1

Enabling flexible charging for 3G servicesIdentifying Market Trends

Convergent Rating&Billing

Impact Analysis

Andreas Krebs (O2 Germany) IIR Mobile Billing Systems 2004

Budapest, September 2004

2

Content

1. Key 1: Executive Summary

2. Key 2: Market Trend and Charging Architectures!

3. Key 3: Impacted Systems and Processes!

4. Key 4: Approach - Just an example!

5. Key 5: Resume and Lesson Learned!

Now we have an interesting discussion again about convergence and 3Gcharging. That I have seen already five to six years ago by addressing thesame weaknesses as of today. We have simply believed in the key suppliersand the normal trend of technology involving.

This presentation doesn’t invent the wheel/mobile phone - but gives youan excellent overview about it and shows your capabilities and optionsfor blending your future charging/billing architecture.

3

1Executive Summary

Mobile operators are suffering from the enormous

number of integrating new charging and provisioning

requirements.

Vendors indicating to mobile operators that their

solutions/platforms can fully address the operators

need of flexible charging.

Reality is that no one vendor solutions can address

the highly complex charging requirements of the

present day operator.

4

Key Message (1/2)

• Mobile operators are suffering from the enormous number of integrating new

charging and provisioning requirements/services.

• Vendors indicating to mobile operators that their solutions/platforms can fully

address the operators need of flexible charging.

• Unfortunately, statements like this are pretty much wishful thinking.

• Reality is that no one vendor solutions can address the highly complex

charging requirements of the present day operator.

• In the Charging and Billing market we see four different types of suppliers, each

representing a specific school of thought and industrial background, addressing

all these weaknesses.

• There approaches are largely complementary rather than competing.

5

Key Message (2/2)

• A careful blending of component solutions from the four approaches will provide

the most suitable path.

• Different types of operators will benefit from different combinations of solution

sets reflecting their approached to launching new data services.

• Integrating these components is the main challenge.

• Convergence, real-time processing and open systems interfaces are the key

focus areas.

• A careful blending of component solutions from the four approaches will provide

the most suitable path.

6

2Market Trends & Charging Models

Four different types of suppliers are well know in

competing on the rating, charging and billing arena.

All of those addressing today’s mobile operator

weaknesses!

To what certain extend the offered solutions are

different?

7

Different Type of Enablers are driving the future Charging Architecture Discussion - (Matrix)

Requirement Enabler

Structural Enablers

“New Products” (Promotions,Bundels, Packages

Marketing “Near Real-Time”-

Requirements

True Convergence/“Real Time”

Better Care & Self-Care

Need to NW-Core-

Replacements (end of life)

Need to SW-Core-

Replacements (end of life)

New Business Models

Need for Cost Savings

(OPEX/CAPEX)

CurrentTime to Market

Balance between Prepaid versus

Postpaid Customer Base

Current FiguresInnovation/Investment

Current Number of Customer

Base - Targeting Base

Current EBITDA

Supplier Satisfaction

Service/ProductDelivery

Satisfaction

Organisational Structure and

Maturity

Portal Strategy Balance between Data and Voice

Revenue

Covering Business Areas

Strategy on Customer Service

Figure: Matrix of the different drivers for adopting new charging models in a mobile operator - not to be completed [Source: o2 Germany]

8

Four different Types of Supplier in the Rating, Charging and Billing Arena - (Matrix)

Core Network and IN Equipment Manufactures

IT Suppliers including Mediation and

Billing solution vendors

Suppliers of IP network and platforms

Content Managementand Mobile Commerce

Providers

• Different industrial background (Years in operating

business, Software- or Hardware-Oriented, “Layered”

Solutions versus “Out-of-the-Box”-Solutions, different

License Models, Years in Business Critical

Environments, Standard Driver - PARLAY, SIMPAY,

JAIN, 3GP and many others)

• Different solutions or platform based solutions (all in

one approach to strategic partnerships)

