It seems the TMF liked my last article about revenue assurance in Latin America so much that they asked me to write another. This one is specifically about how Latin American operators are rising to the challenge of assuring wholesale costs and revenues. Here it is first, before the TMF has a chance to publish it. I am so good to you - always giving you the good stuff before everyone else ;)

Start with a tiny error, like undercharging a call by one cent. Repeat the error millions and millions of times. That one cent multiplies into an awful lot of money. If revenue assurance is the discipline that detects and prevents processing bugs that cost telcos money, then wholesale products represent the ultimate revenue assurance challenge. Small variances add up to big losses, not least because partner telcos may take deliberate advantage. So how closely are wholesale costs and revenues monitored in Latin America?

Dr. Gadi Solotorevsky, leader of the TM Forum’s Revenue Assurance team, believes that Latin American operators have risen to the challenge:

“Most Latin American RA managers tell me that they no longer see inter-carrier settlement as a high risk area. Although some years ago it was very problematic, nowadays they check it, but they do not find any significant problems. This is quite surprising, especially when compared to Western Europe. Many European RA managers view inter-carrier settlement as a high-risk area in which significant leakages are found time after time.”

At the same time, the combination of liberalization and strong growth is putting new pressure on wholesale carriers in Latin America. As markets get liberalized, telcos find themselves needing better systems and processes to manage billing and settlement with an increasing number of counterparts. They are also under regulatory pressure to open up and connect networks in the shortest time possible. New operations have to ensure that their new systems work correctly and can keep a track on what they owe. Established carriers need to be able to manage more partners using their network. The absence of a credit history between telcos means more care is needed in managing relationships. Failings in a partner’s systems may make reconciliation and agreement of balances more difficult, so it is vital that each carrier has complete confidence in their own numbers. That means extra attention must be paid when businesses upgrade their interconnect and wholesale billing systems, often as a direct consequence of market liberalization. There are also other challenges emerging for revenue assurance, as controls need to be extended to cover traffic for newer products like MMS and VoIP, and inventive revenue-share arrangements complicate the calculation of who owes what to whom.

When settling interconnect, one of the oldest problems has been to get agreement on the amounts owed. Unlike domestic customers, other telcos have the means to determine their own calculation of the amounts they owe. Disputes between carriers are rarely reported publicly, but insiders know they occur surprisingly often, even though it usually takes a difference of 5% or more before invoices are questioned. Start-ups are hence particularly at risk, as they are most likely to rely on the billing integrity of the more established networks they connect to. There is also a message here for other kinds of wholesale customer – including content providers and any business involved in revenue share arrangements – that they too need to invest in the technology and processes to protect their business interests. Relying on the occasional audit of their partner’s business may seem like a cost-effective alternative, but anyone with experience of how hard it is to determine the root cause of disputes, or to perform audits of unfamiliar telcos, will know this to be a risky approach. Employing auditors to ask questions is no substitute for recalculating bills using independent data.

The risk of wholesale leaks is amplified because other telcos may take advantage. A mistake with a pricing plan or number range may be exploited by another telco to greatly reduce their costs. Some telcos may even generate artificial traffic for the sole purpose of making money. In this case, the aim is to send calls around a loop to exploit pricing quirks; the generator of the traffic can make more money from the call being terminated on their network than they get charged for transiting it through the intermediary network. As the Latin American market grows, so does the potential for unscrupulous businesses to exploit telcos. For this reason, any wholesale provider needs to be constantly vigilant that all prices are designed to earn positive margins and that there are no unusual spikes in the traffic they carry.

In Europe, new revenue assurance departments often spent several years focusing on retail and corporate products before broadening their scope to cover wholesale. In contrast, revenue assurance departments in Latin American providers have taken a more balanced approach from the beginning. Many have always included wholesale revenues and costs within their scope, giving them a head start. They need to keep moving forward in order to keep pace with change, as the complexity of wholesale settlement is increasing. The good news is that revenue assurance practitioners in Latin American operators are aware of the risks. However, they need to keep their executives motivated and focused on the management of those risks. In revenue assurance, the worst damage is done by leaks that go undetected. The Latin American market is transforming itself, and telcos must stay on guard. When small errors add up to big losses, they cannot afford not to.

Posted by Eric on October 31, 2007 10:22 PM | Permalink | Comments (0) | TrackBacks (0)

There is no time to take breath as the consolidation of the revenue assurance industry continues at a hectic pace. Portugese outfit WeDo Consulting has acquired UK-based risk and security consultancy Praesidium for an undisclosed sum. Read here and here for the announcements on WeDo's and Praesidium's websites respectively.

Last month, WeDo claimed the crown of "world leader" in revenue assurance after they acquired Cape, the Irish vendor. Praesidium is small in comparison to that deal. The 10 Praesidium employees will be retained, taking WeDo's headcount to 380. However, it shows that WeDo's ambitions are far from satisfied, and suggests they are trying to increase penetration into English-speaking markets and other parts of the world where they have tended to lag behind. Praesidium's niche consulting skills should also enable WeDo to lever further revenues from their existing customer base. Presumably both sides see the deal as an ongoing win-win. Praesidium's management and team will be unchanged, and will operate as a new business unit within WeDo. We shall have to wait and see if WeDo's rivals rise to the challenge, and try to respond through further acquisitions and mergers. My bet is that they will - for as long as they can still find targets to acquire.

Posted by Eric on October 29, 2007 03:17 PM | Permalink | Comments (0) | TrackBacks (0)

When I switched my broadband supplier, I was left without service for a few weeks because a third party business had backlogs and was unable to deliver the router on time. So what did I do? I demanded a 'goodwill' credit of course. Because of the way my multi-play provider is organized, the credit did not go against my broadband, but instead went against my existing television bill. The value of the credit was a fixed proportion of the cost of my television subscription. The failure of that third party to deliver the router is possibly never tracked by the supplier, but they had to pay heavily for it. Worse still, if anyone in management at my broadband supplier asked how about credits for broadband products, chances are nobody would be able to give them answer. The value of broadband credits would be absorbed into the credits for their direct-to-home television service. That is a recipe for wasted money because nobody can tell where the root problems lie. Even when products converge, suppliers need to keep separate data for separate products. Only then can they work out which products are causing complaint and hence less profitable than first assumed.

