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Stuart Feargrieve, managing director at Axway UK, talks about lost billing revenue.
It is common knowledge that a significant percentage of revenue generating calls on operator networks are not fully billed. And we aren’t talking small change; the average revenue leakage within the telco industry is estimated to be between 3% and 14%, which equates to tens of millions of pounds that remain unaccounted for.
Addressing this issue is a top priority, regardless of the tough economic climate. Obviously this is an ongoing challenge for the telecoms industry, but this article should help provide guidance for operators who want to stem the tide.
Firstly, by explaining what causes telco revenue leakage, secondly by outlining what telcos can do to address these revenue assurance challenges, and lastly by tying it together ongoing compliance with industry regulations.
Telco revenue leakage?
It is important to remember that telco leakage affects any operator that offers telephony and data network services. It occurs because not all of the sales are being invoiced.
The problem has arisen because the technology required for billing customers has not been able to keep up with the huge amount of changes that have occurred within the telco industry, from the upgrades in technology to analogue, to 2G and 3G, to the almost daily integration of new customer packages. The time to market for services is so fast, that the back end billing cannot keep up. Often this restriction is down to the limited design of the original system.
With this in mind, revenue leakage can normally be blamed on poor processes and poor systems integration. A sales division can sign customers quickly and add services at a click of a button, but it can take 60 days for a department to add a service to a bill.
These disconnections with billings have a knock-on effect to the customer services department as well, as confused customers call to query their bill.
Revenue assurance challenge
Currently a lot of telcos address the issue of revenue leakage by either issuing additional bills, pursuing uncollected payments through debt collection agencies or by renegotiating cost refunds with suppliers. These activities incur substantial and often unnecessary operational costs.
A few top operators have found a root cause fix to significantly reduce these costs and drive competitive advantage with the easy deployment of 'off the shelf machine to machine' software, that requires very little operational effort.
Prevention is better than cure. In order for telcos to protect themselves proactively against revenue loss, they need to have real time visibility into existing billing systems. Existing systems don’t notify the telco when records are lost so they are constantly chasing their tails and wasting significant resources in correlating services versus bills.
Of course, visibility is only the starting point; the diagnosis tool that will help identify the seriousness of the illness and the likely symptoms.
It’s not the telco’s shareholders that are affected by revenue leakage. Telcos are legally obliged to provide regulators with proof of what they are charging and to whom.
Without visibility into all of their systems, they can’t fulfil their obligations. With that in mind, controls must be put in place to ensure that all of their data is accurate and up to date.
Looking forward
There are managed file transfer technologies that can help telcos to consolidate their systems, no matter what their size. For example, Axway worked with BT to implement a scalable file transfer solution across its different hardware platforms, applications, multiple networks and exchange protocols. Its IT systems exchange huge daily volumes of critical business information with customers, suppliers and business partners.
The scale of the task was not for the fainthearted. It covered 630 implementations and 60 different projects, but BT now boasts greater functionality, enhanced security and increased reliability at a lower cost, not to mention the ability to transfer sensitive data according to strict deadlines, avoiding financial penalties.
With many telcos finding that their real revenues are in decline as competition grows, the subject of revenue assurance has moved from a technical billing issue, to a CEO business issue.
It shouldn’t be acceptable that telcos are doomed to persistently lose so much of their revenue, because the technology behind their systems is outdated. They simply need to take the bull by the horns and address the problem; the return on investment is certainly easy to see.
Axway enables enterprises to adapt and respond to rapidly changing market conditions, including burgeoning regulatory compliance, globalisation, industry standards and protocols and service level agreements.