Posted: 12/1998

The Phone Bill Gets a MAKEOVER

By Peter Meade

Television talk-show guests are not the only ones getting major makeovers these days.
The traditional monthly telephone bill, for decades an ugly duckling with not much to say
other than "pay this amount," slowly is blossoming into an informative and
attractive swan.

Domestic long distance carriers are leading the makeover charge, according to Dan
Baker, research director at Technology Research Institute Inc. (TRI), a Sudbury,
Mass.-based consulting firm. MCI Communications Corp.’s much-ballyhooed Friends &
Family program accomplished the lofty goal of every self-respecting carrier’s billing
system, he says.

"Friends & Family became a true product associated specifically with
MCI," Baker says. "It became a brand in and of itself. Friends & Family
represents a sterling example of how carriers can leverage an effective billing system to
gain significant market share."

But this kind of improvement does not have to be limited to the MCIs of the world, he
says. There are several clear steps that can be taken to elevate the status of a
reseller’s billing system.

For example, the power of branding has never been more important, according to Baker.
At a time when no dinner hour goes undisturbed due to myriad telemarketers calling to
offer the latest deals on long distance services, distinctly distinguished brands
represent the best bet for promising the consistent quality and value needed to retain
otherwise-wayward customers.

Boffo branding is greatly responsible for the growth of reseller Network One, which was
a $5 million business in its third year of business (in 1995) and now has its sights
trained on becoming a Tier 2 carrier while recently being certified for competitive local
exchange carrier (CLEC) status in 12 states.

"Every service we offer–no matter where it comes from–is branded with Network
One on it," says Gene E. "Skip" Lane, president and CEO of the
Atlanta-based reseller. "Getting your name out there on your products greatly
improves your chances of success."

The newly named MCI World-Com Inc. entity has done "a phenomenal job" in this
kind of branding, according to Lane.

"It was critical that they kept together the well-known MCI name with the
entrepreneurial, progressive WorldCom," he adds. "Then the brand is being
plastered everywhere."

Network One has underway its own branding bonanza. At November’s Telecommunications
Resellers Association (TRA) show in Orlando, the carrier unveiled a new logo and tag line
("Integrated Telecom Services for Business"), which will be seen immediately on
all bills and literature.

"Hopefully [the logo] will help people who don’t know the difference between
Network One and [fictitious] Network 12," Lane says. "But the key thing is
explaining [in a tag line] exactly what we do and what customers can expect from us."

This kind of explicit definition also should be immediately apparent in a reseller’s
billing, says Kevin Young, president of Young Communications Inc., a Pasadena,
Calif.-based consulting firm to long distance resellers.

"Eliminate any confusion over the kinds of services you deliver," he says.
"That way customers have no confusion when they review their bills. The mainstream
press has lampooned billing for being so confusing and devious, filled with charges that
customers can’t understand." While laws now are in place to make sure long distance
carriers explain their terms, and back them up with concise, dictionary-like definitions,
Young notes that resellers are not bound by this responsibility–a position they shouldn’t
take lightly or take advantage of.

"Resellers, arguably, need to make sure their bills are more clear than
carriers," Young says. "After one wrong bill, customers will go through the next
ones with a fine-tooth comb." Network One has chosen to go with a clone of the bill
of the various incumbent local exchange carriers (ILECs) it competes with because this
practice gives customers comfort in the early stages of receiving their local service from
a new provider.

"Over time we may stand to improve a few things," Lane says. "But in the
beginning the only difference is the Network One name on the top."

A smooth transition particularly is important when several services are being combined
on one bill. This is why service providers must be careful that their bill presentation is
simple and easy to read, says Mark McCormack, executive vice president at Intertech
Management Group Inc., a Chesterfield, Mo.-based provider of convergent billing and
customer care solutions. A summary page listing the individual amounts for different
services should go before details of specific calls and/or services that are broken out,
he says.

The concept and power of convergent billing as the future direction of billing has
brought with it a lot of conjecture as well as hype. "Convergent billing, no doubt,
is a great concept," McCormack says. "But service providers should not lose
track of what is most important: What do customers really want?"

