Copyright 1998 Core Competence, Inc. Charging and Paying for Next Generation Services An Overview of Billing David M. Piscitello Core Competence, Inc

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.

[email protected]


The MarketThe Market


Internet Services MarketInternet Services Market

permission to reproduce courtesy of eStats

It’s growing, but is it profitable?


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


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


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…


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


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


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


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”


Role of Billing in SP NetworksRole of Billing in SP Networks


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 ...


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?


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


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)


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


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


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


Next Generation Billing SystemsNext Generation Billing Systems


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)


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


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


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.


Inhibitors & EnablersInhibitors & Enablers


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


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


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


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...


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


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

...


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

Documents

Copyright 1998 Core Competence, Inc. Charging and Paying for Next Generation Services An Overview of Billing David M. Piscitello Core Competence, Inc