• Different types of Core-Business (Routing-

Technology, Switching-Technology, Content-

Management, Billing-Technology)

• Different Market Shares (Partner Strategy, Alliances,

Spin-off’s, Owners)

• Different activity types within the Mobile Operator

(Core Network, Billing, Consulting, Integrator)Figure: Matrix of the four Suppliers in the Billing area[Source: o2 Germany]

9

Different Type of Enablers are driving the future Charging Architecture Discussion

• Creating a converged view of customers, services and usage

• Monitoring usage and interacting in real-time or near real-time with end users

• Support for diverse and rapidly changing pricing and business models

• Providing a standard way of separating operator charging from 3rd party charging for content and

applications

• Traditional cost-based charging versus value-based approach

• Extending the “statefull” IN model already used in circuit switched networks to the core network

using industry standards such as CAMEL Ph3, RADIUS, DIAMETER

• Pre/Post Paid Convergence

• various standards driven by different parties, alliances (SIMPAY, PARLAY, JAIN, 3GP, IPDR,

Teleforum, ....)

10

IT Vendors Charging Model Approach

11

IP Vendor Charging Architecture Approach

12

Network and IN Equipment Vendor Charging Architecture Approach

13

Content and m-commerce Vendor Charging Architecture Approach

14

3Impacted Systems and Processes

Well we have learned a lot about the different

approaches and the the differing thinking of the

vendors underneath.

But Billing and Charging is only a small piece in a

bigger picture!

How do we get that integrated and to what certain

extend we have to consider other areas and what

are the key challenges?

15

The Restructuring/Introduction of new Charging Models is considering many different places

Pre Postpaid Convergence can mean many different things from a single integration of the CRM solution with the prepaid platform to a full management of a single rating engine with unified tariffs and pricing models for the Prepaid and the Postpaid Customer Segment..

My hypothesis:

No one in word will be implementing this in the full approach.

Cost and marketing thoughts are going to drive the game furthermore?

Discussion!

Figure: Different flavours of Convergence[Source: Schlumberger/Sema Group - White Paper on Convergence 2003]

1

2

Single Customer Careand Self Care

3Unified Services andTariffs

Single Marketing View

4Integrated BalanceManagement

5

6

Integrated Paymentsand Recharge

Common Platform andTechnology

16

Charging, Rating and Billing - How they interrelate?

PrepaidPrepaid PostPaidPostPaid

Offline ChargingOffline ChargingOnline ChargingOnline Charging

Near Real-timeCharging/Billing

Near Real-timeCharging/Billing

Offline ChargingCharging process where charginginformation does not affect in realtime, the service rendered.

Online ChargingCharging process where charginginformation can affect in real-time,

theservice rendered and thereforedirectly interacts with the session/service control.

Near Real-Time Charging/BillingCharging process where charging information does not affect in real-time, theservice rendered but charging information is passed to rating & billing shortlyafter ‚use of service‘. Requires ‚online charging‘ capability combinedwith ‚hot billing‘.

Payment Management -

Key Consideration• Multiple Payment Sources

• Security and Audit

• Authentication and financial institution interfaces

• Revenue Assurance

• Multiple Payment Mechanisms

• Company Accounting Mechanism

• Payment / spending rules based on Product type and customer’s ability to pay / preferences

• Funds reservation and use for specific transactions (e-wallet)

• Payment Receipts

• Customer Trust

• Roaming-Partner-Agreements

• Service-Provider-/ Partner-Agreements ...........

