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SURE! Blog

Usage based Billing: Role of Quota Management and Business Benefits

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Dec, 2014


Over the past few years, internet has grown from being a basic commodity to a basic necessity. This is good for general public, cloud operators, corporations like Facebook and google. However, this led to a steep decline in the revenues per bit for the enablers in the Broadband connectivity value chain. With Operators being at the tip of the pyramid, they are set to lose the most. Over the past decade, broadband has grown from a conservative usage to a basic human right with in a span of a decade and ideally, this should have led to substantial increase in the revenues for the Broadband operators. However, broadband operators only experienced marginal growth in their revenues while their cost of running the operations and market competition has substantially increased.

Competition made operators explore new ways to monetize their offering. While some operators gave the subscribers the flexibility to pay for exactly what they are paying for, some operators helped their users to spend just the needed amount for the service through well planned upselling. With the evolution of all IP networks and services like LTE and WiMAX Advanced, operators can now provide triple play service with the same end user experience like that of the legacy technologies and this opened new avenues for generating more avenues. This is a welcome change as the customer has the option of choosing what he pays for and how much he pays. While operators in the developed markets like Europe and US are increasingly giving their consumers the option to pay for the service quality they need, operators in emerging markets like South Africa, India and Malaysia are giving their customer flexible choice of services like free to access certain applications. However, in both the cases operators are required to have systems which can handle this growing business needs that leads to operational challenges.

While some help is needed to study and analyze the consumer behavior patterns, operators need a rock star combination of quota management and subscriber management platforms to implement these innovative offerings. With the help of such a platform, operators have the ability to offer differentiated services to their customers. Some such differentiators are:

Personalized Plans:

Every user is unique so are their requirements. Although every operator empathizes with this fact, not much has been done to achieve this. A few years earlier, some operators gave their customers the option to choose the usage of individual services like Call Rates, Data Usage, No of video calls, etc. This allowed customers to choose their consumption and spend more on the service that they would be consuming rather than sticking to the operator’s rigid plan. Over the period of time, this has become an accepted business model. Hence the solution providers made the solutions flexible enough to include the evolving business logics into the platforms.

Avoiding Bill Shocks:

Bill shocks have terrible effects on customers. One such shock and the customer would be very angry. Add two more and the customer will have a good reason not to trust in the brand. This can be avoided by keeping track of the key indicators like message or call when the usage reaches to a certain limit. While the quota management can provide the information about the current usage of the user, billing system should be able to identify the usage is exceeding, apply the pre-defined rules and send necessary triggers to the respective systems.

Billing based on the time of the day:

Most operators who have substantial amount of corporate customers have felt that the bandwidth consumption during the off-peak so low that they can make more money by giving it for free. So they did. Retail customers / home users are allowed to use higher bandwidths during this time without actually paying for the same. The only thing operators had to do was to have a system that was capable of enforcing this logic and does not add this usage into the usage bins created by quota manager. Many operators found increased patronage due to this service and led to increased word of mouth.

With the above advantages and other added advantages, operators were able to give better user experience to their customers. Some of the key business benefits that they could see were:

Enable Family Package:

Family packages usually meant for different members of the family enables them to create of group to manage the billing and payment at a single point and avoid the need to make 4 or 5 payments to the same operator. Over a period of time, operators facilitated the family to have a maximum cap for all the accounts and individual accounts too.  This allows the family members to increase the account cap of one member, which is below the maximum cap for the entire family. These changes allow families to manage any increase in usage without actually spending more on their bills. Operators also decreased the calling rates within the family members and this lead to huge patronage in this model of billing. However, in a live session, quota for that particular session should be closely monitored and the session should come to an end once the balance in the quota is exhausted. Quota Manager should be equipped to handle this requirement seamlessly and communicate the billing system to connect, continue or disconnect the session or sessions as soon as the balance is exhausted.

Targeted Layer-7 (Application) based billing:

Some operators allow their users to access only certain applications using their network. This happens for multiple reason and generally applicable to the Venue Wi-Fi s. In a venue scenario, networks do not want the user to abuse the network as this might lead to bandwidth misuse and therefore increases cost of owning the network. Although this is implemented in multiple ways, quota manager has to recognize the data packet destination and allow or suppress the data packets. In these scenarios, venues can also choose to give access to some users who are ready to pay for using the internet. In such a scenario, billing system has to differentiate the paid user from the free user and communicate to quota manager to allow the content from the user and to the user from any website.

Upselling based on Usage:

There is a whole lot of potential in upselling. However, it is when and how that changes irritating tele callers into helpful sales team. Users generally do not usage and use the internet facility. They keep using it for more and more applications and finally end up exceeding their usage, which might lead to lower quality of service and / or complete disconnection for the billing cycle. Instead, operators can choose to create alerts to their internal team to let them know the details of the users who are going to exceed their threshold. Some operators in USA follow a system where they send a message to the user once they reach 60% of their threshold, give them a call once they reach 80% of their usage and disconnect them once they cross the threshold. However, if they see this for a couple of months or more, they upgrade the customer to a higher package where the speeds and data quota are more for three months. Post three months, the operator asks the user to either pay for the better usage experience or reduce his usage to match his earlier data plan.

Operators have been benefiting from these platforms and business models for quite some time now. However, solutions required to handle these complex business models cost very high for developed markets and are not affordable for most operators in the emerging markets. Today, solution providers like SURE! Platform, are emerging with solutions that are affordable to Tier 1 and Tier 2 operators in the emerging markets.

Some of the key business benefits that operators could witness other than direct increase in revenue were as follows:

Maximizing network resources – In scenarios like providing internet to retail subscribers at off-load hours led to increase customer satisfaction levels without any additional load on the network. This leads to increase in customer base creating a positive spiral comes into play. This gradual increase over a period of time can have a reinforce trust in the customers.

Personalized Packages for Users – Giving the user the choice of service and how much they want to spend for a particular service helps improve the customer satisfaction level and thus a better customer life time value.

Improved QoS – Effective monitoring and management of the quality delivered helps operators to keep track of their customers’ satisfaction levels, which in turn leads to better revenues.

By : Kasyapa Malladi

KasyapaMalladi works with SURE! as a Product Marketing Specialist in Broadband. Kasyapa specializes in budget based marketing campaigns, strategy implementation in developing economies and in fostering and sustaining partnerships. Kasyapa’s experience includes Marketing Strategy for Cloud products in developed markets.

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