Posted by Eric on October 27, 2007 12:40 PM | Permalink | Comments (0) | TrackBacks (0)

Thanks to Guera Romo of MTN in South Africa, who wrote the following comment on my post about TMF vs. GRAPA: Which Home for RA Standards?:

"Yes, I know the TMF issued standards and have been using these although they are a bit high level. I guess it is because most of this is driven by vendors who will give enough to make you interested without giving away their IP.

The bit that I have seen on the GRAPA site does not lead me to believe that standard would come from this community although it is refreshing to see operator representation here.

I just believe there is more to RA than TMF and GRAPA. Attending conferences always leaves me a dire need for more "substance". Where are the real goodies that make the board members sit up and pay attention?"

What a good question. But on the other hand, is anybody surprised if the answer is "nowhere"? Yesterday a conference organizer asked me about associations for revenue assurance. I told her about GRAPA (yes, incredibly I do tell people about GRAPA without prompting, despite my reservations about how they are run and why they exist), the TMF and the friendly social club for operators that calls itself the UK Revenue Assurance Group. But after those three I was unable to cite more examples. Probably there are some other countries where people working in RA get together on a regular basis (although the UK is unusual in having so many national and international telcos headquartered so close to each other). You could also argue that user meetings for suppliers like Subex Azure and specific forums in the Fraud sector make for sizable congregations of people with specific interests within the revenue assurance universe. However, other than conferences it is hard to think of any more examples where revenue assurance people from different businesses interact with each other. And even then, as Guera points out, the interaction leaves many of us wanting more "substance". So my best guess is that the substance is, frankly, nowhere to be found. Why is that? Maybe we should ask the opposite - is it reasonable to expect any more substance to this topic we call revenue assurance?

The thing about revenue assurance is that the principle motive is profit. It is a business activity. Nobody does it just because they love it (apart from me and a few other freaks, perhaps, and you have to be cynical even about people like me). So to generate content, and then to share content, there has to be a profit motive. There are lots of kinds of profit as well as direct financial rewards, of course. Which is lucky, because nobody is going to get rich writing a book called "How to help big telecoms operators make a bit more money" or "How to help big telecoms operators make a lot more money". The former book is not sexy enough, and nobody would buy it. The latter book would have to be a lie. You can be sure it would be a lie for the same reasons that you know people who write books entitled "How To Easily Make Millions and Millions of Dollars" make more money from selling the books than they did from following their own terrible advice i.e. they would not waste their time selling books if they knew a better way to make money. As well as making money directly, other forms of profit include the prospect of enhanced future or indirect financial rewards, in other words the benefits that flow from marketing and reputation building. But writing books and selling advice to a tiny audience is probably a terrible way to make money (even Rob Mattison must struggle to find enough gullible people in the world, and once he is finished there will be very few left for the rest of us). Other kinds of profit are less tangible: status, glory, respect and other euphemisms for feeding the ego. But, geez, that hardly is a way to pay the bills, and flying over all the place to share your wisdom takes time and money. Also, the more time you spend flying around the world sharing your wisdom, the less time you spend doing proper work and learning how to do your job so you actually gain some wisdom to share when flying around the world. So be suspicious of any prophets of revenue assurance who have no obvious motive to help your business be more profitable, help you get recognition, help you get a pay rise, help you get a promotion, or help you do anything else which you hope will deliver zillions of dollars to your telco. Because you cannot trust the motives of someone like that.

There is another kind of motive for telling people things, of course. It is the same motive as the one you find in those forums where people share tips on the new kinds of fraud. The important word in that sentence is "share". To get something of value, give something of value. The problem with some people who "share" knowledge of revenue assurance is that they are just repeating the same old lame nonsense they previously heard someone else say. Regularly when I go to conferences I also find I meet people who say "I know nothing - I just came here to learn." "Great," is what I think when I meet them, "they expect me to lavish hours of free advice on them, for absolutely nothing in return." Because that is exactly what they do think. They maybe spent a thousand dollars of their company's money to go to a conference, and so they expect me to make it worthwhile even though there is almost no way that I could ever generate a return on giving them free knowledge. Even if they did want to pay me for my time as some form of gratitude or quid pro quo for the advice I gave them for free up-front, chances are I will be busy working somewhere else during the narrow range of dates when they have a budget they can spend in my direction. So sharing only works well between equals, who have useful experience, who trust each other, and who think that they are speaking to someone who is as willing to be open as they are. The thing there is that neither person is a prophet and neither is a follower. They have to be equals to make that work. This is the challenge for revenue assurance if it is to develop that "substance" that Guera was asking for: we need a meaningful number of people, who are approximate equals, and are open, and honest and willing to share, and willing to work together. Playing the numbers game is easy - advertize one prophet willing to stand up before a crowd and soon enough you will collect a crowd of people who came there hoping to get something for nothing. But after a while even that crowd is going to realize that, usually, you get nothing for nothing. Or as the phrase goes in my Yorkshire vernacular: "you don't get owt for nowt". The trick is to get numbers of equals who all believe that they will benefit it they all share.

