ANATOMY AND PATHOLOGY OF COMMUNICATIONS BILLING AND PAYMENT

Billing for communications equipment, facilities, and services has its roots in telephone service billing. For many years before 1984, AT&T’s local operating companies generated the vast majority of telephone bills. Pricing was based on tariffs accepted and filed with the Federal Communications Commission (FCC) and each state Public Utilities Commission (PUC). Basically there were two rate structures, one for business or other organizational entities and another for residential service. Pricing was a combination of a fixed monthly charge to subscribe to local service, plus an incremental charge for calls outside the local exchange area, also called a long distance call. Charges for long distance calls were made each time long distance service was used and calculated on the basis of a minimum charge for the first 3 minutes, plus a per-minute rate for each additional minute the call continued beyond the first 3 minutes. The basic minimum and additional minutes rates were also distance sensitive. The longer the physical distance between the end-points of the connection, the higher the rate. Go back and read this paragraph again.

So far, we have a basis and method for calculating charges for service. Nothing has been mentioned about extra charges for other fees and taxes. We can get by this point fairly quickly by using the simple technique our elected governing brethren use when exercising their awesome responsibility to levy taxes—simply tell the merchant to charge and immediately remit a flat percentage against an item or on the total amount. Maybe we should add on one other little detail. How many taxing entities are there? Hard to say, but we can estimate starting with one federal, 50 state, and thousands of local municipal and county entities who want to charge some small amount for the privilege of paying a telephone bill within the boundaries of the governmental jurisdictions where one lives and works.

Now we are at a point in our anatomy and pathology where we have written a high-level description of the method for arriving at the charges for one or a primary telephone line for 1 month of service. With the magic of simple addition and multiplication on an already complex process, we can contemplate printing and presenting a bill for payment. What does the bill look like? First there’s a summary of fixed monthly charges for subscribing to the service, complete with taxes. Then there’s the long distance calling summary, complete with details about the time the call started, duration, and charges for each call. For one call, or none, add one more page for long distance service. For the 21st call, add one more page. From the service provider perspective, we now have a streamlined process where we can bill for the majority of our customer base as long as they are single line customers. Oh, and by the way, because we are considering this from the telephone company’s perspective, we also have a streamlined provisioning process whereby every single order for changes or new service drives the single line billing process. What happens when someone wants a second telephone line? Simple answer: Install one and send a second bill each month.

By now your hair is hurting, or if it isn’t, then get ready, it may begin to hurt shortly. Sure it’s painful, but you must understand this picture, else communications cost management will remain elusive and without value. Remember, we are trapped in telephone service billing and payment before 1984, which means one bill for each telephone line, one payment for each bill. Not bad for residential and small business, school, church, library, or other organizational entity to deal with. Telephone service for the masses. What about the larger organization with a corporate headquarters and tens, hundreds, or maybe thousands of field offices? Or a state, county, or large city government with hundreds or thousands of employees in many locations, each with at least one telephone line. You guessed it; phone bills in boxes, not envelopes, measured in pounds, not pages.

The telephone company rose to the challenge, installing service, which works well, and delivering a bill for which payment is expected in due course. Now it’s someone’s job to validate the bill and pay. And with that, we have arrived at the point where it starts to make sense to consider communications cost management process and practice in large and mid-size organizations—business, non-profit, government secular, or whatever—the consideration is how many telephone lines are required and being paid for. And remember, this is before 1984, and only applies to telephone service, single line access to shared switching facility based services called plain old telephone service (POTS). What’s happened since 1984, you might ask. The simple answer is that beginning with the divestiture of AT&T and deregulation of the long distance communications industry, businesses and residential subscribers had to replace single line, single-service billing with triple billing and in many cases initially with triple payment, one for equipment, one for local service, and a third for long distance service. Stop and think about it—the number of billable items tripled. The amount of envelopes and postage tripled or maybe quadrupled.

Fast forward to 2003 and consider again that communications cost management is not just paying the telephone bill any more. What was a single bill changed into multiple bills because of deregulation and divestiture in 1984. Since then, technological advances and availability of commercial products and services from hundreds or thousands of potential suppliers morphed into hundreds or thousands of bills representing millions of transactions for data traffic, mobile telephones, pagers, two-way radios, remote site security and surveillance services, Internet web access supporting internal and external supplier, and customer transactions, as well as plain old telephone service. Now instead of one trusted supplier whose bill was (appropriately or inappropriately) trusted for so many years, we now have many suppliers requiring some level of validation and due diligence to comply with basic accounting rules, tax statutes, and fiduciary responsibility. Read this paragraph again. Not only are there common sense reasons to manage and pay communications costs wisely, there may be legal implications as well. Check out the Sarbanes-Oxley Bill of 2002 and talk to your attorney and an outside auditor.

