The end of sedimentary billing in Opcos – part 1

Posted on April 25, 2012

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I was asked, again, to provide a view on the future of operator billing, and so I thought it’s about time to write it down.

This is part One and looks at history and a brief intro to the costs …

A little history, for context,  or as I prefer to put it “sedimentary billing”, layer upon layer upon layer”

Back in the day when digital services first came about operators would compete coverage,  because it was sparse.

Soon though they had covered the vast majority of the population,  and so coverage was replaced with price.

However telco pricing is not a simple affair, there are devices, phone calls to other uses of your network, other mobile users, other land line users, other land lines abroad, and premium numbers.

The product managers got busy and they began to compete, and gave the customer flexibility to choose different rates for the different types of call.  Of course calls were very expensive and so customers were keen to choose the best combo of prices for their particular needs.

Then SMS became popular and so bundles of SMS were added to the tariff, increasing the number of variables the product managers could play with.

Then came data,  initially priced by time, then amount of data.  More variables, more product managers tweeking, more “choice” for the customers.

Business customers have different rates,  so another group of tariffs to add.

Also telcos like to see services such as music, video, TV, web access, ringtones, ringbacktones, email, picture printing …  the list is endless,  but of course you should have some services included in your tariff,  so another layer of variables to add into the tariff structure.

Then of course there is the issue of devices and in many markets the price to the customer is discounted, and the difference is included in the tariff,  and the amount you pay can vary greatly.

All this leads to a very complex set of tariffs with many layers of pricing,  some operators have thousands of tariffs in play.  this is because whilst they might only actively sell a few at a time,  they honor those still in use by customers,  and some customers will stay on a tariff for years.

Over time of course it all gets turned and folded and mixed up,  and the detail is lost and it all gets messy, slow to change and blurred beyond belief.

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 The costs of all this

The result of all that complexity are layers upon layers of pricing complexity.  good for competing with,  great opportunities to to stand out from the crowd,  however all this comes with a couple of big costs.

Customers do not understand all the choices,  and indeed there are so many that they never could.  Even the professional shop staff do not fully understand all the options,  therefore the cost is that customers will not feel as close the brand as you would like,  many will feel they do not have the best deal,  and so loyalty is low, churn is high, and customer satisfaction is lower than it should be.

The second cost is of the technology platform to deliver the all this pricing and billing,  it is complex, requires “real time” decision making and as a result is very expensive to commission, own and operate.  Very expensive,  very expensive indeed.

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Posted in: mobile