Of course, there is nothing that the lost prophets of revenue assurance hate more than being in a team. Teams are things they want working for them, not with them. Being part of a team means you have to compromise. You also have to share the credit. The Merriam-Webster dictionary definition of teamwork is

"work done by several associates with each doing a part but all subordinating personal prominence to the efficiency of the whole"

It is not hard to see why people wanting lots of publicity are not too keen on teamwork. But you need teamwork to respond to the challenges posed by revenue assurance. There is nobody who knows everything about revenue assurance. Revenue assurance is, after all, a multi-disciplinary field. It embraces accounting, auditing, software development, database management, data integrity, process mapping, corporate governance.... the list goes on and on. No single person can claim to be an expert across every element of revenue assurance. Anyone who makes that claim is a liar. The problem with the lone prophets is that they just talk about the things they understand and pretend the rest is irrelevant or try to bluff their way through it by repeating what they heard other people say. There is a phrase that goes like the following: when a man's only tool is a hammer, every problem looks like a nail. So gurus with database skills want to solve every revenue assurance problem with a database, gurus who develop software always want to develop new software to solve each problem, gurus who... you get the idea. A long time ago I wrote some code in C and C++, but I do not pretend to be a skilled software developer. I have written some SQL queries, but I am not expert at that either. I am a qualified accountant, but spending years working in revenue assurance obviously means I am not the best accountant. One thing I do know is that you have to know your own limitations and be willing to allow some problems to be solved by other people using skills you lack. There may be many ways to skin a cat, but only one will be quickest and cheapest. A good revenue assurance professional puts the interests of the telecoms business before his owns - he drives them to do what they most need to do, not what he is best at doing. So teamwork is a problem for revenue assurance, as lots of people are in competition by offering lots of different ways to skin the same cat. Getting one to admit that their way is not always the best way is going to be hard, but is necessary if we are going to get some genuine teamwork.

So if the substance seems lacking, that is my opinion why. And in case you did not notice, I gave my opinion for free. I broke the Yorkshireman's rule and gave owt for nowt :) Multiply the amount of time I spent writing this by my usual rates and this advice should be worth a good few hundred dollars. But you got it for free. Strangely enough, though, if you do not make people pay for something, then sometimes they do not value it. They just take it for granted and assume it will always be there. So prove me wrong, people. I could put a little button so you can make a donation to this website through PayPal. Then, like Radiohead, I could encourage you to pay whatever you think my material is worth. But, unlike normal people like Rob "Guru" Mattison, money is not what I am asking for here (remember, I admitted I was a freak in the third paragraph). Nope, just give me some info. Tell me something interesting that I might not know. Better still, tell me and everybody else who reads this blog. I dare you. But I will not pay you. Which is why I am not expecting to get much more "substance" from the rest of you than I have previously :( But I would love it if you proved me wrong. If enough people started sharing what they know, perhaps some day we might even find that we work like a team. So be honest: does being part of a team motivate you? If not, expect to wander the revenue assurance wilderness alone, or else decide to follow a prophet - but you can safely assume any prophet you meet is just as lost as everyone else.

Posted by Eric on October 24, 2007 10:33 PM | Permalink | Comments (2) | TrackBacks (0)

A year ago I wrote my first blog on the topic of revenue assurance. So this is a good time to review its progress. Since I started keeping a track, the blog has had readers from 102 different countries, and the readership has steadily grown. Not surprisingly it is most popular in my homeland, the UK. Sadly, the blog has not yet had any visits from Uzbekistan, Namibia or Greenland. But a glance at the top ten countries suggests that the readership is mostly drawn from revenue assurance suppliers. India, Ireland, Israel and South Africa all feature heavily, which is not surprising when you consider that these are all key hubs for software development. During the year, I have written 165 entries. The number one complaint has consistently been that my blogs are too long (some complaint - I do not force people to read them...) At least that means there has been no shortage of things to write about. So, all in all, it has been a pretty good first year.

But it is a long way short of good enough. Do I blame myself? NO! The fault lies with you, dear reader. "Wait!" I hear you cry, "what did we do wrong?". It is not what you did do, but rather what you did not do. In my first blog, The RA Truck Stop, I asked to share some intelligent conversation about revenue assurance, because no self-appointed big shot really does know it all. But instead I have a soapbox that I use to give a monologue. Obviously people read this stuff. Web analytics do not lie (unless, of course, people deliberately type in the URL and then look away from the screen). After weeding out all the spam and the anonymous cranks there were just 28 genuine comments to the blog all year. That is one comment per every six blogs. Or one comment per every three-and-a-half countries. Strangely, I get more emails about the blog than I do comments on the blog, which is nice for me but not a lot of help to anyone else reading. I am not holding Suriname, Iran or Angola responsible for the shortfall in the number of comments, as they exceeded expectations just by visiting the site. No, there are some big guns out there who have yet to wake from their slumbers and start to share their insight with the rest of us. Come on you Indians, Irish, Israelis and South Africans, I know you have more to give. The Brits could try harder too. And as for the Yanks, well, perhaps I can forgive you because you seem to write more books about revenue assurance than every other country put together, although that is just the efforts of one man ;) The blog has plenty of acquaintances, but not enough close friends to help celebrate its birthday. I promise you would learn more from each other than from listening to a wally like me. If you start commenting in serious numbers, I will put up a proper forum and then we can really get the debate going. Blog is one year old, going strong, and ready to make more friends. So do not be shy - we all want to hear what you think!

Posted by Eric on October 22, 2007 08:02 PM | Permalink | Comments (4) | TrackBacks (0)

Legislators love to protect consumers, especially from unpopular and unloved businesses. It is an irony that in many countries the sector that has done so much to revolutionize communication - wireless service providers - has done such a poor job of communicating a positive image. Even in the USA, usually the bastion of the free market, legislators are pushing hard to intervene in the market because of perceived abuses by cellular service providers. Every layer of US government wants to get in on the act: there is a federal "cell empowerment act", individual states are introducing their own "cell phone user bills of rights", and the FCC has said it may re-investigate Early Termination Fees (ETFs). But being unloved is not the same as being bad or treating customers unfairly. And choice enables customers to punish poor service. Rightly or wrongly, the cellular service providers keep on selling their services to customers who keep on buying them and only later complain they were not satisfactory. So why do legislators think they need laws to reinforce the role of contracts and competition?

How Much Does It Cost?