Multilingual Support & Multiple Currencies & Inter-carrier Settlements | Introduction to Billing

Multilingual Support

Multilingual support involves providing invoices and customer care services in multiple languages. There is a growing trend to aggressively seek multinational customers and it is becoming crucial for the billing system to invoice customers in their chosen languages. Multilingual support may also be required by government regulations. Customer service representatives (CSRs) with multiple language skills should be available to communicate with customers. Some of the key challenges associated with supporting multiple languages include single versus double-byte character set support, invoice design, equipment compatibility (printers, monitors, keyboards, etc.), and software drivers.

Multiple Currencies

Multiple currencies used in different countries can complicate the billing system as the billing and customer care system must be capable of recording and processing in units of multiple currencies. Multinational companies will most likely process in multiple currencies. Some of the complications of multiple currencies include: rounding rules, significant digits, timing of rate conversion, payments made erroneously in a different currency, and rapid changes in exchange rates.

Inter-carrier Settlements

Inter-carrier settlements are the exchange of value between carriers that provide services to each other. Because hundreds of carriers may be providing services with each other, inter-carrier settlements are often provided on a wholesale basis between network operators based on prearranged agreements between the carriers. In the United States, inter-carrier settlements are enabled through the use of carrier access billing system (CABS) or independent clearing houses.

Inter-carrier settlements are becoming more complicated with deregulation. To encourage fair competition, some governments are requiring existing (incumbent) telecommunication companies to unbundle network elements (UNE). Unbundling is the process of separating portions of a telecommunication network that are owned or operated by a service provider. It is a common term used to describe the separation of standard telephone equipment and services to allow competing telephone service providers to gain fair access to parts of incumbent telephone company systems. An example of an unbundled service is for the incumbent phone company to lease access to the copper wire line that connects an end user to the local telephone company. The competing company may install high-speed data modems (such as ADSL) on the copper line to enhancing the value of the telecommunications service.

Real Time Billing | Introduction to Billing

Real Time Billing

Real time billing involves the authorizing, gathering, rating, and posting of account information either at the time of service request or within a short time after the call has been initiated (this actually may be several minutes). Real time billing is primarily used for prepaid services such as calling cards or prepaid wireless.

Real time billing involves authenticating, authorization, and accounting. Many real-time billing systems use remote access dial in user server (RADIUS) to limit the access to the system to registered and authorized customers. RADIUS is network protocol that operates on a network server (software program and database) that receives identification information from a potential user of a network service, authenticates the identity of the user, validates the authorization to use the requested service, and creates event information for accounting purposes.

Real time billing may also provide for better customer care and provide advice of charge (AOC) information. AOC provides the ability of a telecommunications system to advise of the actual costs of telephone calls either prior or after the calls are made. For some systems, (such as a mobile phone system) the AOC feature is delivered by short message service.

Figure 1 shows a real time prepaid billing system. This diagram shows that the customer initiates a call to a prepaid switching gateway. The gateway gathers the account information by either prompting the user to enter information or by gathering information from the incoming call (e.g. prepaid wireless telephone number). The gateway sends the account information (dialed digits and account number) to the real time rating system. The real time rating system identifies the correct rate table (e.g. peak time or off peak time) and inquires the account determine the balance of the account. Using the rate information and balance available, the real time rating system determines the maximum available time for the call duration. This information is sent back to the gateway and the gateway completes (connects) the call. During the call progress, the gateway maintains a timer so the caller cannot exceed the maximum amount of time. After the call is complete (either caller hangs up), the gateway sends a message to the real time rating system that contains the actual amount of time that is used. The real time rating system uses the time and rate information to calculate the actual charge for the call. The system then updates the account balance (decreases by the charge for the call).

Figure 1: Real Time Billing

Overview | Billing and Customer Care

Billing and customer care systems convert the bits and bytes of digital information within a network into the money that will be received by the service provider. To accomplish this, these systems provide account activation and tracking, service feature selection, selection of billing rates for specific calls, invoice creation, payment entry and management of communication with the customer.

