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Speaking With
October 2000

 

Billing For Hosted Services

Communications ASPThe ASP model is making a huge splash in the communications market, and many companies in this space are already supporting next-generation networks with new and enhanced services. In fact, Technology Marketing Corporation sees so much promise in this space that we have decided to launch a new publication to keep up with all the news, and it will be called Communications ASP (look for our premiere issue in January of 2001).

I recently got to question Oren Glanz, president and CEO of communications ASP TeleKnowledge, Inc., about this booming area and how it will impact Internet telephony. His responses appear below.
-- Laura Guevin

LG: Why did you decide to embrace an ASP model for your billing and customer care solution?

OG: Like any emerging market, the ASP arena requires business infrastructure solutions that enable new players to get into business quickly with minimal capital investment. TeleKnowledge offers Total-e -- our revolutionary billing, customer care, and e-partner revenue management solution to ASPs through a variety of pricing and delivery options, including a "pay-as-you-grow" pricing model. We expect to expand our ASP solution set by delivering Total-e to clients via the ASP model by the end of the year. Our main edge over our competitors using the ASP delivery model is our flexible "plug-and-play" architecture that allows us to rapidly introduce any service and to customize the systems to fit the needs of specific customers.

LG: As a member of the ASP Industry Consortium, where do you see this business model heading for the communications industry? How does Internet telephony fit into this picture?

OG: We see a trend of telecommunications service providers moving toward the "portal" model. A good example is a TeleKnowledge customer -- a rich communications provider that offers streaming TV, video conferencing, voice over IP, and video-on-demand through a single browser-based user interface. This trend has not escaped major communication players like WinStar, Qwest, Allegiance, and KPMG that are also offering applications and value-added services over their network infrastructures. These companies all see portal-based services increasing their "share of customer wallet."

We also see new players surfacing that can be broadly classified as business communications ASPs. The introduction of new technologies like softswitches makes it possible today to offer customers direct access to hosted communication networks and a set of value-added applications -- like interactive voice response (IVR), enhanced call routing, and CTI integration -- that allow the customer to remotely configure, personalize, and provision a variety of telecommunications services. This notion is exciting not only as an alternative to investing in local PBX infrastructure, but also because of the scalability it provides the customer and the rich browser-enabled functionality that it brings to the end user (like identifying missed, inbound, or outbound calls with click-to-call functionality) -- this applies both to traditional and IP telephony.

From another angle, we see a growing trend of companies offering integrated Operating Support Systems (OSS) suites to communications providers through the ASP model. OSS solutions, similar to ERP and CRM applications that are already offered via ASPs, require a lot of integration and customization work. I think it's still early to determine how successful this model is going to be.

LG: Do you think more companies are going to switch over to a converged service/solution model for offering VoIP services?

OG: Yes. Although the majority of communications industry revenues still come from voice services, voice service providers are facing shrinking revenues. Service providers are therefore looking to broaden their portfolios with broadband/IP technologies. Service providers of all forms are rapidly upgrading their infrastructure to deliver a new generation of services -- multimedia over IP will play a major role in that.

For a network service provider, the revenue increases from supporting portal operations can be quite dramatic. It is estimated that for every one dollar in hosting revenue, the network provider gets from four dollars to seven dollars in network revenue. That is one reason why many firms will attempt to operate at multiple levels of the value chain.

TeleKnowledge works very closely with our OEM partner, Unisphere Solutions, to enable service providers to offer next-generation services. Unisphere Solutions offers a platform for converged broadband networks and traditional voice that allows providers to maximize their revenue opportunities. Our billing technology is embedded into their OSS, providing service initiation, billing, and customer care functionality. Convergence is, however, just the beginning. Unisphere Solutions also offers "service selection portal" technology that allows customers to select and activate a wide range of broadband services directly through a browser-enabled interface.

LG: How is the role of billing and customer care changing as networks evolve to offer converged services?

