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A real time opportunity

Ofcom has pledged to work with operators to reduce bill shock

Alastair Hanlon, director for industry solutions at Convergys looks at how real time billing and customer service can revolutionise the telecoms industry.

The volatile nature of the telecom marketplace makes it no surprise that operators currently find themselves in a quandary. Having seen rapid growth, particularly in the last decade, the market is now stuck, seemingly at saturation point. The strategies that stimulated such rapid growth a few years ago are now not having the same effect.

The entire industry has traditionally been based upon this approach: selling access to the network. Different providers operate their own networks, selling capacity in the form of voice, data, SMS, etc. to customers.

The problem with this approach is it assumes all other market inhabitants use the network in the same way, which is not always the case. For example, this has started to break down as the likes of Google and Apple launch new services over these networks, effectively challenging the telcos’ relationship with customers. These companies look to the market itself for inspiration and build their businesses around understanding how customers use the network

It is through this approach that they dominate an industry they have little previous background in. For proof of this, look to 2009’s Mobile World Congress in Barcelona in February. The unveiling of the HTC Magic, the second phone running on the Android OS, was considered one of the main events, generating more coverage than any other announcement, whilst the lack of attendance by Apple was seen to devalue the exhibition.

There is another issue. A recent Convergys survey highlighted that almost half of British mobile customers did not understand what mobile broadband services could offer them. However, the same consumers also stated that despite this, they would be willing to pay more for new mobile broadband services, if a good quality standard of customer service is in place to help them with any questions. Clearly, customer understanding of products is absolutely critical, and represents a real opportunity for operators.

In order to maintain their importance, and not be relegated to network providers, telcos should follow the lead of Apple and Google, and build offerings from the market. They need to shift focus away from the network, and look at the needs of their customers instead.

Whilst this suggestion is hardly new, this is not a call for better standards of customer service (although that is something that should always be strived for), but of reacting better to customers’ buying habits.

The problem facing telcos is their billing and payment systems are based on the network and charge on the basis of network access, not customer propositions. This is akin a restaurant charging a flat rate for entry, and then letting the customers eat what they like. These systems cannot react quickly enough to changes in customer behaviour. What’s needed is a means of charging that works in real time, so customers can see the exact cost of any new services they’re signing up for. It also needs to work across different network platforms, from the traditional voice and text to newer data services of mobile internet and video. It must also be able to analyse, charge and build promotions across all of these services.

This new approach is called real time convergent charging. Real time systems allow a more intimate relationship with the customer, providing companies with the ability to action changes to packages immediately and begin charging for them simultaneously. It provides telcos with the ability to adapt their offers and prices in relation to customer demand, known as profitability analysis and demand-based pricing.

By taking this approach, telcos would be able to control revenue streams and market share by offering different packages quickly in response to changing consumer demand. The all-you-can-eat data, voice and text approach allows competitors to undercut, which has kicked-off the spiral of ever decreasing prices and left operators using handsets as deal breakers, has in turn allowed manufacturers a greater control over the market. Exclusive deals, often to the detriment of the operators, have become the vogue, with Vodafone, O2 and T-Mobile all taking on showpiece handsets as a differentiator.

This is not to say handsets are not a crucial part of any selling strategy and indeed of the whole market but the services that can be supported on those handsets has become important once again.  The rise in application stores means that telcos need to be more flexible about their approach to charging if they are to retain a portion of the application revenues, rather than restricting their revenue income from inclusive data plans.

The telco marketplace has moved from high growth to maturity. The sales and marketing strategies that were used for one have not transferred successfully into the other. This transition presents operators with an opportunity to use the customer insights they already have to react quickly to changes in customers’ behaviour and provide a service that fulfils their needs. By doing so, telcos can secure future revenue streams and ensure they continue to generate a profit.

Alastair Hanlon is director for industry solutions at billing firm Convergys


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