Billing and customer care systems are the link between end users and the telecommunications network equipment. Telecommunications service providers manage networks, setup the networks to allow customers to transfer information (provisioning), and bill end users for their use of the system. Customers who need telecommunication services select carriers by evaluating service and equipment costs, reviewing the reliability of the network, and comparing how specific services (features) match their communication needs. Because most network operations have access to systems with the same technology, The billing and customer care systems are the key methods used to differentiate one service provider from another because most network operations have access to systems with the same technology.

There are many different types of services to be supplied and billed. These include traditional voice, short messaging, fax, data communications, and information services. Billing systems process the usage of network equipment that is used during the call (events) into a single Call Detail Record (CDR). The billing process involves receiving billing records from various networks, determining the billing rates associated with the billing records, calculating the cost for each billing record, aggregating these records periodically to produce invoices, sending invoices to the customer, and recording payments received from the customer.

Customer care systems, sometimes known as provisioning systems, provide customer service representatives (CSRs) with tools to assist and standardizes communication with the customer.

Billing system costs can be a substantial percentage of revenues collected. In addition to the initial acquisition cost of computers and software, operational costs are very high. Of the service provider’s staff, 20%-30% directly or indirectly provide billing and customer care support.

There are many billing standards that have been developed for telecommunications networks. Because the services offered by different types of network operators (e.g. cable television compared to local telephone companies) are beginning to overlap, billing standards are also converging.

Future trends and challenges for billing systems include new types of services to bill for, telephone number portability that complicates account identification numbers, and increased customer self care to reduce the burden (and cost) of billing systems.

Figure 1 shows an overview of a billing and customer care system. This diagram shows the key steps for billing systems. First, the network records events that contain usage information (for example, connection time) that is related to a specific call. Next, these events are combined and reformatted into a single call detail record (CDR). Because these events only contain network usage information, the identity of the user must be matched (guided) to the call detail record and the charging rate for the call must be determined. After the total charge for the call is calculated using the charging rate, the billing record is updated and is sent to a bill pool (list of ready-to-bill call records). Periodically, a bill is produced for the customer and as payments are received, they are recorded (posted) to the customer’s account.

Figure 1: Billing and Customer Care System.
Source: The Billing College

Billing and Customer Care

Billing and custom care systems convert the transfer of bits and bytes of digital information within the network into the money that will be received by the service provider. To accomplish this, billing and customer care systems provide account activation and tracking, service feature selection, selection of billing rates for specific calls, invoice creation, payment entry and management of communication with the customer.

Billing and customer care systems are the link between end users and the telecommunications network equipment. Telecommunications service providers manage networks, setup the networks to allow customers to transfer information (provisioning), and bill end users for their use of the system. Customers who need telecommunication services select carriers by evaluating service and equipment costs, reviewing the reliability of the network, and comparing how specific services (features) match their communication needs. Because most network operations have access to systems with the same technology, the billing and customer care system is one of the key methods used to differentiate one service provider from another.

There are many different types of services to be supplied and billed. These include traditional voice, short messaging, fax, data communications, and information services. Billing systems process the usage of network equipment that is used during the call (events) into a single call detail billing record. The billing process involves receiving billing records from the system and other networks, determining the billing rates associated with the billing records, calculating the cost for each billing record, gathering these records periodically to produce invoices, sending invoices to the customer, and recording payments received from the customer.

Customer care systems, also known as provisioning systems, provide customer service representatives (CSRs) with information that assists and standardizes communication with the customer.

Billing system and customer care system costs are substantial. In addition to the initial acquisition cost of computers and software, operational costs are very high. Of the service provider’s staff, 20%-30% are employed to provide billing and customer care support.

There are many billing standards that have been developed for telecommunications networks. Billing standards are also converging because the services offered by different types of network operators (e.g., cable television compared to local telephone companies) are beginning to overlap.

Real time billing allows service operators to collect billing information at the same moment that services are being consumed. This type of billing allows the service provider to measure and respond to usage trends more rapidly and provides extra services such as prepaid phone cards and improved customer service.

Generally proprietary systems are developed in order to integrate the company’s current back-office and customer service systems in those situations where customer off the shelf (COTS) billing and service packages do not fit the company’s needs.

Future trends and challenges for billing systems include new types of services to bill for; telephone number portability that complicates account identification numbers and increased customer self care to reduce the burden (and cost) of billing systems. Self-based customer care services allow customers to access and maintain their own account information.