1 Enabling flexible charging for 3G services Identifying Market Trends Convergent Rating&Billing Impact Analysis Andreas Krebs (O 2 Germany) IIR Mobile Billing Systems 2004 Budapest, September 2004

2 Content 1.Key 1: Executive Summary 2.Key 2: Market Trend and Charging Architectures! 3.Key 3: Impacted Systems and Processes! 4.Key 4: Approach - Just an example! 5.Key 5: Resume and Lesson Learned! Now we have an interesting discussion again about convergence and 3G charging. That I have seen already five to six years ago by addressing the same weaknesses as of today. We have simply believed in the key suppliers and the normal trend of technology involving. This presentation doesn’t invent the wheel/mobile phone - but gives you an excellent overview about it and shows your capabilities and options for blending your future charging/billing architecture.

3 1 Executive Summary Mobile operators are suffering from the enormous number of integrating new charging and provisioning requirements. Vendors indicating to mobile operators that their solutions/platforms can fully address the operators need of flexible charging. Reality is that no one vendor solutions can address the highly complex charging requirements of the present day operator.

4 Key Message (1/2) Mobile operators are suffering from the enormous number of integrating new charging and provisioning requirements/services. Vendors indicating to mobile operators that their solutions/platforms can fully address the operators need of flexible charging. Unfortunately, statements like this are pretty much wishful thinking. Reality is that no one vendor solutions can address the highly complex charging requirements of the present day operator. In the Charging and Billing market we see four different types of suppliers, each representing a specific school of thought and industrial background, addressing all these weaknesses. There approaches are largely complementary rather than competing.

5 Key Message (2/2) A careful blending of component solutions from the four approaches will provide the most suitable path. Different types of operators will benefit from different combinations of solution sets reflecting their approached to launching new data services. Integrating these components is the main challenge. Convergence, real-time processing and open systems interfaces are the key focus areas. A careful blending of component solutions from the four approaches will provide the most suitable path.

6 2 Market Trends & Charging Models Four different types of suppliers are well know in competing on the rating, charging and billing arena. All of those addressing today’s mobile operator weaknesses! To what certain extend the offered solutions are different?

7 Different Type of Enablers are driving the future Charging Architecture Discussion - (Matrix) Requirement Enabler Structural Enablers “New Products” (Promotions,Bun dels, Packages Marketing “Near Real-Time”- Requirements True Convergence/ “Real Time” Better Care & Self-Care Need to NW- Core- Replacements (end of life) Need to SW- Core- Replacements (end of life) New Business Models Need for Cost Savings (OPEX/CAPEX) Current Time to Market Balance between Prepaid versus Postpaid Customer Base Current Figures Innovation/ Investment Current Number of Customer Base - Targeting Base Current EBITDA Supplier Satisfaction Service/Product Delivery Satisfaction Organisational Structure and Maturity Portal Strategy Balance between Data and Voice Revenue Covering Business Areas Strategy on Customer Service Figure: Matrix of the different drivers for adopting new charging models in a mobile operator - not to be completed [Source: o2 Germany]

8 Four different Types of Supplier in the Rating, Charging and Billing Arena - (Matrix) Core Network and IN Equipment Manufactures IT Suppliers including Mediation and Billing solution vendors Suppliers of IP network and platforms Content Management and Mobile Commerce Providers Different industrial background (Years in operating business, Software- or Hardware-Oriented, “Layered” Solutions versus “Out-of-the-Box”-Solutions, different License Models, Years in Business Critical Environments, Standard Driver - PARLAY, SIMPAY, JAIN, 3GP and many others) Different solutions or platform based solutions (all in one approach to strategic partnerships) Different types of Core-Business (Routing-Technology, Switching-Technology, Content-Management, Billing- Technology) Different Market Shares (Partner Strategy, Alliances, Spin-off’s, Owners) Different activity types within the Mobile Operator (Core Network, Billing, Consulting, Integrator) Figure: Matrix of the four Suppliers in the Billing area [Source: o2 Germany]

9 Different Type of Enablers are driving the future Charging Architecture Discussion Creating a converged view of customers, services and usage Monitoring usage and interacting in real-time or near real-time with end users Support for diverse and rapidly changing pricing and business models Providing a standard way of separating operator charging from 3rd party charging for content and applications Traditional cost-based charging versus value-based approach Extending the “statefull” IN model already used in circuit switched networks to the core network using industry standards such as CAMEL Ph3, RADIUS, DIAMETER Pre/Post Paid Convergence various standards driven by different parties, alliances (SIMPAY, PARLAY, JAIN, 3GP, IPDR, Teleforum,....)

10 IT Vendors Charging Model Approach

11 IP Vendor Charging Architecture Approach

12 Network and IN Equipment Vendor Charging Architecture Approach

13 Content and m-commerce Vendor Charging Architecture Approach

14 3 Impacted Systems and Processes Well we have learned a lot about the different approaches and the the differing thinking of the vendors underneath. But Billing and Charging is only a small piece in a bigger picture! How do we get that integrated and to what certain extend we have to consider other areas and what are the key challenges?