Nobody likes to buy something then find out it costs more than expected. Telcos are in the business of making the headline prices of their products look good, whilst making their money elsewhere. This is nothing new in business: many products get sold at a loss on the prospect of making fat profits from associated sales. The solution is also pretty simple. Customers should only agree to tariffs that they understand. Legislation aims to make all prices straightforward so everyone can understand them. But if customers refused to buy into tariffs they did not understand, then legislation would be irrelevant.

Terminating a Contract

The old phrase is that a deal is a deal. ETFs are sometimes treated like they are unfair punishments. That might be true if customers did not know that they signed contracts that lasted for a certain period of time. The fact that they last some time is important - it means that the up-front costs of providing the service can be spread across the duration of a contract. Pretending that there are no up-front costs would be a fiction. Spreading the cost is a kind of financing deal. Customers can avoid the pitfalls of ETFs by picking products that avoid the spread by having higher costs at the beginning, and shorter contractual tie-ins.

Intervention to reduce ETFs may seem like a no-brainer to some people, but most of the proponents have to admit that there is nothing fair about reducing ETFs if that means customers who do not break their contract early end up subsidizing the customers who do. It is not good enough to simply complain that ETFs seem too high. Intervention in prices means doing the maths. Politicians and regulators need to remember they also represent a silent majority of customers who are satisfied with their services, and may be quite happy to agree to contracts with high ETFs if that means the price they pay a significantly lower price that the customers who make work for telcos by repeatedly switching providers.

Handset Locking

The uproar about unlocking iPhones shows how sensitive this topic is. Again, the issue is about whether prices are transparent to customers. Locking is key to restricting a customer's freedom, but is a reasonable exchange for a handset that would otherwise be more expensive. Hook-ups between operators and handset manufacturers are pivotal to keeping costs down and creating a compelling proposition where handsets and networks work properly together. Trying to uncouple the two is perfectly sensible from the customer's perspective. But if all handsets were sold unlocked, then prices would be higher. The best option for customers is that shop around for a deal they like. If enough customers want unlocked handsets, then somebody will provide them, but at a higher price.

Competition Does Not Work, But Nor Does Intervention

So why do customers regularly feel cheated? Poor service, obstacles and penalties for changing suppliers, broken promises and hidden fees are routine causes of customer dissatisfaction. Regular and constant complaints tells its own story about how pleased customers are with the service they get. When telcos made it hard to complain, or make insufficient effort to listen, that exacerbates the frustration. But part of the problem is really very straightforward - wireless communication is such a compelling sales pitch that many people would buy it regardless of poor quality services and poor treatment by their supplier. Complaining about ETFs and handset locking is like complaining that the original Ford Model T automobile only came in black. Like the first mass-produced automobiles, cellphones have such a dramatic impact on our lifestyle that most inconveniences are pretty trivial compared to the advantages. Which is why people buy them regardless of the poor treatment of each and every supplier. Cellular literally sells itself. Which in turn is why competition is not enough of a spur to improve performance. However, it is specious reasoning to think legislation is the key to better service. More transparent pricing may benefit the unwary customer, but is unlikely to cause telcos to cut prices or lower their expected returns, so transparency is hardly likely to lead to lower bills. Flexibility may be great for customers, but may be less loved if the cost of flexibility is transparent as flexibility adds to costs. Politicians should beware of imposing flexibility and transparent costs whilst simultaneously encouraging other kinds of cross-subsidy in telcos. If some costs are considered to punish customer disloyalty, bear in mind the alternative is to expect loyal customers to pay more. So legislators want to have their cake and eat it: making rules to address what they do not like, but not answerable for how that benefits the customer in the end.

The most effective form of customer protection is customer action. But asking customers to challenge their poor cellphone service would be like asking the first automobile owners not to buy their Model T until Ford offered a range of colors from purple to pink. It sounds like a good idea, but nobody would want to do it in practice. Getting legislators to intervene may seem like the perfect solution, until you realize that somebody will still have to foot the bills, and the providers will still look for a way to turn a profit and get an advantage over their competitors. The biggest failing of most providers is that they make promises they do not keep. Arguably they do that because they have to compete for customers and making promises is their way of attracting customers. By that logic, less competition would make for better services. Meaning the services would be no better, but that the expectations would be set lower. In reality, customers are better off with broken promises and the right to seek redress when contracts are not satisfied. Much better that than vanilla contracts defined by legislators, which promise the minimum and deliver no more. That may avoid disappointment, but will not encourage innovation either. For good reason nobody in government tried to make Ford sell his cars in pink; where the customer cannot exert enough influence, then government intervention will probably flatter to deceive.

Posted by Eric on October 18, 2007 10:23 AM | Permalink | Comments (0) | TrackBacks (0)

It is always fascinating to see how the big companies (the ones with the contacts and the influence to land huge deals) end up reselling the products of the niche companies (the ones who arguably know what they are doing). Hence the news today is that Hewlett-Packard has integrated parts of cVidya's MoneyMap revenue assurance product into its own CentralView solution. The win-win is pretty straightforward: HP gets a product that does revenue assurance and hence the prospect of more revenue assurance sales whilst cVidya benefits from selling more thanks to HP's greater reach. One footnote: in the press release there was an interesting bit of spin on the benefits of the product. HP said it would "ultimately, deliver a better experience for customers". That is an interesting way of saying that customer bills would not be full of errors ;)

Posted by Eric on October 17, 2007 03:03 PM | Permalink | Comments (0) | TrackBacks (0)

I got translated into Spanish! Here is the Spanish translation of my TMF article on revenue assurance in Latin America. The English version is here.

