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Copyright 1998 Core Competence, Inc.
Charging and Paying for Next Charging and Paying for Next Generation ServicesGeneration Services
An Overview of BillingDavid M. Piscitello
Core Competence, Inc.
Copyright 1998 Core Competence, Inc.
The MarketThe Market
Copyright 1998 Core Competence, Inc.
Internet Services MarketInternet Services Market
permission to reproduce courtesy of eStats
It’s growing, but is it profitable?
Copyright 1998 Core Competence, Inc.
The New Telephony World?The New Telephony World?
Competition for POTS– Voice over Networks
(VON)– Voice over IP
(ITU-T H.323)– Immature, but – not to be ignored
Who will use it?
Where?
When?
Reasons for Considering VOIP2%11%
49%11%
27%
Adopt integrated data & voice applications
Reduce Toll charges
Reduce cable plant costs
Reduce staff
Other0 20 40 60
This year
1-2 years
2+ years
N/A
Timetable for VOIP
VOIP to remoteoffice
VOIP to Desktop
VOIP replacesTDM intra PBXlinesVOIP replacesPSTN/WATS
Copyright 1998 Core Competence, Inc.
Evolving Access MarketsEvolving Access Markets
• T1 bandwidth no longer sufficient for enterprise
• Residential broadband access will dramatically change consumer and small business utilization
Source: Yankee Group
Copyright 1998 Core Competence, Inc.
Not if SP’s want to Not if SP’s want to stay in business...stay in business...
Fixed fee pricing is common today, but for how long?
• Flat rate fee increases (MSN)
• New rate plans & incentives (AT&T)• Tiered services plans
(AT&T, AOL)• Companion plans
(MCI)
Cross-elasticity issues!
Service Providers must reflect the cost of operations in
billing and rating…
Copyright 1998 Core Competence, Inc.
Promising markets beget competitionPromising markets beget competition
SPs face broad competition in many forms– other SP’s (like you)– multiservices SP’s– your customers
What should you do when someone tries to steal your lunch? protect it look to eat someone else’s
Copyright 1998 Core Competence, Inc.
SPs will offer differentiated services:SPs will offer differentiated services:(protect your lunch)(protect your lunch)
Differentiate services on existing infrastructure to– provide significant new revenue streams– retain customers (satisfied customers don’t switch)
Examples:– IP VPNs– Dial IP VPNs– Guaranteed bandwidth– Intranet and Extranet hosting– Management and security outsourcing
Copyright 1998 Core Competence, Inc.
SP’s will Expand and Diversify:SP’s will Expand and Diversify:(steal someone else’s lunch)(steal someone else’s lunch)
SP’s need new revenue opportunities, so they will enter new markets
Strategies:– leverage existing infrastructure to provide new services
• ISP offers Voice over IP• Frame Relay, ATM provider offers VON• LEC offers DSL
– expand infrastructure and (in parallel) service portfolio• introduce ATM into backbone and edge• offer ATM VC’s, transparent LAN services
Copyright 1998 Core Competence, Inc.
The Cost of DifferentiationThe Cost of Differentiation
A willingness-to-pay for differentiated services exists– Level 2 CIR, VANs, VPNs– Voice Feature Groups (Follow Me Roaming, MCI One)
SP’s must be able to account for service provided to – customers, regulators, policy makers– SP partners (e.g., settlements)
But… SP’s require tools to– deliver differentiated services and– demonstrate that a service is indeed
“differentiated”
Copyright 1998 Core Competence, Inc.
Role of Billing in SP NetworksRole of Billing in SP Networks
Copyright 1998 Core Competence, Inc.
Billing Is A Differentiated ServiceBilling Is A Differentiated Service
Billing is a service – service based on knowledge of network utilization– apply this knowledge to identify price-quantity
relationships that satisfy broadest range of user needs
Accounting information (usage detail) is required to– prove the service provided meets or exceeds SLA– demonstrate value (premium surcharge is justified)– compute usage-sensitive bills– innovate ...
Copyright 1998 Core Competence, Inc.