OG: We see changes in three main areas:

  1. The need to quickly introduce and create the necessary support for new services. At TeleKnowledge we created Total-e with this kind of multi-service environment in mind. Using a "plug-and-play" design based on object-oriented methodologies, we are able to build business support for new types of services in a matter of days, and eventually allow the customer to create any new service offerings through a user-friendly interface in a matter of minutes. Traditional telecommunications/-ISP billing systems today cannot compete with such flexibility.
  2. The need to support unlimited numbers and types of e-partnerships. We see a major trend today of providers forming strategic partnerships for the purpose of delivering a service to end customers, to broaden the service portfolio and reach new markets with channel partners. The challenge is to manage the number and diversity of these agreements.
  3. The move towards value-based billing methods. In a converged world, there is a need to support a variety of service-specific pricing parameters. Moreover, the richness of value-added content-based services offered today (such as video on demand and stock quotes to WAP-based devices) require a new approach -- value-based billing -- which takes into account customers' definitions of value, measured in terms such as quality of service (QoS), timeliness (when and how the service is provided), and the relevance to a specific customer.

LG: What kinds of benefits will this bring to business customers? End users?

OG: Consolidation brings to the customer the ease of managing billing and customer care services through one point of contact. Moreover, in the race to retain customers and build customer loyalty, service providers must offer multi-service packages that cut the total cost for the customer.

LG: What new challenges do ASPs and next-gen service providers face in billing and customer care?

OG: The ASP market is still in a relatively young stage where supply might be affected more by Web-readiness of applications, rather than end customers' demands. With ASPs debating best-of-breed delivery versus integrated models, finding the right set of applications and right mix of OSS infrastructure is a major challenge -- it requires a flexible and dynamic billing and customer care solution that can accommodate changes across every aspect of the business: Addition of new services, modification of existing ones, application of new pricing strategies, creation of revenue sharing models, monitoring and evaluating QoS, and more.

In the ASP arena, alongside billing, there is a real need for a comprehensive infrastructure to support partner relationships. Such relationships include: Private and co-branding services for resellers, virtual/multi-provider operations, supporting revenue sharing/commission agreements, and enabling value-added services for partners (bill production, virtual CSR, and the like).

With the move toward mission-critical applications, the challenge turns to addressing service level agreements (SLAs), which becomes crucial to delivering services at the levels customers are willing and able to pay. Billing systems must interface with QoS monitoring systems in order to determine whether or not the SLA has been violated, allowing service providers to issue refunds to customers if and when required.

LG: How will solutions like TeleKnowledge's help bring VoIP to the forefront as a next-gen service offering?

OG: TeleKnowledge develops and markets billing infrastructure solutions -- we enable providers to price different levels of VoIP offerings based on customer definitions of value, thus making these services more accessible and attractive.

TeleKnowledge was the first to introduce the notion of value-based billing to the market. With the addition of qualitative measures, such as timeliness, relevance, and quality, value-based pricing is a step forward compared to the quantitative, cost-recovery approach of usage-based billing. Using value-based metrics, a provider may charge customers less for a private IP call than for a business IP call with higher guaranteed QoS, or charge video-on-demand customers more for viewing current releases versus titles available for rental in video stores. Another recent example is pricing a WAP-user stock quote service differently based on a set of preferences defined daily by the customer -- such as number of sources (quantity), transmission frequency (timeliness), and personalized content (relevance).

Moreover, as the market grows more complex, service providers are teaming up to deliver joint offerings. Total-e empowers IP telephony providers to create and manage unlimited numbers of new e-partnerships with ISPs, VARs, and portals, and enables the creation of private and co-branding agreements. It also supports revenue-based terms based on commissions and other revenue-driven concepts.

LG: What kind of challenges does VoIP face in this regard?

OG: VoIP should be able to deliver differentiated services such as call center and PABX over the Net, QoS for VoIP, and other diverse applications. Simple VoIP is no longer a differentiator.

The billing challenge is how to incorporate the qualitative measures into the equation. The billing system may receive a large number of quantitative measures from QoS monitoring solutions, but still has to be able to determine the business meaning of these numbers -- from a pricing standpoint. For example, a single instance of decline in QoS may or may not constitute a break of phone conversation and may or may not be considered a violation of service level agreement. The billing system needs to be designed to figure that out accurately and quickly. Another challenge is the ability to collect and consolidate network usage information with customer database information.

On the partner side, the challenge is how to capture and settle a large number of partnerships each with different business rules, combined with customer billing requirements.

[ Return To The October 2000 Table Of Contents ]







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