3G Billing - What's all the fuss? By Neil Philpott, Directory Solutions Strategy Amdocs

In the face of declining voice service margins, Communications Service Providers are investing heavily in deploying and marketing "3G" networks that are capable of supporting an ever-increasing variety of data services from streaming video, to gaming, to proprietary business applications, to mobile commerce transactions for tangible goods and services. However, as 3G finally makes it into the mainstream, its success is inextricably linked to how the CSPs charge and bill for services in ways that are both intuitive and acceptable to the end user while also being relevant to the CSP's costs and billing capabilities.

A range of possible solutions exists, with a range of implications for the Business Support Systems, Internal Business Processes, Content Providers, and End Customers. Each solution has inherent costs and time to market factors. They are also, as yet, un-proven in the market place. This article examines several of these approaches and how CSPs are adapting their systems and processes to handle them.

Looking back
In a circuit switched network, it was reasonable to justify the price of 'long distance' on the basis that calls that travel a long way cost Service Providers more to carry than calls that go across the street. We were all conditioned to agree that calls placed during peak hours (i.e. normal business hours) were of more value and therefore priced higher than calls made on weekends, evenings or cheapest of all, in the middle of the night.

By the Drink
Initially many providers have deployed the most direct - and easiest - method to charge for data services: by the byte. In a sense this was the natural approach for an industry steeped in decades of experience with pricing based on how much network capacity the service uses. When data services came along mediation systems were adapted to capture the 'size' of the content that was downloaded, sent, or consumed and the transaction was based on a published price per byte, KB or MB. Small 'buckets' of data were frequently included with each pricing bundle to incent customers to try the amazing new services available on the device that was previously just a wireless phone. This approach is direct, presumably profitable, and consistent with the CSPs legacy operating model. However, there are a couple of issues that make this approach problematic:

1. Network elements need to be finely tuned and closely monitored to ensure that a given content product, or even category of products, always generates the same "size" of network usage. That is to say, a photo of the latest pop idol that downloads today at 250 KB can't download tomorrow at 850 KB. Customers tend to compare purchases and pricing. Consistency across content that is perceived to be of identical size to customers is critical.
2. The vast majority of the population has no personal frame of reference for how big a MB is. Tell them that the $8.35 charge on their bill is the result of 1.67 MB data consumption and they are likely to not purchase many data products in the future because they don't understand what they are buying and how much they will be charged. Allow them to rack up hundreds of dollars in charges during their first month of blissfully ignorant usage and you will lose the customer.

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