Why Usage Detail is ImportantWhy Usage Detail is Important
Telecommuter
Mobile User
Internet Network
Remote/Branch Offices
Usage Detail reveals:Who is using the network?
How much bandwidth is being used?
What the network being used for?
The cost associated with this usage?
Copyright 1998 Core Competence, Inc.
How SP’s will apply Usage DetailHow SP’s will apply Usage Detail
Balance traffic patterns by providing incentives for off-peak traffic
Pin-point revenue opportunities
Identify and control network costs
Differentiate service
Charge based on consumption rather than assumptions
Copyright 1998 Core Competence, Inc.
SP Requirements for Usage DetailSP Requirements for Usage Detail
Characteristics that service providers seek in accounting systems include:
– Very high accuracy/integrity
– Very high detail
– Readily auditable
– Persistent data store (corollary to accuracy)
Copyright 1998 Core Competence, Inc.
Components of SP Billing SystemsComponents of SP Billing Systems
Depending on whom you ask, SP’s need:– Usage collection, mediation, (cross-)correlation– Service creation and provisioning– Authentication and authorization– Pricing and rating engines– Billing and payment processing– Customer Care – Activity Tracking
Copyright 1998 Core Competence, Inc.
Billing Models for:Billing Models for: Internet-based services Internet-based services
ISPs want same flexibility for IP as telcos have for POTS
SPs will offer tiered rate packages
Goal is to combine billing elements – Flat rate: all-you-can-eat access is necessary, not sufficient – Time: duration, time-of-day, day-of-week– Usage-sensitive: traffic/hit counts, excessive use surcharge– Destination-, Distance-, and Carrier-info: settlements
– Class of Service: access speed, user priority, by traffic type
And apply them across their service offerings:– IP Telephony, Fax over IP, Internet Dial, Dedicated
Access, Hosting, outsourced security and management
Copyright 1998 Core Competence, Inc.
Billing Models for:Billing Models for:Layer 2 ServicesLayer 2 Services
SPs already have “circuit” billing models, will innovate for SVC billing:
– Flat rate • dedicated port or PVC, unattractive option for SVCs
– Time-based• duration of SVC, time-of-day, day-of-week
– Usage-sensitive• metered traffic, surcharge for excess volume
– QoS-based • prioritize by port/VC, ATM ABR/CBR/VBR/UBR, FR CIR
Copyright 1998 Core Competence, Inc.
Next Generation Billing SystemsNext Generation Billing Systems
Copyright 1998 Core Competence, Inc.
Traditional Telephony Billing ModelTraditional Telephony Billing Model
– Network elements perform usage measurement collection and accounting record generation
– Supervisory systemsSupervisory systems and adjunct processors perform usage measurement aggregation, mediation, and correlation
– Call detail records sent to RAO for processing (rating, discounting, tariffing, crediting and debiting, and invoicing)
Many SPs seek to map traditional 3-tiered telephony billing model...
Data Generation
Data Aggregation
MediationCorrelation
RAOProcessing
Call detailCall detailrecords inrecords inAMA formatAMA format
CO equipment(network elements)
CO equipment(Switching SS’s,
adjunct processors)
Copyright 1998 Core Competence, Inc.
Accounting MediationUsage Data Generation
Internet Billing ArchitectureInternet Billing Architecture… onto access, routing, and switching solutions for providing
– Dedicated IP VPNs
– Dial IP VPNs
– “Voice over …” services
– Layer 2 services
– hosting and outsourced services (web, security, gaming, etc.)
Billing Systems
Billing Systems
Copyright 1998 Core Competence, Inc. Tier 2Tier 2Tier 1Tier 1
Billing and Customer care
systems
Customer OSS’s
Tier 3Tier 3
Billing and Customer care
systems
Customer OSS’s
Tier 3Tier 3
Services:
Layer 3: Data, VoIP, Stream
Layer 2: Data, VON
Layer 3: Dial Access
Hosting,Mgmt,Security,Leasing
NetworkElementsProvideServices
Data Collectors:
Collection Protocols: Web-Enabled Clients
Open Interfaces:SQLAMATPSAPIs
Cross-LayerCorrelationAggregation
Mediation
Raw & Aggregated Accounting Data
Typical Components of an Typical Components of an Internet Billing ArchitectureInternet Billing Architecture
Copyright 1998 Core Competence, Inc.
