Realtime convergent charging is key to driving service revenues

Cynthia Leung, Senior Analyst

Service providers and telecoms vendors today vary in their strategies and construction approaches to next-generation networks.

It is important that they focus not just on the service and technology aspects, but also address the subscriber and business concerns. In a service-driven business model, operators have to manage, deploy and withdraw services in a very cost-effective manner. Therefore, the parameters of the services have to be changed very quickly in order to meet time-to-market requirements. From a subscriber point of view, multiple and complex pricing structures (fixed, subscription, location-based, prepaid, postpaid and pay-now) can be confusing and become an impediment to service adoption.

A realtime convergent charging solution provides new business drivers for services and significantly enhances flexibility in pricing plans. The charging solution, instead of a being a burden that slows down the business, can become an active component of the changes, with the fast launch of new pricing strategies. For example, the transition to paid-for content from an 'all-you-can-eat' model will deliver higher profits from content and drive increased demand.

Prepaid-postpaid convergence

In a traditional network, fixed, GSM or CDMA, the charging and billing systems are tightly coupled with the services, with specific charging rules and bill formats. Consequently, the billing for each type of service is independent of others, making it hard to realise information sharing and limiting flexibility.

In existing networks, prepaid services are commonly developed in intelligent network (IN) systems. For postpaid subscribers, a charging data record (CDR) is generated when the service usage is complete and then passed to a separate postpaid offline billing system for batch processing. There is always a time delay between the CDR being mediated, rated and debited from the account balance, and the latency is even higher for roaming callers.

For most operators, the first migration towards convergent charging is merging prepaid and postpaid. Based on a modular design, all the charging and accounting functions are separated from the network and service control in the IN structure. The relevant subscriber account information, originally distributed in different service systems, can now be managed in a centralised manner. It also enables the offering of mixed user accounts composed of postpaid sub-accounts and prepaid sub-balances.

Realtime rating and charging

Another fundamental requirement of convergent charging is efficient measures to control services in realtime. Before service delivery to the end user, the realtime system first authenticates the subscriber and checks the account balance. During service consumption the platform interactively monitors the status. When the account balance threshold set by the operator is reached, proper actions will be taken, such as a warning in advance or terminating the service connectivity to prevent further service consumption. With this mechanism, operators can greatly reduce revenue leakage due to last-call exposure and extra-long malicious service usage.

Market opportunity

Convergent charging is particularly attractive to greenfield operators in developing countries and emerging markets, such as South East Asia, the Middle East and Africa, as they are unhampered by the constraints of legacy infrastructure compared to tier 1 operators in mature markets.

For telecoms operators whose prepaid users account for a major percentage of the whole subscriber base, realtime convergent charging is becoming the development trend. As all services and packages become available to prepaid users, the potential of the prepaid sector can be exploited fully. Another attractive aspect for greenfield operators is to offer mobile prepaid customers a pay-per-use model. There is no monthly subscription fee and it is much easier to switch between operators.

There is no lack of vendor offerings in this space. Traditional IT offline billing vendors like Amdocs, Convergys and Intec are moving quickly towards realtime charging. Even major network equipment vendors are actively pursuing this market, either by partnering (Alcatel-Lucent), developing their own products (Huawei and ZTE) or acquisition (LHS by Ericsson). Other vendors include Oracle (after acquiring Portal), Comverse, LogicaCMG, Telcordia, Kabira and Redknee, as well as mediation vendors like Openet, eServGlobal and HP IUM.

Further integration and evolution

In the migration path to next-generation charging, 3GPPR6 has defined an online charging system (OCS) in the IMS architecture. Interacting with the service control layer through Diameter Credit Control protocol, OCS supports multiple charging modes (for example, content charging, traffic charging or volume charging) for voice, data and value-added services. It provides prepaid rating and realtime control of services for different account types and management requirements, spanning across PSTN, PHS, 3G, IMS, WLAN and broadband IP-based networks.

Going forward, operators still need to integrate the converged rating and charging with backend OSS/BSS, and converged customer care and self-provisioning systems. The traditional BSS will evolve towards NGOSS service management and business intelligence, including marketing CRM and QoS, as well as content management. With the integration service delivery platform, a realtime convergent charging platform will further enable service providers to exploit new revenue sources from Telco Web 2.0, thus realising the full network and business transformation.

Cynthia is a senior analyst working from Ovum's office in Hong Kong, focusing on the service infrastructure markets in the Asia-Pacific region.