Posted: 04/1998

By Robert J. Marino

As the Telecommunications Act of 1996 celebrates its second anniversary, competition
and convergence are gaining momentum. Due to dramatic change expected over the next 24 to
36 months, providers of local and long distance telephone service, cable, wireless and
Internet access will compete for market share within an increasingly integrated market.
The implications for bundling services are dramatic as carriers rethink marketing and
operational structures, and consumers brace for the avalanche of new services and
competitive offers.

In a hypercompetitive market, the case for bundling is compelling for both carriers and
consumers. For carriers, bundling offers the opportunity to compete effectively, attract
and retain high-value customers, uncover new revenue potential and diversify into other
services. Consumers relying on one communications provider should experience reliable
services, discounted rates and high levels of customer support. One provider also
translates into one bill and one point of customer contact–the major value proposition
for consumers and a significant operational challenge for carriers.

Delivering on Promises

The ability to deliver on the promise of a bundled service offering has critical
implications. According to Kate S. Bergin, a retention marketing expert and professor at
Northwestern University, there are significant switching costs involved with a bundling
proposition. Depending on the service offering and customer trust level, bundling can
either raise or lower switching costs. In other words, if a customer sees value in the
offering, retention rates can be very high. However if the customer does not see the value
or questions the ability of the carrier to deliver on the service, then attempting to
bundle services can drive customers away. Hence the importance of putting in place an
effective bundled service strategy, including appropriate approaches to convergent billing
and customer services.

Convergent customer support and billing solutions are an essential component for
effectively delivering multiple services to the market. Customer support and billing
solutions can result in operational savings. When transitioning from a single-service to
multiple-service environment, business and technical trade-offs must be considered.
Current service features and functionality may be traded for multiple services
flexibility. Time-to-market may be traded against the level of cross-service integration.
And levels of customer support may need to be traded against the effect on carrier
business processes.

Ultimately, convergent solutions must support multiple service integration and
client-centric business operations, but not at the expense of current levels of
functionality and transaction throughput. To meet these challenges, a carrier should look
at a convergent customer support and billing strategy that focuses on two approaches: a
consolidation approach and an integration approach.

Consolidation Approach

Because any updates to systems involve the migration of the customer database, moving
and cleaning the data without error can be a challenging process. Therefore, service
providers with a large embedded base within existing platforms should consider a
consolidated approach to convergence. The consolidation approach couples a provider’s
existing, single-service billing solution with other comprehensive billing solutions, and
front-ends these with an integrated customer management program.

By linking existing solutions in this manner, several benefits are realized. First,
customer demands for the convenience of a single invoice for all telecommunication
services are met. Second, by deploying the integrated customer management program across
multiple, service-specific billing solutions, customer queries regarding any service can
be provided with a single point of contact at the service provider. Finally, service
providers can offer cross promotional discounts to customers, increasing customer
satisfaction and retention.

The consolidated approach, in enabling service providers to leverage prior investments,
improves convergent services’ time-to-market and reduces the risk of migrating customers
from an existing system en masse while delivering to customers the promised benefits of
convergent telecommunication services.

Integrated Approach

As technologies converge, a time will come when the upgrading of existing systems will
become either too expensive or inefficient. When that time comes, some service providers
will want to invest in a single, integrated solution.

Whether it’s a service provider upgrading to a single solution or a new player making
an initial investment, an integrated solutions approach is the choice for the future. An
integrated approach offers service providers a more flexible alternative to compete in a
dynamic, integrated environment. A multiservice, fully integrated solution is designed to
manage all aspects of the operator’s business including the provision of all telephony,
interactive and entertainment services. An integrated solution may feature a single
relational database that supports service negotiation, customer service and trouble
reporting for customers. In addition, integrated solutions can offer highly flexible
implementation options through user-defined controls, full integration of customer
accounts, call processing and cycle billing.

The installation of an integrated billing solution brings significant operational
benefits. The integrated approach enables carriers to readily implement and maintain a
single, streamlined customer support and billing solution while providing the ability to
grow across markets as their subscriber bases grow. Fully integrated information
technology (IT) and customer support platforms also provide efficiencies.

Customer Support Issues

Once competition and convergence fully arrive, carriers will alter their focus from
market penetration to differentiation with customer support and billing as their primary
weapons. Integrated customer support and billing solutions provide an extensive amount of
information about a carrier’s prospective and current customer base.

Integrated customer support and billing applications enable a carrier to target
specific market segments by matching customer demographics to service procedures and
investments. Service management is important to provision and monitor requested services
as well as migrate users to a rate plan that is the best match for their usage patterns.
In addition, the ability to collect information, turn it into valuable intelligence and
provide customer service representatives with easy access to the data becomes an important
service differentiator, ultimately enabling the carrier to use that knowledge to increase
customer satisfaction, loyalty and revenue opportunity.

When implementing an end-to-end solution, the customer support and billing
infrastructure can translate into a highly powerful marketing tool in an integrated
environment. Service providers can provide better customer management if marketing and
sales, customer service, and problem resolution organizations have a single view of the
customer. Call histories generated from billing data, combined with customer service
records and demographics, allow for very specific customer segmentation, which can lead to
personalized programs and more effective cross-sell and upsell campaigns.

Conclusion

Bundling services and possessing the supporting systems and interface structure is
driven by the need to differentiate offerings and improve customer service in competitive
markets. An integrated customer support and billing solution allows operators to address
specific customer needs, react quickly to market conditions, and create a variety of
special discounts and promotions. Customer support and billing not only require the
enhancement or replacement of existing systems, but also the critical involvement of the
people interfacing with the systems and end users. Deploying an end-to-end solution will
help define who wins the war for customers in the time to come.

Robert J. Marino is president and CEO of CBIS. CBIS provides provision and
management of customer care and billing solutions for the communications industry. For
more information, visit the CBIS web site at www.cbis.com.