system is softening. A lot of things previously done by billing are now done by the real time rating engine that is part of our BSCS. This moves things like taxation into the rating engine and processes them in real time.
We also have to work with what already exists and this means pre and post-paid billing systems and often a number of different rating engines. We need to get these back together and our central balance manager does this in BSCS 8.
There is now another process that needs to take place which translates the traditional billing mechanism into a form users can understand and that is not billing for the byte. In effect, there are now two billing requirements. The first identifies the cost to the operator and presents it to an internal cost centre, the second creates a bill that is both understandable and relevant for the customer. We believe that this can best be achieved through bundling.
However, this in turn requires not just real time billing but real time balance management. This real time balance management capability is what sets BSCS 8 apart as a real solution to the needs of mobile operators today.
Mobile Europe: Can you explain the difference between real-time rating and balance management?
Dr Trötscher: For most operators now the ability to rate in real time is not enough by itself. Those rated events must themselves be accumulated in the form of defineable bundles in real-time. With this it is possible to manage accounts appropriately — to authorise transactions, trigger discounts or to trigger alerts if the limits included in bundles are being reached.
However, this requires a powerful tool. In online charging mode, BSCS 8 is designed to support an average latency of 10ms. This means that it can process 20 million single event or 60 million bundled events per hour on a 32 CPU server, while in near real-time post event mode, it can rate 200 million transactions per hour. It’s a powerful solution which has been benchmarked on a number of different platforms aimed at all sizes of operators from Linux systems for smaller operations to more familiar HP and Sun platforms.
Mobile Europe: Isn’t this being unnecessarily complicated? If predictability of cost and value for money are the driving factors for consumers, why can’t operators just offer flat rate, all-you-can eat bundles as have been supplied in the US for fixed line customers?
Dr Trötscher: The bottom line is that mobile capacity is too expensive to offer such options. Operators need to control the usage but there also has to be a correlation between usage levels and the value customers associate with particular content. Identifying this could take years but operators already know that open-ended, unpredictable pricing options will not fly. That is why bundling meets the needs of both operators and consumers today.
Mobile Europe: Can bundled services be offered to all customers or is it just for post-paid account holders?
Dr Trötscher: To maximise the opportunity, operators needs to offer new services to all their customers but they can’t do this without first ensuring that they have full control over the authorisation of transactions. We address this with the concept of real-time rating and balance management which bring pre-and post-paid systems together. It can work in real-time for post-paid if necessary and manage new services for pre-paid and therefore the appropriate payment method can be deployed.
We employ a consulting methodology to the issue of pre and post-paid convergence based on what operators want to achieve. Some want to migrate pre-paid to post paid, others want to increase the value of pre-paid by offering higher value services. We have a generic model of six degrees of convergence moving from CRM only to full system integration, BSCS 8 is part of this with its real-time balance management provides the ability to offer the same products and services to both forms of account.
Mobile Europe: How does the bundling concept work with roaming?
Dr Trötscher: It remains to be seen if there is a valid case for roaming bundles of content. In the future when large operators span the world with a global presence then from a business viewpoint a unified offering may be more realistic.
Technically it is possible today. BSCS 8 supports TAP3.9 and therefore can be used to various business models for the reconciliation and settlement of content-based transactions both with content providers and other operators.
Contact: bssmarketing@slb.com
Although ticketing will lead the way, the mobile commerce report also establishes that the rapid adoption of mobile devices for commerce related applications is by no means limited to ticketing. All segments — money transfers, banking, payments and coupons — are forecast to see significant growth rates.
Report author Howard Wilcox said, “Our report demonstrates the spectacular growth that we forecast across all the segments of mobile commerce. Four of these segments (Ticketing, Money Transfers, Physical Goods and NFC) will more than double in transaction value over the next two years, whilst Digital Goods, Banking and Coupons will still post very healthy growth of 30% to 50% over the two years.”
The Juniper report, however, stressed that commerce providers need to keep users top of mind when developing their applications. If the initial user experience is poor for mobile payment methods — either based on cost, security, reliability or ease of use — then customers will reject them.
Further findings include:
- Mobile banking is becoming a must-have channel for banks;
- The mobile coupons market will approach $6bn by 2014;
- Mobile payments for physical goods will treble within three years as sites such as eBay Mobile and Amazon Mobile are used increasingly.
The new Juniper report features segment level assessments of mobile payments for digital and physical goods, NFC, mobile money transfer and remittances, mobile ticketing, mobile coupons, smart posters and mobile banking. The study pinpoints the key market drivers and constraints and sizes all seven mobile commerce market segments through global five year forecasts of gross transaction values.