• Customer can change between PostPaid/Prepaid in Realtime

[Source: o2 Germany]

17

Network

IN PlatformEvent

Collection / Mediation

Rating and Billing

Customers are classified by payment type and provisioned accordingly

Subscriber and tariff information managed in multiple places

Flexible payments instruments by service type unachievable

Real-time view of Account Balance across services not available

Real-time credit risk management restricted to prepaid customers

Simple tariff models only (usage-based with simple measures) and often long lead times to introduce new products and services

Restrictive event and data services Pricing of simultaneous service usage by customers

and real-time cross-product discounting not possible Restricted opportunity for cross-sell and up-sell to

drive-up ARPU

Key Constraints

Legacy Billing Systems Restrict the Ability to Support Emerging Charging and Revenue ModelsCommon Legacy Pre-paid and Post-

paid Rating and Billing Architecture

Legacy Pre-paySystem (Service Node)

Customer & Tariff

Database

Event Collection / Mediation

Legacy Billing System

Customer & Tariff

Database

CDR feed (for statementing)

TransactionDatabase

Figure: Key Components in the legacy world [Source: o2 Germany and Internet research]

18

Challenges - Interface for Rating/Charging

Call controlIN

Rating & balance (real-time)

Billing (batch)

Content

control

IN

Rating & balance

Billing (batch)

Call controlContent

control

IN

Rating & balance

Billing (batch)

Call controlContent

control

Mediation

Billing-based real-time billing IN-hosted real-time billingIN-based real-time billing

Figure: Different approaches for adopting new charging models in a mobile operator - not to be completed/as of today [Source: o2 Germany]

19

4Approach - Just an example

Ups, there are many things confusing us. A lot of

interaction appears and needs a carefully ordering and

evaluation.

That is life, you have many options, you can only choose

one, you have to blend the mixture!

Is there a general answer giving the way forward?

20

Prescription - the 10 golden steps

• STEP 1: Look at your current situation and use slide 7!

• STEP 2: Look at the tools/systems/vendors you have. Please use slide 8!

• STEP 3: Look at the portions of applications of the “new” architectures you have

already in place! (slide 10/11/12 and 13)

• STEP 4: Look at slide 15 and the level you going to modify or change!

• STEP 5: Consider the mixture from all of that!

• STEP 6: Investigate on the Type of Convergence! (slide 16)

• STEP 7: Please have a closer look again at the right hand side of slide 16!

• STEP 8: Address slide 17 to your management (Marketing, IS, Network, Procurement,

Member of Board)!

• STEP 9: Discuss slide 18 in your organisation and please starting your own thinking

and conclusion!

• STEP 10: From up to here it is your party!

21

............

The various charging architectures that are emerging, their strengths and weaknesses, and that one vendor solutions is fulfilling the prophecy is unrealistic.

The importance of jointly conducting more detailed studies into these emerging architectural models as input to major decision making on critical topics such as Pre-Post Convergence, selection and placement of rating engines, product catalog etc.

22

5Resume and Lesson learned!

This isn’t just a billing or IT project at all, it requires a lot

involvement of other parties.

We will see new alliances between the supplier form

different areas!

I can’t really see an industrial driven common approach for

the Mobile Operator.

You have to work hard - it’s like a re-launch of you whole

entire business!

23

Questions - louder please!

Thanks to the IIR and for all the lovely people I have met here inBudapest in the last couple of days!

Have an nice way home and take care!

24

Sources

This slide set doesn’t reinvent the wheel. A lot of public material was be used.

Thanks to my colleges in the Architecture Department at o2 Germany and mmo2!

“Emerging Charging Architectures for New Mobile Services” report from Analysys Research

“Billing for Content” report from Ovum

“White Paper on Convergence” Schlumberger/Sema Group

Presentations made by Logan-Orviss et al. at the Pre-Post Convergence meeting hosted by O2

Ireland in Dec 2003

Other Intellact sources e.g. Yankee, Informa, Total Telecom

o2 Internet Research

Results of vital Discussion with many colleges from various departments within o2 Germany

and mmo2 Group

25

IIR - Mobile Billing Systems 2004

Andreas Krebs, O2 GermanyIS ArchitectIS PP ArchitectureSeptember 2004

andreas.krebs@o2.com

land line: +49 89 2442 1308

mobile line: +49 179 49 63 643