The Who, What, and Why of Convergent Billing

By Lisa Phifer
Core Competence, Inc.

Carriers know that billing is where the rubber meets the road.  Service turn-up and delivery mean nothing if customer payment cannot take place.  Billing sounds so simple: send an invoice, collect payment.  In reality, considerable network infrastructure and systems integration is required to deploy an effective billing operations support system.

Take a quick look at billing systems today, and one word keeps popping up: convergence.  What is convergent billing?  Why do competitive local exchange carriers (CLECs) need it?  And who can CLECs turn to for convergent billing solutions?

What Is Convergent Billing and Why Should CLECs Care?

At its core, convergent billing is the integration of all service charges onto a single customer invoice.  Convergent billing means creating a unified view of the customer ― and all services provided to that customer ― for single-point customer care.

CLECs understand the value proposition behind convergent services: becoming a one-stop shop for multiple services, delivering voice, data, video, and Internet access over wireline, wireless, DSL, cable, and dial-up.  But why convergent billing?

Studies like one by Price Waterhouse conducted in 1997 indicate that customers want to purchase many communications services from single provider.  And, when doing so, customers want all services invoiced on a single consolidated bill.  Receiving a single bill simplifies processing and payment for the customer.  And a unified bill enables cross-service discounts, so that customers who order multiple services can receive preferential pricing.

Even those customers who are ambivalent about a unified bill most certainly appreciate single-point customer care ― difficult, if not impossible, without convergent billing.  Customers want to call a single number to resolve billing problems.  They don't want to call different numbers for local and long distance service, much less for data or video services purchased from the same provider.  They expect customer service representatives to have access to their entire account record, not just that portion of their account associated with a single service. 

Who among us hasn't experienced the frustration of being shunted from one department to another and back again when trying to resolve a problem, ask a question, or add, modify, or delete a telecommunications service?  Multi-service providers who successfully create a unified view of each customer gain a competitive edge that helps them hold onto existing customers and attract new ones.

What's Good For The Goose Is Good For The Gander

Multi-service CLECs also stand to benefit internally from convergent billing through improved operational efficiency, flexibility, and economy of scale.

Convergent billing enables multi-service packaging and pricing, whereby existing customers are enticed to add new services and new customers are attracted by innovative service bundles.  In a highly competitive market, providers must seek new service differentiators to stand out from the crowd.  Convergent billing helps a CLEC leverage its position as a next generation service provider by allowing distinctly different services to be priced and invoiced together, with new combinations created quickly to reflect market changes.  Unified customer account records allow a CLEC to easily view the big picture, spotting cross-service relationships and buying patterns that spell out new opportunities.

Traditional billing systems are tied to individual technologies.  Call detail records (CDRs) are generated by wireline voice switches.  IP flow records are generated by Cisco routers.  PVC traffic history is gathered from ATM and Frame Relay devices.  RADIUS accounting records monitor switched dial-up or ISDN Internet access. 

Traditional "stovepipe" billing systems gather one type of data, aggregate it, apply rates appropriate for the type of service, and generate single-service invoices that may include both one-time fees and recurring flat-rate, usage sensitive, distance-based, time-sensitive, and class-of-service charges.  Billing systems are also responsible for applying promotions, discounts, tax calculations, credits and adjustments, handling collections, account suspension/reactivation due to non-payment, and reporting.  And billing systems are closely tied to customer care systems that enable customer acquisition, service order entry, and contact management.

Investing in a new "stovepipe" billing system for each type of service is an expensive and obviously suboptimal proposition.  But note how many "back office" billing system responsibilities are common across service types.  The extent to which a CLEC can reuse the same billing system components reduces systems cost, leverages prior investment, and simplifies end-to-end processing.  Common systems increase operational efficiency and produce unified customer views -- for example, by creating a common multi-services repository of billing data that can be leveraged by single-point customer care systems.  And once a convergent billing system is in place, it may help the CLEC deploy new services more rapidly.

Where Can I Look For Convergent Billing Solutions?

At the lowest level, convergent billing involves gathering data in various formats, originating from diverse systems, and mediating it into a common format.  One industry effort that may facilitate this is the standard IP detail record (IPDR) format being defined by IPDR.org. 

The IPDR is intended to be an extensible format that captures meaningful usage information and cost components for any IP-based service.  A common IPDR would reduce the need for mediation ― at least within the IP world ― by pushing consistent representation down to the device level.  A common format for raw data is a step in the right direction, but it is only one piece of a complex puzzle.

It may seem natural for a single-service CLEC to start with a single-service billing system.  As the CLEC branches out into new services, it may be forced to adopt new "stovepipe" billing systems.  By the time the CLEC becomes interested in convergent billing, there's already a legacy to contend with.  And that legacy may influence who the CLEC looks to for convergent billing solutions.

Entry-level turnkey IP billing packages like Boardtown Platypus or Rodopi Billing Software are narrowly-focused on meeting the needs of ISPs who deliver IP services, not data CLECs.  Carrier-grade IP billing systems are more robust and flexible, and may offer convergent billing for IP over anything (wireless, cable, DSL, dial-up). 

A few examples include:

For example, Portal markets Infranet to data CLECs and wireless and cable IP service providers.  Solect sells IAF Horizon to broadband CLECs, mobile IP providers, and ISP/ASP markets.  But carrier-class IP billing systems are just that: IP-centric.  In the near term, they are less likely to meet the unique requirements associated with billing for voice ― unless you're talking Voice over IP.  Convergence with the telecommunications world may come through partnership with a traditional telco OSS supplier ― for example, Amdocs and Solect.

On the other side of the fence, wireline billing systems offer integration with legacy telco operations systems and understand billing elements like CDRs, settlements, and tariffs.  A few systems that have traditionally focused on this market include:

Increasingly, these systems are being adapted for multi-services convergent billing.  For example, Kenan describes three strategies for achieving convergence.  "Electronic stapling" combines charges already calculated by two or more "stovepipe" billing systems onto one bill.  "Consolidated billing" takes pre-rated data from legacy billing systems, then recalculates charges by applying package pricing and discounts to produce a single bill.  Finally, "integrated billing" takes raw usage data and performs all billing system functions in an aggregated fashion.  Kenan Arbor/BP supports all three forms of aggregation, but only the latter enables both cross-product pricing and single-point customer care.

The Current Situation

For now, convergent billing is best described as a good idea that can be realized in part, but perhaps not yet in full.  CLECs may be wise to avoid "stovepipe" billing systems and seek out solutions that offer some level of convergence for core services. 

Look for back-office components that enable consolidated billing and single-point customer care for multiple service types, with interfaces that allow data aggregation and rate input from disparate sources.  Even if today's convergent billing systems do not handle every forseeable next generation service, they represent a step in that direction.  And ask your vendor about their game plan for convergent billing ― if nothing else, the answer will tell you how far you're likely to get with their existing system.

Lisa is vice president of Core Competence, a network consulting firm located in Chester Springs, PA.  She has been involved in OSS design and development for local and inter-exchange carriers for nearly a decade.