Posted by Eric on October 17, 2007 10:19 AM | Permalink | Comments (0) | TrackBacks (0)

Five years ago I sat in the UK head office of T-Mobile, listening to George the product manager. George was earnestly explaining Wi-Fi hotspots, a technology he believed would disrupt the telecoms market and generate lots of money as a consequence. Wi-Fi hotspots are tiny radio stations that connect computers to the internet at broadband speeds without needing wires. George's theory was that it offered the prospect of a great new service to customers, but would not need to be backed by the same kind of serious spending commitment normally needed when rolling out a wireless network. In a normal wireless network, coverage is a vital selling point. In contrast, Wi-Fi hotspots work across a very short range, so the selling point would be the very high levels of performance relative to even 3G. Hotspots would hence be based in places where people were away from home, where they congregated in large numbers, but would be likely to sit still for extended periods whilst they accessed the internet. That means places like hotels, bus stations, or libraries. George did not need to labor his explanation of Wi-Fi, because the idea was not invented by telecoms businesses (although telcos often think they invent every good idea). The Institute of Electrical and Electronics Engineers developed the 802.11 wireless network standards some years before. Fortunately, some businesses clubbed together afterwards and gave 802.11 the much sexier name of "Wi-Fi". Lovers of acronyms should be aware that Wi-Fi is also known as Wireless Local Area Networking or WLAN. Whilst George was diligently explaining the benefits of Wi-Fi, I was biting my tongue and resisting the temptation to point out that my laptop was already Wi-Fi enabled. In fact, earlier that year I had been in LAX airport, sharing a beer whilst waiting for my flight and chatting with a software developer from Austin, Texas. He raved about how Wi-Fi had literally freed him from his desk. But whilst this amiable Texan could show me his laptop, he could not show me Wi-Fi in action. This is because public hotspots - the radio base stations that users connect to - were yet to become common, and there certainly was no coverage in that particular LAX bar. Which is why George and T-Mobile thought they would make a lot of money. Their plan, as George explained, was to build hotspots all over the world, and charge people for using them. As I tried to point out at the time, that seemed like a pretty risky way to increase revenues. Spending lots of money on building networks is what makes operators special. If anybody can build hotspots here, there and everywhere for very little cost, then anybody, and everybody, will do it. That makes it harder for any single business to charge a premium for using their hotspots. More likely, people with Wi-Fi enabled devices will get great wireless broadband access in many new places, but pay little or nothing. Worse still for T-Mobile and other networks, customers would eventually realize that internet connectivity can be used for far more than just browsing the web...

Fast forward five years and T-Mobile, like other networks, are still trying to, and sometimes succeeding at, making money by selling Wi-Fi access to laptop users. They also have many competitors, some traditional, some not so traditional. This has lead to a proliferation of hotspots. McDonalds has 15,000 Wi-Fi enabled restaurants worldwide. T-Mobile has a deal to provide hotspots throughout Starbucks in the US, and Starbucks has similar deals with T-Mobile and other providers in other countries. Whilst the number of hotspots has grown, so has the number of devices able to connect to them. It used to be that only laptops and PDAs came with Wi-Fi functionality. Now an increasing number of smart phones and other hand held devices come with Wi-Fi as standard. For examples, take a look at Nokia's range of Wi-Fi enabled phones or the new Apple iPhone-that-is-not-a-phone, also known as the iPod touch. During those five years you may also have noticed that fixed-line providers have taken a hit because some broadband subscribers have started to use clever IP services like Skype to make calls for free. It does not take a genius to work out that if Wi-Fi enables you to get broadband access on the move, and your cellphone can also connect you to a Wi-Fi hotspot, that some people will want to start using services like Skype on their cellphone and so cut the costs of traditional voice calls. So whilst investing in hotspots seemed like a great idea to George five years ago, it may not seem so great now. Though not common yet, Wi-Fi enabled mobile devices raise the prospect of saving customers a lot of money when making calls. It also means that customers can reduce the expense of using data services on the move. Hotspot operators may try to block access to certain kinds of IP service, but their problem is that low costs mean competitors can enter the market and cause further disruption, much like George hoped to do five years ago. That means if one telco tries to preserve its margins by restricting what can be accessed via its hotspots, a rival business may be able to steal customers and revenues by offering hotspots without restrictions. They also can go one further by offering hotspots that are free.

Not just commercial operations are interested in the potential of Wi-Fi. In recent years, there have been several prominent projects to provide Wi-Fi access across whole cities. These municipal projects have met with mixed success. Cities like Auckland in New Zealand and Philadelphia have successfully implemented Wi-Fi across wide urban areas. In contrast, proposals for Wi-Fi in cities like San Francisco have faced criticism or wrangling over funding. Often local government wants to provide a free or low-cost internet service as a way to provide connectivity to all citizens, thus improving the prospects of the poor. However, concerns about such diverse topics as privacy, use of advertising as a way to generate returns for investors, and longevity of contracts between cities and suppliers have slowed if not stopped the anticipated wave of municipal roll-outs. In August, Earthlink, a service provider set to build some of the municipal networks, announced it was restructuring in order to cut costs; this also means increased scrutiny over whether its municipal projects really will generate sufficient returns on investment. However, it is not necessary to roll out Wi-Fi on a grand scale to undermine the business model of those wanting to charge for it. A small business, like a cafe or a guest house, may give Wi-Fi access for free as an additional way to attract customers. They will probably find it easiest to give the service away and hope to increase conventional sales; they will lack the resources to generate revenues directly from selling Wi-Fi connectivity. Furthermore, some domestic WLAN users freely allow others in range to connect to their home network. Whilst for a minority this is an act of pure charity, for most it is because they have failed to set up their security correctly. There are business models that encourage users to share access to their home networks. Customers of the provider FON agree to a reciprocal arrangement where every FON customer can roam for free on every other FON customer's home network. Customers can also get a share of the revenues earned when other Wi-Fi users pay to access the internet through their home WLAN. This model has attracted the attention of big telecoms operators wanting to disrupt the market. Recently French service provider Neuf Cegetel agreed to partner with FON, thus giving 600,000 customers the opportunity to opt in to the FON model. This was topped on October 4th when a similar deal was reached between British incumbent BT and FON to create a Wi-Fi community that will give 3 million subscribers the option to join. Deals like this give fixed-line telcos like BT the opportunity to steal back revenues from wireless providers by offering mobile phones that also provide voice and data services via Wi-Fi whenever possible. These phones can connect via Wi-Fi to the subscriber's home network, or to the provider's own hotspots, or to the home networks of fellow FON users. Only if there is no Wi-Fi hotspot in range will the phone then try to connect to a normal 2G or 3G wireless network. This means cheaper call costs for users and enables fixed-line providers to compete without incurring the costs of building a full wireless network with near-universal coverage.

It is not all upsides to using Wi-Fi for wireless voice and data calls. Many customers will dislike the relatively poor level of support they receive compared to typical wireless services. Speeds for data transfer can be great, so long as not too many people are trying to use the same hotspot. That also assumes you are within range of a hotspot, which for users away from home is only likely in cities and even then only in public places. However, if customers can accept they typically get what they pay for, then phones that can switch to Wi-Fi in preference to 2G or 3G network connections offer a simple way to cut costs. As more people adopt Wi-Fi and run their own home networks, so coverage will inevitably grow and the benefits of adopting Wi-Fi increase. On top of this, increased competition will drive costs down. After all, charging customers to use Wi-Fi may not be a good way to get their loyalty or their money if the rival business down the road gives them unfettered Wi-Fi access for free. The first signs are emerging that even the traditional corporate models for generating revenues from Wi-Fi are having to become more flexible. Starbucks profits from charges for using its Wi-Fi hotspots, but in a deal with Apple, people will be able to browse iTunes for free in Starbucks. The thinking here is pretty clear - better to give the access for free and make a margin on music downloads than to charge for access and hence impede lucrative iTunes sales. McDonald's has gone one better in the United Kingdom. McDonald's announced on October 6th that they will provide Wi-Fi internet access free of charge in all their 1,200 UK restaurants. This will make them the largest provider of free hotspot access in the UK, representing about 10% of all hotspots in the country. Clearly they think that there is more profit to be made from selling burgers than bytes, and that they will be enticing customers to come and spend more at relatively little cost. This will put pressure on other Wi-Fi providers to follow suit. So it looks like bad news for George, as the days of selling access to Wi-Fi hotspots may be coming to an end. Worse than that, those hotspots will also take voice and data revenues from wireless network operators by offering similar or better quality services at a fraction of the price. For the rest of us, it looks like the spread of Wi-Fi is very good news indeed.

Posted by Eric on October 15, 2007 04:29 AM | Permalink | Comments (0) | TrackBacks (0)

Japanese telco KDDI is set to cut the cost of calls, and increase the cost of handsets. Diminishing the subsidy of handsets should, in principle, be a good thing for customers. It means they pay for what they get. That means that customers who make more calls do not subsidize customers more interested in how their handset looks than in how it works. However, with economic growth in Japan still struggling to gather momentum, some analysts have warned that reducing call costs may encourage a price war that would have a deflationary impact on the Japanese economy. So what is good for Japanese customers may end up being bad for Japan as a whole :(

Posted by Eric on October 11, 2007 10:01 PM | Permalink | Comments (0) | TrackBacks (0)

In Greek mythology, the Hydra was a beast with many heads. Cut one off, and two would grow in its place. Rob 'The Guru' Mattison has a similar affliction. The Global Revenue Assurance Professionals Association (GRAPA) is one face of his campaign to profit from revenue assurance. His consultancy XiT, which seems to share marketing data with GRAPA, is another face. After previously claiming that only telco employees were allowed to join GRAPA - conveniently ignoring that neither Rob Mattison nor any of the admin 'volunteers' from XiT happen to be employees of any telco - it seems that rule has been scrapped and now commercial organizations will be allowed to join. I wonder if they will get treated the same as the commercial organization that runs GRAPA. So what is the first commercial organization to join? No, not XiT. It is the 'Revenue Assurance Academy'. According to GRAPA's website the Academy is:

"a company dedicated to the development of training and certification standards for revenue assurance professionals and will be working closely with GRAPA to help standardize and raise the quality of available training to consultants, revenue assurance engineers and managers."

But there is another way to describe the Revenue Assurance Academy. The Revenue Assurance Academy is just another name for XiT, Rob Mattison's consultancy! No wonder the Academy will be working closely with GRAPA, given that the person who profits from the Academy is none other than the unelected President of GRAPA. What bothers me is that anyone believes this hogwash about being dedicated to anything but making money for Rob Mattison. Lest we forget, Rob is a serial guru. According to his own hype, and his own books, Rob has previously been an expert on object-oriented programming and business intelligence. Which is probably why he is so confident that he is the right man to hand out certificates to those deserving to be considered revenue assurance professionals... and willing to pay him for them. In the style of Rob's Academy, here is my own blurb for GRAPA, the Academy, Mattison Consulting, XiT and all the other businesses run by Rob and his family:

"another business front dedicated to Rob Mattison's quest to rule the world of revenue assurance, that will be working closely with other Rob Mattison businesses to mislead honest professionals into giving Rob their money as tribute to his self-proclaimed expertise."

Do you think if I paid the US$75 fee for corporate members I would still be allowed to join? ;) To be fair to him, by setting his price at a modest 75 bucks, Rob knows not to price himself out of the market...

