April 1999
Customer & Billing Solutions Are Key For ISPs
BY RICHARD M. AROIAN
The Darwinian forces of the free market make it impossible to compete successfully on
price alone. This is true whether you are an Internet service provider (ISP), a
competitive local exchange carrier (CLEC) or an international start-up competitor fighting
your deregulated post telephone and telegraph (PTT) administration. You cut your price,
your competitor cuts prices, and before you know it, your rock-bottom margins are so thin
you're either out of business or bought out by somebody with deeper pockets.
Something else is needed -- an approach with staying power. For example, many ISPs are
evaluating the possibility of content-sensitive, transaction-based pricing. The problem is
nobody wants to be the first service provider to charge customers for content they are now
receiving free. And even if content-based pricing catches on, the fact remains: Competing
on price may get you into the market, but it won't keep you there.
STRATEGIC DIFFERENCES
ISPs are also looking beyond Internet telephony toward other revenue sources. Rather than
simply providing a physical conduit, they would like to be responsible for transactions
relating to Internet commerce. One way would be to act as the credit card verification
source. Another would be to act as the billing company for transactions. Or, they could
physically store the transaction data, collect orders, assemble orders, and pass them on
to information providers.
The Internet also provides some interesting possibilities for self care. Currently, ISP
customers must make a phone call to their provider and talk to somebody in support in
order to ask a question or make a change. Increasingly, however, clicking an online icon
will initiate support calls, which will route requests through an automatic call
distributor (ACD) to the help desk or customer support area. ISPs trying to distinguish
themselves through superior customer service will be able to do so by offering this
self-help customer care - available at a low cost, 24 hours per day, seven days per week.
No matter which strategic direction ISPs follow, they must add value and differentiate
themselves in order to survive. This need for differentiation is particularly acute in the
case of Internet telephony. In addition to facing the formidable challenge of convincing
customers to abandon their trusted, plain old telephone service (POTS) in favor of this
new offering service, ISPs must also prove Internet telephony can compete on quality
before they can even think about claiming it competes on price.
THE KEYS TO COMPETITION
Internet telephony will likely carve out a legitimate market niche. If so, customer care
and convergent billing systems will be available to offer service providers a host of
competitive advantages that will enable them to add value and differentiate themselves. In
addition to allowing these carriers to quickly bring new products and services to the
market - within 90 days in some cases - customer care and convergent billing systems
provide complete billing and account management capabilities within a single bill. These
capabilities span a variety of wireline and wireless services including local and
long-distance service, cable TV, pay-per-view, and Internet access.
Customer care and convergent billing systems also provide one point of customer contact
across multiple account levels, service offerings, languages, currencies, and locations.
Their customer management capabilities further differentiate their service provider users
by allowing them to provide innovative pricing, services bundling, and cross-product
discounting.
As a result of implementing this kind of system, a service provider positions itself to
not only improve customer care, but to dynamically target new service offerings for
specific market segments using demographic data.
Consider, as an example, the value of multiple language support for customer care. If a
Portuguese customer calls customer support, they would automatically be connected to a
Portuguese customer service representative. Or, if a German customer calls the carrier,
the customer can receive a follow-up letter in German. This kind of attention builds
customer loyalty and undercuts the prohibitive costs of churn.
TOTAL INTEGRATION
True customer care and convergent billing solutions must be fully integrated across the
entire spectrum of services, allowing access to all information from any one service. In
this environment, when a customer calls in, the customer service representative is able to
look up any one of the services and provide information on all of them to the customer.
The customer service representative will also know if there are outstanding repair and
maintenance requests on any particular service. This information is available from one
system, on one screen, without the use of hot keys to toggle in and out of multiple
systems. A truly convergent system integrates business functions such as customer care and
contact, service order delivery/provisioning, event processing/data collection, billing,
post-billing, and sales and marketing. Customer service representatives can take an order,
enter it, delete it, or modify it from any one of the services they are selling at any
time.
The ability of customer care and convergent billing systems to attract and retain
customers has elevated them to mission-critical status at emerging and established
carriers alike. This growing popularity is largely attributable to the fact that it
currently costs carriers about $400 to obtain a cellular customer, and the average life
cycle of that customer is nine and a half months. Making matters worse, that acquisition
cost is rising at a rate of up to $100 per year. This negative scenario is compounded by
the fact that wireless customers are progressively reducing their monthly usage. Customer
care and convergent billing solutions are an ideal antidote for this threatening financial
situation.
IMPLEMENTING A SOLUTION
ISPs and other service providers have three choices when it comes to implementation
options for customer care and convergent billing solutions. The first option is purchasing
an in-house system; the second is contracting for a complete, turnkey facilities
management scenario.
While this scenario places the day-to-day operations burden on the vendor, it still
requires the customer to purchase the software and hardware necessary to run the system.
Hardware and software aside, struggling new service providers and established carriers
alike would rather concentrate their attention on building out their core infrastructures
and signing up new customers than spending the time required to manage a customer care and
billing system.
Using a service bureau is the third choice and the least expensive option by far. By
selecting a service bureau-based convergent customer care and billing system, service
providers are able to slash their start-up costs, rapidly bring products and services to
market within 90 days, and avoid the risks associated with implementing a sophisticated
convergent package. The tremendous hard-dollar savings that flow from the service bureau
option make it possible for emerging and undercapitalized carriers to compete on a level
playing field with their richer competitors. In addition to saving millions of dollars in
up-front licensing and hardware costs, these companies are also able to eliminate months
of development and deployment times.
Moreover, they are able to do away with a plethora of additional expenses associated
with recruiting, hiring, and training seasoned personnel. Throw in the savings from not
paying for external consulting and systems integration, and the financial justification
for this approach becomes very appealing.
In addition to cutting costs, service bureau users gain the peace of mind that comes
from implementing a best-of-breed customer care and convergent billing solution. Rather
than worrying about all the challenges of running their own in-house systems, they can
rely on the dependable 24 x 7 operations and scalable functionality that comes with this
solution. As a result, they have the time to concentrate on the things they do best.
Although the service bureau option can grow as needed, it is not necessarily permanent.
After building a successful base, service providers can switch over to a licensing
arrangement whenever it meets the needs of their business model.
CONCLUSION
In the cutthroat telecommunications service provider marketplace, a price-based
competitive strategy may get carriers into the marketplace, but it won't support them for
long. There are simply too many competitors who are willing to cut their rates in the
short term in hopes of finding a way to survive in the long term.
Content-based transaction pricing may sound alluring, but there is no solid sign that
the Internet market - which is addicted to free content - will pay for anything unless
there is no other alternative.
This puts ISPs in a bind. Starting out with only a tenuous price-based strategy, they
are trying to sell the great mass of largely satisfied POTS users a service that is widely
regarded as technologically immature.
The answer for these value-starved companies is to be found in customer care and
convergent billing solutions. The ability of these systems to bring customers quickly to
market while providing them with complete billing and account management capabilities
produces a competitive advantage that can never be matched by bargain basement pricing.
Richard Aroian is vice president of marketing and strategic alliances at Saville
Systems, Inc. Saville is a leading provider of innovative convergent billing and customer
care solutions for the local (fixed wire), data, long-distance, wireless, and cable and
energy telecommunications markets. Saville currently employs over 1,400 employees in its
Boston, Toronto, Edmonton, Galway, London, Miami, Frankfurt, Brisbane, Sydney, and
Singapore offices. For additional information, visit the company's Web site at www.savillesys.com. |