WHITE PAPER: Telecom billing – time for a change

What will you learn? Telecom billing –

How the architecture and
role of telecom billing has
time for a change
changed recently

What new services must

The new role of the billing systems and challenges
retail (B2C) billing support facing CSPs in the billing space
and why performance is key

What are the main

challenges in B2B billing The new role of telecom billing
and why it must show great
flexibility
In recent years, many changes have shaped the telecom services market. Smartphone
Why M2M requires advanced usage has skyrocketed, the consumption of data and content has also increased,
billing tools with low TCO competition on the market has become stronger than ever before and the focus of
operators has moved from networks and products to customer experience.
How to combine billing with
PCRF
As a result, the role of billing systems has been redefined. Many modules that used to be
Why traditional billing part of them, such as product catalogs, customer management and managing product
systems cannot overcome instances, have evolved to become separate tools. Therefore, billing has been pushed to
these challenges and need the role of a mere “calculator”.
to be transformed
But the new requirements this “calculator” has to meet have become extraordinary large.
Currently, a telecom billing system must handle sophisticated services, various types of
subscribers, lines of business, payment methods and business models.

Additionally, it must control services and charge for them, as well as provide information
to other applications, and do it all in real-time.

Traditional billing modules become independent tools

As customer requirements increased, the customer management module in billing systems

ceased to be an effective tool. Customer Relationship Management systems took over
the role, and are currently the main tool for managing interactions with customers, sales,
marketing, customer service and technical support activities. As a result, billing is no
longer the master repository of customer data.

The need for service innovation led to increasing the complexity of service offerings –
product portfolios became extremely difficult to manage effectively. This in turn entailed
moving out product management modules from billing systems and developing modern
tools for managing convergent services in the form of product catalogs. These systems
are now taking care of all aspects related to managing product offerings, such as defining
sales rules, dependencies between products etc.

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WHITE PAPER: Telecom billing – time for a change

As a consequence of these changes, pricing algorithms have become the core of billing configurations and, as such, define a
billing system’s capabilities to handle various price plans, such as usage-based, tiered pricing, periodic fees etc. These pricing
algorithms are used by product managers in the product catalog to flexibly define new product offerings.

Customer Product Billing

Management Managers Administrators Finance

Billing
Customer
Collection Billing Account
Information
Management Management
Management

Billing Inquiry,
Receivables Product
Disputes &
Management Instances
Adjustments

Product Pricing Bill Format /

Offerings Algorithms Render

Transactional
Product / Service
Document
Rating
Production

Customer Product Billing

Management Managers Administrators Finance

CRM Billing
Customer
Collection Billing Account
Information
Management Management
Management
Product Inventory
Billing Inquiry,
Receivables Product Product
Disputes &
Management Instances Instances
Adjustments
Product Catalog

Product Pricing Bill Format /

Offerings
for CRM
Algorithms Render
for self care apps
for rating/charging
Transactional for billing
Online Product / Service
Document
Charging Rating
Production

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WHITE PAPER: Telecom billing – time for a change

PRODUCT CATALOG

Product Specification (CPM) Product Offering (CPM)

Template

Template Product Specification Product Offering

...

Bundle Simple
Product Specification

Composite Atomic

Characteristic
Characteristic values
value
value
BILLING

1. direction, first min, unit, fees; 1. service, threshold, fee;

period fee 2. direction, first min, unit, fees; 2. service, threshold, fee; ...
... ...

Recurring fee Voice usage rating Data usage rating ...

Pricing Algorithms

Figure 1. Pricing algorithms

A billing system needs to properly rate and bill for every product offering available in the product catalog.

Figure 1 shows the product catalog layer and the billing layer.

The structure of the product catalog consist of TMForum’s SID entities – product specifications and product offerings. These
entities are managed by product managers only and billing departments may have no influence over them.

When a new product offering is created, pricing algorithms must be specified for it. These are defined in the billing system. All
characteristic values for defining the particular pricing information, such as final price per minute, the price of recurring fees,
commitment periods etc. are specified in the product catalog.

Having lost the function of defining product offerings, billing systems have had to deal with more challenging pricing algorithms
since they must be more universal and better designed than before to encompass the above requirements.

