May 18, 2017

3 Reasons Why Digital Service Providers Still Need Billing

Billing’s definition and role might change, but it’s not going away just yet.

Among the most provocative statements made at TM Forum Live! 2017 came from Erik Hoving, Group CTO of KPN. Hoving pointed out that digital companies generally do not produce bills for their customers, opting instead to charge directly to credit cards, which, he argued, negates the need to spend substantially on complex billing systems. “We’ve spent zillions on BSS, but who wants a bill?” asked Hoving. “Why do we have a billing system at all?" he added. Hoving has a point, and his rhetorical question is worth answering. If the entire communications industry is transforming, the definition of the term "billing" and the technology derived from it will also change, but billing will still remain highly relevant.

Here are three reasons why digital service providers still need billing:

1. Settlement in B2B2X Value Chains Derives from Billing

In increasingly complex value chains consisting of suppliers, distributors, multilayer channels and partner ecosystems for supply and distribution, revenue sharing is an inherent model. Every player in the equation needs to pay or be paid its share. Shared revenue has to be settled accurately across all parties. In a transaction-heavy and increasingly digital service environment, the need for sophisticated settlement capabilities has increased significantly. Without billing platforms capable of handling complex settlements, these multiparty value chains can’t conduct business.

2. Record Collection is Subject to Government Mandate

Even without bills, billing records related to phone calls and any other metered communications are heavily regulated and play an important role in how service providers cooperate with law enforcement organizations. Event collection, mediation and related data analysis all derive from billing. While it's within the realm of possibility that these records will someday become obsolete or governments will no longer require them for surveillance or building criminal cases, there is little reason to believe service providers’ mandated record-keeping requirements will vanish any time soon. As a result, those core aspects of the end-to-end billing process must continue.

3. Charging is Digital and Derives from Billing

In a real-time, transaction-driven digital service environment, charging is the key to generating revenue and controlling authorization. Charging is arguably the next-generation offspring of billing. It is also a valuable asset that can be exposed as a callable service. A charging service should become a very common, underlying component of a range of services and digital business models, including try-before-you-buy and freemium. If there’s no charging, there’s no revenue. So even if bills are never issued in the future, billing’s legacy—no pun intended—will live on in charging mechanisms that will continue to evolve over time.

Please follow these links for more information on Netcracker’s Revenue Management and Cloud-Based Online Charging System solutions.


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