Mr. Ran Mitra

Vice President

Intelligent Networks Division

 New Ways to Generate Profit in a Real-Time Billing Environment

2

Context of this presentation

Comverse is recognized by analysts as one of the major providers of prepaid service worldwide

Systems are deployed in all network types, with all major switch types, and using all major IN standards

Rapid evolution to a real-time billing platform, offering real-time billing for all services to all subscribers

A pioneer in the delivery of converged billing solutions around the world

3

Goals of this presentation

To assess the current state of billing for services

Today’s bipolar approach

The trend towards convergence

To identify new ways to generate profit through the use of real-time billing of all services to all subscribers

Reduced costs

Increased revenues

Uniquely real-time benefits

To address specific cost and risk issues in today’s converging market

Impact of roaming

Impact of data services

4

A Bipolar Billing Market

Traditional post-paid systems Offer sophisticated billing options

Maintain close relationship with end-users

Require much effort and time to make changes

Traditional prepaid systems Offer real-time usage and credit control

Require little effort and time to make changes

Details of end-users are often missing

5

The Trend Towards Convergence

Goals of Convergence Combining the best of prepaid and post-paid

Unified billing systems and processes

Consistent Customer Care

Reduce cost of CC, provisioning, etc..

Consistent marketing programs

Ways to achieve Convergence Limited integration, especially Customer Care

Speed up the billing process for some services/ subscribers to approximate real time

Change the overall billing paradigm – a real time billing system

6

Comverse’ View of Convergence

Real-time Billing of All Services to All Subscribers Authorize all service requests in real-time Rate and charge for services in real-time Monitor usage and enforce a credit limit in real-time Collect and distribute account usage information in real-time

Off-line Billing Support for All Subscribers Unified and consistent Customer Care Comprehensive Customer Relationship Management Traditional billing cycle and payment collection Reconciliation of charges between operators and content

providers

Working together….

7

Changing Billing Paradigms

Prepaid PostpaidReal-Time

Non Real-Time

8

Improving Profit – Cost Savings

Losses due to bad debt Every subscriber is a credit risk Losses are exacerbated by roaming and data services Consider the banking and credit card industries

Losses due to revenue leakage Not every service that is delivered is billed to the subscriber “More revenue is lost each year as a result of revenue leakage

than is spent annually on billing system.”

Costs due to duplicate systems and processes Two systems and processes Two marketing programs Two plans for introducing new services

Address the following….

9

Time

Ser

vice

Val

ue a

nd C

ompl

exity

Basic Voice Services

Value-Added Voice

M-Commerce

Greater Risk:•Credit Loss•Leakage

Value-AddedData Services

Increased Risk over Time

10

For emerging data services and the associated higher ARPU:

Managing Credit Risk

• Debit card: individual can spend only the balance in their bank account

• Credit card: can spend up to a predefined limit

• Both cards can be used to purchase all goods & services

Consider an analogy:

Prepaid account = debit cardPost-paid account = credit cardReal-time authorization and credit limits must apply to both

types of account

11

Switch

BillingSystem

Incomplete customer records

Records too late

FraudDebt write-off

Bill generation & collectionDelayed payment

BillCollection

Corrupted CDRS

Failure to create records

Records lost

Sent to error file

Reducing the Extent of Leakage

Real Potential Savings:• Reducing leakage (2%)• Reducing bad debt (2%)• Automated billing (1%)

Real-timeBilling

12

Improving Profit – Increased Revenue

Increased billing flexibility Introducing new services without excessive time and cost Changing service packages dynamically New ways of charging for emerging services

Increased billing openness Real-time access to account information The potential for dynamic marketing programs

Increased personalization Accurate account information allows greater self-care Selecting a tariff plan from several alternatives Customizing behavior based on personal information

13

Examples of Dynamic Marketing

Reacting to a ring-tone purchase Send SMS to congratulate the buyer

Send an MMS that trailers a music video

Offer 25% discount, valid until midnight

Capitalize on impulse buying

Informing of a potential bonus Offer free local calls when threshold is reached

Inform the user, in real-time, that threshold is 10 minutes away

Stimulate additional calling

14

The Power of Promotions

Introduce a new product Free initial use of the service

Free use of service in return for reaching calling threshold

Free local calls, SMS or ring-tone when first using service

Stimulate additional usage Establish a series of thresholds and bonuses

Bonus based on combination of thresholds

Thresholds that are time-dependent

15

Award credit and notify based on payment, usage, or periodic fee

Allowance of free calls for a monthly fee

$20 fee

120 anytime minutes, 2400 weekend minutes

MegaBytes

$50

Anytime Data Anytime Calls Weekend Calls SMSCore Balance

$100

Currency

5

10

Minutes Minutes Messages

60

120

1200

2400

10

20

Allowance of MO-SMS when account is recharged

$50 recharge applied

10 short messages

Allowance of mobile data as a usage bonus

After 60 minutes of international calls, 2 free MB of data

An Example of Promotions

16

Real-time Billing is a Challenge

‘Real-time’ must be part of the fabric of the system

Cannot be “bolted on” to a batch system

Affects all aspects of the system

‘Real-time’ is technically challenging

Requires a database ‘write’ for every transactions

Processing millions of service requests every hour

Response time must be in fractions of a second

Hot billing or near real-time is a poor substitute

Limits opportunities for dynamic marketing

Account information may not be up-to-date

Cannot inform of bonuses during service delivery

Credit risks and revenue leakage remain

17

Conclusions

There are two ways to improve profitability Reduce costs

Increase revenues

Real-time billing offers both Reduce bad debt and revenue leakage

Offer new services rapidly

Stimulate additional usage

Hot billing or near real-time is a poor substitute “Get it now” vs. “Get it soon”

Thank You