Because customer and product management functions were ­taken out of billing systems, information concerning products
was also separated. In modern BSS architectures this is an independent module. It provides information to CRM, Self-Care
applications, as well as to all billing purposes, including online charging. It also contains all final prices for particular customers,
which is extremely important for creating personalized offers and discounts.

Such a change in the architecture also potentially eliminates situations when information presented via Self-Care or CRM and
the information on invoices differ from each other, which in turn leads to an improvement in customer experience.

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WHITE PAPER: Telecom billing – time for a change

Sample products and options in the B2C market

Hybrid products Shared data plans Service-based

Voice, SMS and data with Bundled voice, SMS and data Video streaming charged per
predefined limits together in the same family plan minute with free minutes in the
Customer will not have to pay a bill Many devices under a single plan
higher than this limit account Remaining data consumption
After reaching the limit it is still Pricing may depend on charged per data usage with
possible to make a call following monthly limit
how many devices are included
the top-up like in traditional in the plan
prepaid models
usage
Invoices are generated monthly
Charged in pre-paid, post-paid or
and cover “post-paid” monthly fees
mixed/hybrid models
Good solution for controlling costs

Multi-service bundles Limit control Cross-service discounts

Bundles: Possibility to define customized For customers ordering multiple
e.g. phone + internet + TV limits services
One invoice Leads to higher customer E.g. it can be a special discount
satisfaction and may decrease for a mobile broadband product
churn available to all customers paying
Not only for traditional services for specific monthly voice tarifs
Customized notifications

Billing in the B2C segment – large-scale calls for large-scale performance

The mass market (B2C) has always been the biggest source of revenue for operators. From this perspective, other lines of
business, such as the enterprise customer market (B2B) or M2M, are often seen as complementary, but they do remain
strategically important. As a result, billing systems serving the B2C market are crucial elements of BSS architectures, and face
many challenges. Some of these challenges include:

Product types such as hybrid, shared, service-based, as well as advanced discounts and bundles must be fully supported
by B2C billing systems. Advanced limit control with custom notifications is also necessary. For example, customers should
have the possibility to set up an SMS notification for when their total spending for data consumption has reached 20 EUR

Marketing/product management departments demand highly flexible tools to innovate and compete and a short time-
to-market. If they come up with a new product offering, they expect to be able to implement it and launch it immediately.
This is highly challenging for the entire IT architecture, including billing systems

Real-time does not only apply to prepaid anymore. The trend is that everything becomes controlled in real-time. Prepaid or
postpaid is only a payment method

Huge challenges are related to all real-time processing and the management of huge numbers of subscribers and invoices

The main challenges in this area are of a technical nature and relate to the performance of the billing system, which is crucial
in the B2C.

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WHITE PAPER: Telecom billing – time for a change

Currently, a telecom Billing in B2B – big customers require big flexibility

billing system must
handle sophisticated The B2B domain in this white paper refers to all telecom services offered to enterprises.
services, various types While prices for services in B2C are falling, in B2B they remain stable. B2B is becoming
of subscribers, lines a very important area for communication service providers. B2C architectures have
of business, payment already been transformed in the past, whereas many B2B IT architectures (BSS) have

methods and business still not been modernized. The main challenges that are faced by billing systems serving
enterprise customers include:
models.
Enterprises are often large international customers. And some of them also act as
service resellers. The same product offerings must now be offered on the international
market with proper multi-country support – including not only multiple languages but
also multiple time zones, multiple currencies or various tax regimes supported within
the same system

Support for hierarchies and split-billing controlled by the customer is a must in B2B

When it comes to flexibility, it is even more important here than in the B2C domain.
Products offered to business customers are very personalized. If an offering is defined
in the product catalog, it does not necessarily have to be sold in its exact form. The
final form of products and prices is constantly being decided during the sales process

Finance departments may also require some level of flexibility, for instance they may
require the possibility to create debt and credit notes or advance invoices

While time-to-market was important in the B2C domain, lead-to-cash time is important
in B2B. When a product is sold it must be delivered as soon as possible

Not only traditional services can be billed for. Billing may relate to more comprehensive
solutions delivered to an enterprise customer or to a specific site (e.g. micro cells)

Sometimes final users, payers and owners of services are not the same departments,
this should also be taken into consideration

In general, delivering services to enterprise customers (and billing for those services) must
involve taking the individual specifics of enterprise customers into account and focus on
maximum flexibility, as these clients may have very strict requirements resulting from
their business strategies, whether organizational or IT specific.