15 The Restructuring/Introduction of new Charging Models is considering many different places Pre Postpaid Convergence can mean many different things from a single integration of the CRM solution with the prepaid platform to a full management of a single rating engine with unified tariffs and pricing models for the Prepaid and the Postpaid Customer Segment.. My hypothesis: No one in word will be implementing this in the full approach. Cost and marketing thoughts are going to drive the game furthermore? Discussion! Figure: Different flavours of Convergence [Source: Schlumberger/Sema Group - White Paper on Convergence 2003] 1 2 Single Customer Care and Self Care 3 Unified Services and Tariffs Single Marketing View 4 Integrated Balance Management 5 6 Integrated Payments and Recharge Common Platform and Technology

16 Charging, Rating and Billing - How they interrelate? Prepaid PostPaid Offline Charging Online Charging Near Real-time Charging/Billing Near Real-time Charging/Billing Offline Charging Charging process where charging information does not affect in real time, the service rendered. Online Charging Charging process where charging information can affect in real-time, the service rendered and therefore directly interacts with the session /service control. Near Real-Time Charging/Billing Charging process where charging information does not affect in real-time, the service rendered but charging information is passed to rating & billing shortly after ‚use of service‘. Requires ‚online charging‘ capability combined with ‚hot billing‘. Payment Management - Key Consideration Multiple Payment Sources Security and Audit Authentication and financial institution interfaces Revenue Assurance Multiple Payment Mechanisms Company Accounting Mechanism Payment / spending rules based on Product type and customer’s ability to pay / preferences Funds reservation and use for specific transactions (e-wallet) Payment Receipts Customer Trust Roaming-Partner-Agreements Service-Provider-/ Partner-Agreements Customer can change between PostPaid/Prepaid in Realtime [Source: o2 Germany]

17 Network IN Platform Event Collection / Mediation Rating and Billing  Customers are classified by payment type and provisioned accordingly  Subscriber and tariff information managed in multiple places  Flexible payments instruments by service type unachievable  Real-time view of Account Balance across services not available  Real-time credit risk management restricted to prepaid customers  Simple tariff models only (usage-based with simple measures) and often long lead times to introduce new products and services  Restrictive event and data services  Pricing of simultaneous service usage by customers and real-time cross-product discounting not possible  Restricted opportunity for cross-sell and up-sell to drive-up ARPU Key Constraints Legacy Billing Systems Restrict the Ability to Support Emerging Charging and Revenue Models Common Legacy Pre-paid and Post- paid Rating and Billing Architecture Legacy Pre-pay System (Service Node) Customer & Tariff Database Event Collection / Mediation Legacy Billing System Customer & Tariff Database CDR feed (for statementing) Transaction Database Figure: Key Components in the legacy world [Source: o2 Germany and Internet research]

18 Challenges - Interface for Rating/Charging Call controlIN Rating & balance (real-time) Billing (batch) Conten t control IN Rating & balance Billing (batch) Call control Content control IN Rating & balance Billing (batch) Call control Content control Mediation Billing-based real-time billing IN-hosted real-time billing IN-based real-time billing Figure: Different approaches for adopting new charging models in a mobile operator - not to be completed/as of today [Source: o2 Germany]

19 4 Approach - Just an example Ups, there are many things confusing us. A lot of interaction appears and needs a carefully ordering and evaluation. That is life, you have many options, you can only choose one, you have to blend the mixture! Is there a general answer giving the way forward?

20 Prescription - the 10 golden steps STEP 1: Look at your current situation and use slide 7! STEP 2: Look at the tools/systems/vendors you have. Please use slide 8! STEP 3: Look at the portions of applications of the “new” architectures you have already in place! (slide 10/11/12 and 13) STEP 4: Look at slide 15 and the level you going to modify or change! STEP 5: Consider the mixture from all of that! STEP 6: Investigate on the Type of Convergence! (slide 16) STEP 7: Please have a closer look again at the right hand side of slide 16! STEP 8: Address slide 17 to your management (Marketing, IS, Network, Procurement, Member of Board)! STEP 9: Discuss slide 18 in your organisation and please starting your own thinking and conclusion! STEP 10: From up to here it is your party!

The various charging architectures that are emerging, their strengths and weaknesses, and that one vendor solutions is fulfilling the prophecy is unrealistic. The importance of jointly conducting more detailed studies into these emerging architectural models as input to major decision making on critical topics such as Pre-Post Convergence, selection and placement of rating engines, product catalog etc.

22 5 Resume and Lesson learned! This isn’t just a billing or IT project at all, it requires a lot involvement of other parties. We will see new alliances between the supplier form different areas! I can’t really see an industrial driven common approach for the Mobile Operator. You have to work hard - it’s like a re-launch of you whole entire business!

23 Questions - louder please! Thanks to the IIR and for all the lovely people I have met here in Budapest in the last couple of days! Have an nice way home and take care!

24 Sources This slide set doesn’t reinvent the wheel. A lot of public material was be used. Thanks to my colleges in the Architecture Department at o2 Germany and mmo2! “Emerging Charging Architectures for New Mobile Services” report from Analysys Research “Billing for Content” report from Ovum “White Paper on Convergence” Schlumberger/Sema Group Presentations made by Logan-Orviss et al. at the Pre-Post Convergence meeting hosted by O 2 Ireland in Dec 2003 Other Intellact sources e.g. Yankee, Informa, Total Telecom o2 Internet Research Results of vital Discussion with many colleges from various departments within o2 Germany and mmo2 Group

25 IIR - Mobile Billing Systems 2004 Andreas Krebs, O 2 Germany IS Architect IS PP Architecture September 2004 land line: mobile line: