On 1 April 2010, UK regulator Ofcom announced significant cuts to future mobile termination rates (MTRs). The result is that MTRs will fall by a whopping 88% on average, from their current average of 4.3 pence per minute (ppm) to just 0.5ppm by 2015.

This is interesting because of the scale of the change. BT must be whooping it up, though they should realise that F-M substitution gets a boost as price levels get closer still. I expect to see a relative closing of on-net off-net prices; more complete bundles; increased dominance of Any Time Any Network price models. MNO margins will suffer but I also think this will dampen future demand for voice over mobile broadband applications which were surely coming as mobile data starts to deliver.

One can challenge by asking whether mobile operators one day gang together and try to ‘punish’ fixed-line users, by increasing the rates of calls made to fixed lines?

Even though this sounds like a joke, until a couple of years ago C&W used to punish pre-paid customers, by charging call terminating fees to pre-paid customers at higher rate than post-paid. While it was impossible to tell the call originator who is who. So, my reply to the joke would be: “never say never”.

IMHO RA is so hopelessly reactive, they find out about things after they happen and then react.

It would be a real shift for RA to work with Regulatory people to anticipate changes in inter-carrier charging in order to come up with effective models to maximize returns.

At some point of time I had noticed that I don’t find too many contributors to talkRA from North America. Even though the readership is there, yet we lack the contribution. American society has contributed greatly to the world economies and culture, with myriad inventions addressing every aspect of our lives and culture, not forgetting the infamous French fries or Spaghetti Bolognese (any attempt to mention this latter dish at a common Bologna restaurant would risk the guest being thrown out by the chef).

So, back to NA and RA.

The North American numbering plan, where all phone numbers, both mobile and fixed, use the same numbering system imposes a unique definition on how business is conducted.

The fact that CSPs in the Rest of the World (a fine American-invented phrase) use unique non-geo prefixes for mobile phones makes life rather different when one tries to compare the industry challenges with the North American numbering plan and the implications for revenue assurance.

In North America, the called party (MPP) has to pay for the call. The fact that in the US and Canada it is impossible to tell whether the called party is a landline or mobile imposes an MPP regime, the opposite to the CPP convention where the caller pays. In some cases the providers do offer a special ring tone when calling mobiles. In my eyes, this is a limited remedy.

As a consequence of MPP, the chargeable rate is determined by a myriad of tables and call jurisdictions. These charges are based on NPA-NXX tables and zones to determine whether the call has attributes (x,y) where x = {inter-LATA, intra-LATA} , y = {inter-State, intra-State}. On top there are “corridors” that override the above jurisdiction and also metro areas and more. For simplicity, I will not go into “1-800″, and related numbers.

Needless to say, this complexity also affects interconnect and other settlements between carriers that also must follow this uniquely North American approach.

In my view, if the RA sector outside of North America focuses on whether the OSS systems are correctly performing in view of recording, conveyance, charging, and provisioning, the North Americans instead focus greatly on “guiding” rules that are complex and where one wrong or out-of-date attribute in a table could cause a lot of harm. Let me illustrate how complex the situation can be. An average reference table system for a US telco would be comprised of say tens of tables: NPA-NXX and small NPA-NXX, CLLI codes tables and more. Vendors like CCMI and Valuecom make a living from providing such tables on a monthly subscription basis to various TEM vendors and telecom consultants.

The rates might look simple, however the guiding logic, which involves guiding to a customer and guiding to a service is rather complex. This is the driver of the business models of TEOCO and ATS, amongst others. As an anecdote, how things can be interesting, some rates involve distance calculation. There are at least 2 formulas for distance calculation. The “accurate” one is based on NPA-NXX V&H coordinates and calculates using the square root. The alternative formula by AT&T is based upon AT&T V&H figures and an iterative approximation. This alternative exists because, back in 1948, computers could not calculate square root along with correction logic.

The North American market is large enough to keep an admirable vendor like TEOCO doing well. After all, for a mid size company, there is so much business in the US, that sometimes it is not worth showing your cards just to play outside the US.

Since the domains of rating and billing verification, for retail, wholesale and interconnect fall within the pillars of the RA practice, it is little wonder that a generic solution would fit both the North American and RoW markets. If one would say that in the US you can get “all you can eat” price plans for a fixed amount so why worry about the issues above, my reply would be: (a) read the fine print and ask what does the “all” stand for, and; (b) interconnect is the major revenue stream and rating is still required anyhow.

To summarize my points, revenue assurance in North America has rather different aspects and challenges to RA in the RoW. TMF GB941 is generic enough not to be concerned with such differences. As for me, I’m curious. On the other hand, quite a few American vendors view CSPs in the RoW with a perspective more suitable to the North American market.

I recall an immortal comment by the American CEO of a large solution vendor. He said to me once at some telco conference: “..these Europeans are not all the same…” I replied “…well UK is not even part of the continent anyhow”.

I would appreciate your comments.

I recently found myself occupied with new endeavors (smart grid related topics etc). Seeking complete closure, I’m somewhat troubled why RA attracts only limited interest from the “typical” telco CXO.

TalkRA is discussing various RA techniques and standards; It had been read by a small and quality community of RA professionals. Yet it would be safe to assume its coverage is limited to a small number of RA practitioners.

I will try to offer a suggestion why…

The highest art of any trade is being able to answer the “what if not” challenge. I presume no one would dare to ask “what is the cost of not have a billing system?” or “what is the cost of not having a customer service department?”

Yet, I’m not so sure what would be the reply if we challenge the RA function and the related costs it involves. Sure, there are rather useful RA dashboards, and there is documentation about the right way of doing business by the TMF, Papa Rob and plenty of consulting firms. We’re also well familiar with fancy ROI figures which support the cost-benefit argument to implement an effective RA policy. However my challenge is being able to reply to a simple question: “what is the cost of not having an RA?”.

For sure one can craft a reply and mention SOX as a supporting argument. Others would mention proper financial controls. In some cases we can offer an uphill reasoning that we need RA to demonstrate that the telco is taking all the proper measures to shield itself from class action law suits when billing is not right.

To my ears, these are somewhat whining arguments. I’m looking for a clear and decisive answer, similar to one where no one dares to ask the cost of not having a billing system. At least in the case of billing, the reply lays within the question. Can somebody offer a similar answer for RA?

talkRA might consider offering an exciting prize for the best reply!

Recently I stumbled upon this story about Kenyans making a cheap mobile phone charger for their bicycles. What strikes me is the fact one would expect it is in the best interest of a telco to give such a device to consumers. The logic is self explanatory:

no power = no calls
no calls = no revenues
no revenues = no telco & no RA as well….!

No one could dispute that to have revenue assurance we must first have revenues.

The cost of the charger is $4.50. Yet no one gives it away for free to the consumers. Amazing.

By contrast, in Kenya the life insurance companies are providing free drugs to AIDS patients. Drugs which claim to extend life expectancy of their customer bases and so improves their financials… The math seems pretty simple: as long as the person is alive he/she is paying the monthly premiums or at least not claiming on their life assurance policy, which improves the financials. It looks like the telco CXOs and the RA never thought about a parallel analogy in their domain.

One comment though, a CFO of one telco in Africa mentioned once that they provide free AIDS drugs to extend the life expectancy of their customers. Seems as they didn’t think beyond that to also providing manual phone rechargers.

Of course there are hand operated phone rechargers, Nokia has one. There are also solar rechargers. I even recall one top-notch finger-revolving recharger, but none of these come close to $4.50 recharger to use with bicycles.

On a personal note I thought that telcos already altered their engineering DNA by adopting the same techniques as mass consumer companies or copying how retailers conduct business. Seems as, at least for some, there is still a way to go.

It seems Russian communications providers have broadened the definition of RA – to include blocking VoIP.

It is obvious Skype and IM erode prime revenues for any telco. The question that matters is whether they can find alternatives to compensate. It seems Putin and his buddies came up with a simpler solution: say Skype is a threat to national security (no one can argue with that) and, by the way, also a threat to the personal wealth of a few super-rich individuals.

I hadn’t conducted any further research whether this modus vivendi occurs between Skype and other countries or operators. It seems the old saying that “pornography is a matter of geography” also applies to RA.

I would like to share with you an article I stumbled upon that made me smile. Its title is “Life under the Chief Doublespeak Officer” and it was written in 1989 by William Lutz. In my view, it is as relevant as ever.

In this blog, I would like to challenge the definition of RA, following similar lines to the article above. I offer an idea why this function attracts only modest interest within a common telco.

No one would argue that the fundamental definition of Revenue Assurance is about assuring the telco makes money, this month. This necessitates that Marketing, Sales, and Operations have a joint and collective role in managing a customer experience that delivers the brand promise.

Yet, in how many telcos do RA managers have the freedom to evaluate the above functions, without first going through a career change opportunity?

Let’s see.

Marketing defines the brand promise

Marketing identifies the most profitable customers and what they value. Marketing documents and understands all aspects of the purchasing decision. It defines the attributes of product performance. It determines the brand promise and communicates it to the marketplace. In an ideal telco, Marketing and Operations work together to translate the customer experience into specific processes and actions through which the organization can deliver on the promise. If the brand cannot deliver on this promise, it is destined for failure.

• In how many telcos is RA an active contributor in these processes?
• In how many telcos does RA have any say in these topics?
• Would someone allow RA to review market research findings about brand strength?

Sales effectiveness

Without a skilled and productive sales organization, few firms can survive, especially these days. The sales function takes place in a constantly evolving environment. Sales organizations must adapt to continuous changes in their products, customers, competitors, and markets. Intense competition places great value on understanding and responding to current trends within and across industries.

• What RA department would call up residential customers and ask their view on the telco business?
• What RA department would pay a visit to a large corporate customer to learn about the issues that prompt them to take their business elsewhere?

Operations creates the right infrastructure and processes to deliver the brand promise

The brand promise is only as good as the internal processes that deliver it. Every process should be designed, monitored, and evaluated on its ability to deliver against brand promise. This includes defining and removing internal obstacles and then strengthening the organizational ‘enhancers’ (like communication systems and technology).

Successful organizational alignment means that Marketing and Operations have a joint and collective role in designing and managing a customer experience that delivers the brand promise.

• What RA department would call the call centre to experience the promises that Marketing states in its ads… without risking being right-sized by the COO immediately afterwards?
• What RA manager would propose metrics to evaluate operational effectiveness?

Conclusion

I guess I made my point. I would be intrigued to hear your comments.