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WHITE PAPER: Telecom billing – time for a change

A modern billing system Billing in M2M – the need for advanced tools with low TCO
must be very flexible,
which may mean different There are many promises related to M2M (Machine-to-Machine) communication as a new
things in different lines of revenue source for operators. It is still difficult to make it work though because M2M is
the telecom business. still in its infancy. Nevertheless, it is important to protect a position on the market, enter
it and be ready for growth.

Some aspects related to M2M are similar to the B2B domain. Customers (in some
verticals) are international, which leads to the necessity of full multi-country support
for systems, including billing. Products are also very personalized and their final form
is decided during the sales process, like in B2B

As a part of revenue assurance, advanced limit control of spending may be required.

In the short history of M2M there have been many instances of fraud related to the
misusage of M2M SIM cards. So limits have to be possible to control a group of SIM
cards or even particular SIM cards

The biggest technical challenge for billing in the M2M domain is related to its ability
to bill not only for telecom services, such as activation or data usage fees. Depending
on the implemented M2M strategy, it may be necessary to be able to bill for services
related to verticals such as security, mHealth, smart metering or others

Additionally, M2M is a low ARPU business, which means that using the existing
systems of operators can be very difficult. In many cases, billing services are delivered
as part of separate M2M platforms or in an outsourcing model

Delivering advanced M2M billing services, their management and billing, while keeping
costs low, is a real challenge.

Billing + Policy Management – desired but complicated

The smartphone revolution, and the increased usage of data transmission has led to the
creation of new charging models for data products. Examples include:

Tiered pricing

Location-based pricing

Device differentiation (e.g. in shared data plans)

Service-based pricing (e.g. per minute for video streaming and per kb for rest)

Quality-based pricing

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WHITE PAPER: Telecom billing – time for a change

Such models can be implemented in typical 3GPP architectures, with separate real-time charging and policy management (OCS
and PCRF). However, flexibility and a reasonable time-to-market period demanded by marketing departments requires that real-
time charging and policy management are better integrated.

CRM Billing
Customer
Collection Billing Account
Information
Management Management
Management
Product Inventory
Billing Inquiry,
Receivables Product
Disputes &
Management Instances
Adjustments
Product Catalog

Product Pricing Bill Format /

Offerings Algorithms Render

Online Transactional
Product /
Charging Document
Service Rating
role Production

PCRF
role

Network

Figure 2. PCRF & OCS convergence

In bigger installations it is difficult to imagine that the roles of real-time charging and PCRF (Policy Charging and Rules
Function) are carried out by the same component. Logically, it seems very reasonable, because it can provide more
flexible pricing models related to data services.

Also, a lot of valuable information is gathered by PCRF and OCS. It can be used to make charging and policy decisions. Potentially,
OCS would make charging decisions based on information from PCRF and it can also be done the other way round. Recent
standardization (Sy interface) helps but it does not solve all problems related to the required level of flexibility.

When it comes to flexible product offerings that are created in the product catalog and are based on policy-related decisions
(e.g. an offering with free video streaming minutes) they should be defined in the same way as all other offerings. This means
the process should involve the product management department and, potentially, the IT department. Network departments
(where standalone PCRF is typically situated) should not be involved in implementing such offerings. It could save a lot of time
and costs, which would improve not only time-to-market but also business efficiency.

Unfortunately, it is technically very difficult to implement this scenario, because PCRF must work in the core network regime
when it comes to capacity, latency and reliability. Nevertheless, there are many benefits to such an approach.