Posted by Eric on October 9, 2007 10:19 PM | Permalink | Comments (1) | TrackBacks (0)

At a conference I attended last year, somebody asked what the audience felt about outsourcing of billing. To say they were against it is to put it mildly. The recurring criticism was that outsourcing results in a loss of control. I found that a bit strange. Outsourcing involves agreeing a contract with another company; the contract governs who does what. The same is true of someone working 'in house'. Their work is also governed by a contract; a business has no more control over its employees than it has over its suppliers. In fact, it can be easier to replace a failing supplier than to replace failing employees. Nevertheless, it is common for outsourcing to generate suspicion, resentment, and even hostility. Some of that is due to the contract negotiations. By their nature, they clarify that all parties should profit from the deal. That means if things go wrong, it can be hard to persuade either side to take remedial action if this also implies increased costs and reduced profits. Which of course means that relationships with outsourcers are no better or worse than the contracts that get negotiated. A genuinely good deal for both parties will be respected and will work well. A poor deal for one or other will lead to tensions. Areas of vagueness or uncertainty in the contract can compound those tensions. Finally, from time to time circumstances may arise that were not anticipated in the contract. So it is not surprising that billing, which can be error-prone, poorly documented and difficult to understand, can be especially problematic for outsourcing. But perhaps the challenge of writing a contract can help to refine insights into what are the key principles for effective billing.

They say people learn most from their mistakes. If that is right, Vodafone UK should be able to share a valuable lesson about how to outsource billiing. According to The Register, Vodafone UK's outsourcing deals have contributed to a series of problems with billing; read here and here. If you read the comments on those pages, you get the feeling that many customers are fed up with it. They blame Vodafone, of course. One thing we cannot know from the outside, however, is which company really is to blame. Of course, one possible answer is that they all are ;)

Posted by Eric on October 7, 2007 09:09 PM | Permalink | Comments (0) | TrackBacks (0)

Advanced meters offer the prospect of saving utilities a lot of lost revenue. Part of the reason is that smart meters tell the supplier how much energy is being consumed on a regular basis. Compare that to a traditional dumb meter, which the company may not even have a record of in their systems, and which only gives accurate data as often as somebody reads it. Read here about United Illuminating, the winners of the 2007 metering award for best revenue assurance initiative, as decided by the Global AMI Utility Peer Group (UPN). The figures for 2006, with ROI of over 240% and $2.1 million in revenue recovered, speak for themselves.

Posted by Eric on October 6, 2007 05:09 PM | Permalink | Comments (0) | TrackBacks (0)

It is big news that the band Radiohead has broken with convention and decided to offer their latest album, In Rainbows, for, well, whatever people feel like paying. If you have not seen their website yet, I recommend you take a look. The fonts and colours are vaguely reminiscent of the early days of home computing, which I doubt is accidental for a band so studied in everything they do. When you get to the page that asks for your money, you get the option to type in the amount you want to pay.



Repeated hits on the question mark icon only calls up screens that confirm, then reconfirm, that you really can decide how much you want to pay. But is distributing music on this basis really surprising? The rise of digital music and piracy means that revenues from selling music keeps falling and falling. On the other hand, associated revenues from live performances and merchandise keeps going up and up. Most radio stations have never been anything more than channels for non-stop advertising of popular music. When I was a kid, I would tune to Radio 1 and use a cassette tape to record DJ Bruno Brookes playing the week's Top 40 singles. It was a primitive form of piracy. However, stealing the music helped to instigate a life-long passion that also caused me to go to the record shops and buy many of the songs I listened to. The music industry has made an awful lot of money from me since, so they benefited in the long run. So, now that piracy is so hard to combat, and the cost of distributing music is falling to negligible levels thanks to the internet, more and more bands will decide to give away their music for free. The main point is that if some people give the music away for free, and some make you pay for it, then more people will listen to the music given for free. And that will secure better long-term popularity for the artists prepared to cultivate a fan base. Bands with a very committed following, like Radiohead, might reasonably assume that the odd fan will make some small contribution, and that small amounts from a small share of very very many people will more than cover their costs as a result. Better still, they may give the download away for free, but will also sell the music as part of a nice bit of packaging. Then the album cover becomes the equivalent of the shirt worn by a football fan - a sign of belonging that people will happily pay excessive amounts for, because they want to show other people they belong. All that changes is that instead of advertising the music, the advert is the music. The bands instead make money from gigs and t-shirts, neither one of which can be copied quite so cheaply or easily.

Radiohead are by no means alone. Indie band The Charlatans are giving their next album away for free, in co-operation with radio station XFM. Record shop retailers responded angrily when Prince gave his album away free with a newspaper. What the retailers are forgetting is that their industry is dying, as was demonstrated when Richard Branson decided to sell the Virgin Megastores chain, almost 40 years after he opened his first shop. Nobody wants to go down with a sinking ship, and musicians are no different. The trend is for record shops to shut and music to be sold on-line, and nothing will reverse that. The artists listed above are simply finding a new business model to sustain their established careers. In future, there will be an increasing number of musicians that make their reputations on the back of music given away for free. Last week I was in a packed venue to see Dan Le Sac vs. Scroobius Pip, an act whose popularity is based almost entirely on people watching their video on YouTube.

Although DLSvSP have not yet been signed to a record label, they clearly are a success. They pack people into venues up and down the country, week after week. They can also sell their music directly through iTunes, which suggests that music labels will become irrelevant over time. It is doubtful that any music label would have had the courage to back this incongruous duo that do not even begin to fit into any standard marketing niche.

If music can be given away for free, it is not such a big leap of the imagination that other recorded entertainment will eventually go the same way. I have already blogged about the prospect of television shows being given away for free, with the viewers having the option to make a donation much like they have with Radiohead's new album. After all, George Lucas made a fortune by cutting a unique deal with studio 20th Century Fox. Instead of demanding money up-front, Lucas secured the rights for sequels and merchandise for Star Wars. The studio considered these to have negligible value. History shows they were very very wrong to do so. So how much longer will it be before a latter-day Lucas comes along, secures film financing, makes a good movie, gives it away for free, then cashes in a strong and long stream of ancillary revenues, augmented by the much higher levels of exposure attained through reaching the maximum number of viewers?

