Multiple Personalities
By Peggy Anne Salz, Fri Dec 19 08:00:00 GMT 2003

If operators thought developing and delivering personalized mobile data and content services was tough - wait until they try to charge for them.

There's no polite way to say it: operators are in it knee deep. In the race to be first to market with compelling content, most operators have neglected to work out realistic rate plans for their next-generation services. The culprit is their current legacy billing systems: they have been customized for voice calls, and typically can only rate simple price plans based on minutes of use. This just won't do in tomorrow's data-centric world.

Current billing systems have another flaw: they process post-paid and prepaid users separately. This effectively forces operators to treat prepaid users as second-class customers and limit the mobile data services they can access. Operators need to encourage prepaid users to access data, not treat this sector as if it were a credit risk.

So, as it stands today, few providers are truly able to monetize their content and reach the audience they need to. A new, unofficial statistic I've heard making the rounds is a shocker: carriers generally lose between 1 and 3% of their revenues due to poor integration between their order, processing, billing and collection systems. Most in the industry confide the actual percentage is much higher, which means an unbelievable number of carriers are leaving money on the table.

Against this backdrop, expect 2004 to be the year of prepaid-postpaid platform trials. "Convergent billing" will no doubt become the new business mantra-and some companies, particularly billing solutions providers, will make a lot of money helping mobile carriers and newly merged operators put order in the dozens of billing systems they have had to band-aid together over the years.

However, merely integrating software won't be enough. As our lifestyles become inextricably linked with our mobile devices, operators will inevitably require more flexible billing and rating systems to both charge us correctly and settle their tab with the dozens of content providers and third-parties in our personal value chains. It will be like the "Friends & Family" tariffs we remember from the wireline world - only about a hundred times more complicated.

The scenarios are endless - and go far beyond simply combining post-paid and prepaid accounts. You want to encourage your teenage daughter or son to call home more often? You can charge these calls to your mobile account, or pay them via credit card. You want your son to study and not text during school hours? Why not configure his mobile profile so he can only text after school's out? And while you're at it, you can limit his interactive gaming to make sure he does him homework. You want to do your daily shopping via mobile, fill up the tank and track all the loyalty points you're collecting from third-party providers AND your mobile operator? It's all possible.

Or, at least it will be possible in a few months.

Portal Software is working on what will be a world-first lifestyle billing solution that will literally place the user at the center of the billing process. "Rather than forcing the user's account to fit within the confines of the billing system, which is very structured and very much built on a hierarchy of controls, we have created a sort of virtual representation of the user," Kurt Lillywhite, CTO EMEA and VP Marketing at Portal Software explains. "This 'object' represents the user and all the relationships the user has with the outside world including banks, content providers, family, friends and third parties." The billing system interfaces with this 'object', and the 'object' dictates the how, when, and where it consumes and pays for mobile data. According to Lillywhite his company plans to debut at 3GSM this February.

At Telenor Mobile billing manager Paal Jessen Petersen told me that reworking the company's data services billing to be more "intuitive" has allowed the company to break new ground. It can offer attractive packages of mobile data services geared to young, prepaid users such as xtrapakke, which includes one month of WAP via GPRS, five animated MMS, five wallpaper MMS, one Java game and one polyphonic ringtone. "With a flexible billing system we can test different charging models and concepts. That way we can keep pace with customers' changing tastes."

Telenor has also moved up a notch in the value chain because it can link mobile data offers with m-commerce schemes. It's a key capability Petersen tells me will "position Telenor up there with the banks."

One service gives prepaid users 15% discounts m-commerce purchases they make using Telenor and its partners when they top up their cards. "Because we can bill for it we can offer users incentives to use prepaid to buy tickets, DVDs, you name it," Petersen says. This strategy has paid off for Telenor. The operator, which has 3.2 million customers in Norway, reports 500,000 converts to m-commerce since it began pushing the service at the start of 2003. Plans are to take implement much of what it has learned in other markets. Worldwide Telenor counts more than 25 million subscribers.

Rehauling Telenor's billing system was a mammoth task, but Petersen is convinced it's worth the hassle. "3G will catch on when operators can create - and charge for - personalized service bundles," he says. "But there can be no 'Big Bang' in billing. You have move step-by-step." His blueprint: First, implement flexible billing systems. Second, experiment and create mobile data offers to fit customer tastes. Finally, support more personalized billing.

The Telenor example shows operators will have to move away from the mindset that billing is about batch processing and begin to understand that billing is a service. Moving ahead to 3G, providing this new type of lifestyle billing service is likely to be an operator's key differentiator.