Billing models in a digital age: How operators can adapt to keep pace with demand
Digitalisation has had a huge impact on how we use our phones, with consumers now expecting to access data-rich services such as social platforms, videos and emails, on the go via their smartphone or tablet. This in turn has impacted billing and charging models, resulting in customers buying an increasing number of flat rate and all-you-can eat packages, made up of app-specific service bundles.
On the surface, this should make things simpler for operators to:
- Reduce the number of complex tariff structures they need to maintain
- Communicate with subscribers and drive subscription take-up rates
- Attract new segments of the market based on which app is included in the bundle
However, the situation on the ground is somewhat different. With intensifying competition and smartphone penetration reaching near saturation in many markets, the challenge of acquiring and retaining new customers is more important than ever. As a result, operators have been forced to engage in a race to the bottom, based on price, to increase volumes and continue to generate a margin. The MTN Group for example, reported a 45 percent reduction of its data tariffs in Africa in its 2015 Annual Report, yet during the same time period, it saw an increase in traffic of 108.5 percent and revenue grew by 32.6 percent.
There is clearly a limit to this model and the rise of unlimited data packages is undoubtedly leading to the devaluation of data as a currency; with SMS and voice revenues also rapidly declining, increased demand on the network, requires higher capital expenditure, and this is often challenging for operators confronted with stagnating revenues and decreasing margins. As a result, operators have come under pressure to find new revenue streams and quite often these new initiatives are being hampered by existing systems that are not able to support these new billing and charging models, and these often involve too high costs and a slow pace of change, hindering operators’ ability to launch new services.
To maintain a competitive edge, not only do operators need to look for systems that can support these new charging models but operators also need to develop partnerships which enable them to offer an enhanced range of services to their customers. Instead of focusing on merely pushing “simple” offerings that can be easily replicated, they will need to define an offering made up of telco and non-telco services, which have a clear appeal to specific segments of the market. Through this approach, operators will be able to provide their customers with all the services they require in one location, and offer a diverse range of offerings tailored to suit each individual’s needs. By offering a wide variety of services and personalised packages, customer retention and ARPU will be increased and this will also provide operators with the opportunity to upsell packages to customers.
To support this new approach to delivering new services through partners, a robust partnering solution, from on-boarding of partners to settlement and customer service, is required and must be underpinned by billing and charging systems that can support this new way of doing business and attracting customers.
As the data currency devaluation continues and the subscription type model becomes the norm, operators will need to ensure that their billing and charging system can keep pace. For example, operators should be able to enhance the customer experience by implementing new rules into charging to enable unused minutes to be rolled over, to ensure that customers don’t feel they’re paying for something they don’t use. Operators should also make bandwidth management a priority, to reduce customer dissatisfaction due to perceived low quality of service when they are being downgraded as a result of fair usage policies being enforced.
Finally, when working with non-telco third parties, operators must look at introducing multi-tenancy capabilities to efficiently share information and on-board and settle with those partners with ease, in order to remain competitive in our digital age.
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