There is only one glitch in all of this. Lots of telcos are banking on downloads and streaming traffic being the next generation of revenues. If the product is given away for free, their charging model collapses. It does not even matter if the networks do away with the neutral net, as a two-speed internet will still be fine for letting people download a movie slowly and overnight, especially as they will be encouraged to make copies for their friends. That might make the next generation of revenue assurance more about securing a portion of merchandise rights and ensuring a correct split of revenues than it is about counting CDRs. The telcos that win will be the ones who facilitate the sale of merchandise, with user-friendly ways of buying toys and t-shirts as people watch the content. If content is king, but content becomes free, then every telco business model ends up looking a lot like Amazon's. Unless the telcos hope that people will choose to give them voluntary donations as well ;)

Posted by Eric on October 3, 2007 05:56 PM | Permalink | Comments (0) | TrackBacks (0)

As I was driving into London the other day, I was bemused to find the bearded shagger, Richard Branson, taking over the airwaves of my favourite radio show. Try as I might to avoid his grinning entrepreneurialism, it seems impossible. Branson's efforts to promote himself and his Virgin-branded businesses knows no end. When Branson is not attempting to break world records, he is making near-subliminal cameos in movies like Bond prequel Casino Royale. This time he was promoting a new UK television channel, Virgin One, whilst fending off questions about the decision to sell his high street retail chain, Virgin Megastores. Virgin One, like V+ and other Virgin offerings, has a strangely familiar name. Which is not surprising as Virgin Media's current strategy seems to be to copy their Murdoch-owned rivals, Sky. Branson talked up the 'irreverent' schedule of his new channel, which consists of a lot of cheap comedy shows imported from the US plus one UK-made documentary, dedicated to the edifying topic of the penis. His salesmanship could not disguise that this is a hurried attempt to fill the gap created when Virgin could not afford Sky's demands for more money for their channel, Sky One. That badly hurt Virgin, leading many of their cable subscribers to churn to the Sky's satellite service. Sky has more than double the number of subscribers of Virgin, and with BT entering the home television market, Virgin Media is under severe pressure to generate returns that justify the optimism shown in the refinancing and rebranding of the troubled UK cable sector.

Viewer numbers are vital to both Sky and Virgin, not just because of current advertising and subscription revenues, but for the future profitability of both businesses. As television converges with the internet, viewers will stop being passive spectators and will become interactive consumers. Whilst watching television they will be given the option to download the theme music to their favourite show, to find out who sells the clothes the actors are wearing, and to book a test drive in the Aston Martin car that James Bond drives. That is why Sky+ and V+ are important; link these hard drives to a set-top box and you guarantee that every viewer has the computing power necessary for fully interactive services, whilst retaining full control over the options presented. This is also behind Branson's decision to sell Virgin Megastores to its management team. The first Virgin business, established in 1969, sold records by mail order. Soon after Branson opened a record shop on London's Oxford Street. That shop generated the profits that funded the Virgin music label, and started the ceaseless chain of Virgin enterprises ever since. Records are a physical and tangible way to distribute music. When Branson started selling records he was able to undercut his rivals and hence gain an advantage. Now his on-line rivals can undercut him, by eliminating the need to handle, store and maintain physical stock, by avoiding the need to pay for premises on high streets and in shopping malls, and the salaries of staff working inside them. A clicks-and-mortar strategy is no good to Virgin because on-line sales are so much cheaper and so much more attractive to customers than old-fashioned shops. The decline of these shops is inevitable. The Virgin strategy is flicks-not-mortar. Flick through a wide range of television shows, user-generated content and interactive entertainment, click up a screen to purchase music, other downloads and even physical goods, and never leave the comfort of home (unless you are browsing on your mobile phone). Selling the Virgin Megastores may seem to end nearly 40 years of Branson the music retailer, but in reality is just the next chapter of Branson, the king of irreverent discounting.

Posted by Eric on October 2, 2007 09:12 PM | Permalink | Comments (0) | TrackBacks (0)

Forgive me for discussing a situation as serious as that in Burma in a blog dedicated to revenue assurance in the telecoms industry, and for trying to draw connections between the two. Sometimes there is a need to go beyond the normal commercial concerns that occupy our time. I imagine all of you are aware of the democracy protests taking place in Burma, a country referred to as Myanmar by the generals that have governed it for over forty years. Fifteen years ago, I knocked on doors around Liverpool University, getting students and neighbours to sign a petition for the release of Daw Aung San Suu Kyi from house arrest. We obtained 10,000 signatures in total, but many years later the situation in Burma, and of Suu Kyi's democracy movement, has changed little. One thing that has changed in the meantime is the technology of communication. And the military dictatorship knows it too. The repressive regime is resorting to desperation tactics to stop the rest of world seeing the truth of how Burma is governed, and to stop democracy activists from organizing their protests. The dictators are cutting off Burma's connections to the internet and confiscating mobile phones.

Hardship is the wellspring of dissent in Burma. Once one of the most prosperous nations in Asia, decades of economic mismanagement have ravaged its people. Whilst the rest of the developing world is investing in communication as a way to fuel growth, it is typical that the Burmese junta's first priority is to retain power at any cost. Internet access and technological leapfrogging to mobile not only help to enrich Burma, but they also enable pictures of brutality to be sent around the world, and for the brave Burmese monks and citizens to co-ordinate their protests. Whilst the rest of the world can urge diplomats and politicians to put pressure on the Burmese government, there is little immediate assistance we can give to the freedom fighters. There is, however, one way we can help the march of freedom all over the world, and to make sure it can never be forced backwards. Open communication is the enemy of the despot. Every penny invested in electronic communication enriches our liberty and makes it harder for autocrats to manipulate us. The better we do our jobs, the better the investment made. In Burma, the multiplicity of links with the outside world increases the challenge in blocking them. The more mobile handsets people have, the harder it is to take them all. Let us work to get the most from communication investment, so everyone can talk to everyone. Then we can hope that within another fifteen years, no government can commit crimes against their people without the whole world knowing.

Posted by Eric on October 2, 2007 06:18 PM | Permalink | Comments (0) | TrackBacks (0)