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WHITE PAPER: Telecom billing – time for a change

B2C / policy management B2B M2M

Customer type Prepaid, postpaid, hybrid International customers Customers and resellers Multi-
country: multi-language, multi-currency, multiple time
zones, multiple tax regimes

Focus on customer Limit control and Final products are personalized, defined during selling
experience notifications process
Shared data plans; cross- Hierarchies and split-billing controlled by customer
service discounts; multi-
service bundles
Provides information in real
-time

Supports revenue Billing quality control Advanced limit control: per

assurance group or per SIM; for data
or money; per zone

Smart Flexibility and short time- Flexibility and short lead- Billing for connectivity and
to-market demanded by to-cash demanded by non telecommunication
marketing sales services – M2M verticals
Flexibility also needed Prepaid model possible on
for finance departments: SIM level or reseller level
debt, credit notes advance
invoices in any time

Convergent Real-time is not only Billing not only for

pre-paid traditional services
Pre-paid/post-paid is only Billing for site or solution
a payment method delivered
Content services Invoices for enterprise or
Service-based, cross- departments
service discounts, shared Users, payers and owners
of services

Future proof Technical challenges: Very business-oriented Deliver advanced and cost
- All-real-time processing efficient billing services to
- OCS and policy decisions M2M departments in the
must be made with the organization
core network regime
(reliability, latency,
capacity)
- Large number of
subscribers

Organization al challenge:
- Traditionally PCRF is a
part of network core!

Figure 3. Comparison of billing features and challenges in various lines of business

Traditional billing systems are no longer enough

In transformed BSS landscapes the billing system must cooperate efficiently with CRM in managing all interactions with
customers, as well as with the product catalog when managing product offerings and sales rules. It must also be smoothly
integrated with an external product inventory, where all information about current customer subscriptions and prices is stored.

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WHITE PAPER: Telecom billing – time for a change

A modern billing tool A modern billing system must also be very flexible, which may mean different things in different
should be ready to handle lines of the telecom business. A billing system in B2C must support short time-to-market

more than the typical and product catalog flexibility, demanded by marketing departments. In B2B and M2M, it
must provide short lead-to-cash time and selling flexibility demanded by sales.
telecommunication
services.
Supporting full convergence is also a must in today’s world of innovative, complex service
portfolios. The difference between prepaid and postpaid should only be in the payment
method and all modern products and options, such as shared data plans or service-
based charging should be easily implemented. This moves the role of a telecom billing
system far beyond the typical boundaries of billing. From a network perspective, a billing
system should take over the roles of OCS and even PCRF.

A modern billing tool should also be ready to handle more than the typical telecommunication
services – many sophisticated offerings are possible in B2B and M2M, where the potential
services to be handled by the billing systems include even those from other industry
verticals such as mHealth, smart metering or security.

For large telecom groups, acting in many countries, the challenges are also related to
handling international customers with a consistent product offering (same offerings in
many countries served by the group). Handling international customers requires multi-
tenancy, multiple languages, multiple time zones, multiple tax regimes, all in one version
of the system. These are all functions that an effective billing system has to include.

In the era of large data consumption, which is still growing, the performance requirements
for a billing systems are also increasing, especially when everything has to be controlled
in real-time and service-based charging is a common thing. This is especially visible in
the area of B2C.

Costs are also a very important factor to be considered. In low ARPU businesses, such
as M2M, billing must be very cost effective. And it doesn’t mean that it can be simpler at
the same time. Requirements for M2M billing are quite high while TCO must remain low,
which poses real challenges for operators.

Last but not least, billing can also strongly influence customer experience. Overall billing
quality (proper invoices) is a crucial element of customer experience. Data consistency,
which facilitates informing customers and producing invoices based on the same
information is crucial to support it. Good spending control should also be made possible to
allow customers to control their expenditure by setting up individual limits and notifications.
This should apply not only to regulated services (data roaming), but for all services,
including content-based ones.

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WHITE PAPER: Telecom billing – time for a change

Customer Product Billing

Management Managers Administrators Finance

CRM Billing in transformed BSS landscape

Customer
Information Full convergence
Management
Multi-tenant and multi-country Product Inventory
All-real-time and custom limits control
Revenue assurance Product
Instances
Product Catalog Marketing and sales flexibility
Supports not only telecommunication
Product
Offerings
services
Superior performance
Cost effective

Figure 4. Billing system in a transformed IT landscape

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Comarch is a provider of complete IT solutions for telecoms. Since 1993 the company has
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