Likely SP Billing StrategyLikely SP Billing Strategy
Begin with traditional approach– uni-directional flow of usage detail to Internet-RAO for
bill processing
Enable billing across services– access services– application services– outsourced services– leasing services
Evolve– Develop interactive billing methodologies
Copyright 1998 Core Competence, Inc.
Holy Grail: Convergent BillingHoly Grail: Convergent Billing
Convergent billing
– integrate billing for multiple products and services
onto the same consumer invoice– support invoicing, discounting, reporting
– track invoices and accounts receivables,
collections, etc.
Copyright 1998 Core Competence, Inc.
Inhibitors & EnablersInhibitors & Enablers
Copyright 1998 Core Competence, Inc.
Challenges to deploying Billing: Challenges to deploying Billing: Accuracy, CompletenessAccuracy, Completeness
Statistical averaging to estimate usage – fraught with problems as basis for billing
• “who’s sampling what and when” affects averages– considered inadequate for settlements
Provisioning info and customer data– may not be available for all services
Completeness– every element may not be monitored – new (unmonitored) elements may be added
Granularity– increasing detail further impedes reliability/scalability
Copyright 1998 Core Competence, Inc.
Challenges to deploying Billing: Challenges to deploying Billing: Integrity and AvailabilityIntegrity and Availability
Is there sufficient protection against modification of billing data– in transit?– when stored at Tier 2?– when supplied to Tier 3?
Availability can be an issue– Batch mode collection prevents real-time access– Persistence of stored data can be a challenge
• managing large volumes of data• regulatory requirements
Copyright 1998 Core Competence, Inc.
Challenges to deploying Billing: Challenges to deploying Billing: ScalabilityScalability
Data model– SVCs and voice are short duration/high volume
– taxes tier 1 and tier 2
Call model– forcing IP and VoIP into call model may not scale
Scale model– must scale not just to large routers and switches, but
on the order of many, many CO’s and POP’s
Copyright 1998 Core Competence, Inc.
Provisioning As A Billing EnablerProvisioning As A Billing Enabler
SP’s will complement billing strategy with directory (LDAP) services for provisioning
– intelligent networks, policy based management– provisioning on per-user, per application basis
Service order entry and customer profile update will become an end-user activity
– reduce customer care costs– “instantaneous” service activation and change
Rapid provisioning must have a “near real time” impact on billing...
Copyright 1998 Core Competence, Inc.
Old Style Provisioning ModelOld Style Provisioning Model
DNSServers
TerminalServer
CircuitOrders
Today, provisioningis hampered by
• separate • parallel• ad hoc• unidirectional
workflowsNo common data repository
MailConfig
RADIUSServer RADIUS
Proxy
DHCPfile
DNSfiles
OrderDesk
DHCPServer
MailServers
TelcoOSS
Equip.Orders
Vendors
Copyright 1998 Core Competence, Inc.
New Style Provisioning ModelNew Style Provisioning ModelUser
Webform
FamilyWebform
IntranetWebform
WebServer
Database
DNSServers
DHCP/RadiusServers
Terminal
Server
MailServer
ATMSwitches
PurchasedPurchasedFacilitiesFacilities
Directory
DNSServers
DHCP/RadiusServers
TerminalServer
MailServer
ATMSwitches
OwnedOwnedFacilitiesFacilities
Directory
Directory is common thread, repositoryfor provisioning data that enables billing
...
Copyright 1998 Core Competence, Inc.
Parting CommentsParting Comments
Era of “Free” Internet is ancient history
“All you can eat” Internet Era coming to an end
Era of “Usage-based” Internet begins
Considerable investment re-tooling,
re-engineering, and new thinking