The reality today, he adds, is that while convergent bills "are great to look
at," they have been slow to be implemented. "Face it, if customers wants to
leave, they will for the first good reason," McCormack says. "But convergent
billing is a fine way to get them to think twice because there is more at stake."

In moving toward convergent billing, service providers should never take their eyes off
delivering easily understood bills. According to consultant Young, this is a worthy goal
because it directly equals fewer customer service calls. He cites the example of one
recent client, which reduced its daily call-toll from 300 to 30 thanks to a new,
simplified bill. Such a move let the reseller either reassign existing personnel to other
functions or reduce its head count for financial savings.

Resellers could learn a few lessons from Internet service providers (ISPs), according
to Intertech’s McCormack. "ISPs have tens of millions of customers and they all seem
happy to pay their bills by credit card," he says. While so much has been written and
speculated on the subject of convergent billing, where a variety of services including
wireline, wireless and Internet access are merged on one bill, the only place this
much-talked-about convergence is happening right now is on credit cards, he adds.

"The introduction of a new technology, such as wireless or Internet access, is a
great opportunity to re-examine how billing should happen," McCormack says. One of
the challenges that service providers must overcome with convergent billing is that the
converging services are all coming from different places with differing backgrounds and
expectations. For example:

On top of working toward a convergent bill, service providers need to offer other
options. Providing billing frequency flexibility is a powerful way to get closer to
customer needs, says Jef Morrow, director of corporate development for Axiom Inc., a
Moorestown, N.J.-based provider of billing, data collection and traffic management.

"This is especially relevant for attracting and keeping new customer
segments," he says. "It’s simple but powerful: Give customers something they
didn’t have before."

For instance, let customers choose their billing periods, says consultant Baker.
"Why must bills be due at the end of every month?" he asks. "Because they always
have [been]?" Letting customers choose their payment date lets them work the process
better into their budgetary routine. Or perhaps a customer wants to be billed twice a
month, he adds.

Delivering alternate payment methods, such as credit or debit cards and home banking,
present customers with useful, more convenient options.

"Offering customers prepaid service is very popular for wireless users in
Europe," says Jack Boyle, a Seattle-based vice president, telecom strategic
alliances, for American Manage-ment Systems Inc., (AMS) a provider of both customer care
and consulting services. "The same can be done with fixed wireless."

This frees service providers of some of the back-office systems required for
paper-based billing. "Paper will never completely go away," he says. "Most
people still like the confidence of seeing things on paper."

But people also want to see more than "pay this amount." More and more
service providers are responding by offering some kind of advanced bill analysis. This
presents customers with all types of pie charts and graphics for comparing this month’s
usage vs. usage for last month or the same month last year.

"Here is where electronic billing really shines," Baker says. "Online,
service providers can offer all sorts of options to let customers manipulate their
data." It will not be long before online phone bills include a Quicken-like
[bookkeeping] capability, he adds.

"The Internet is a great place to go to see additional information that would just
take up room or time on a paper-based bill," Baker says.

Perhaps businesses eventually will pay an additional amount to see such customized
information. But be careful before going overboard on the Internet. Baker mentions one
telephone company in Manitoba that started offering web access only to be hit with a
backlash. "You put my bill on the Internet with all that smut!" was the outcry
from some of the ‘Net clueless, he says. After shutting down the project for awhile, the
telco then returned to the Internet in a limited fashion.

Even today, the Internet is not for everyone, says Axiom’s Morrow. "It represents
a great security issue to a lot of people," he says. Arguably, a reasonable strategy
would be to make bills available on the Internet only if customers so desire them in that
fashion.

Intertech has been involved in web-based billing since 1997, according to McCormack.
"It’s a great way to upsell to an existing customer base, especially on
residential," he says. "The web has a great upside because it provides benefits
for both customers and service providers alike. While customers may go online to enjoy
tangible benefits, such as seeing more details on their bills or being able to pay
electronically, service providers realize great cost reductions in customer-service
staffing."

McCormick cites MCI WorldCom’s Net Savings plans, which offers single-digit long
distance rates, if customers perform all their customer service needs over the Internet
and pay their bills by credit card.

"This is a ‘trade’ that offers the best of all worlds," he says. "This
win-win situation could reduce costs by 50 percent."

But look for paying bills over the Internet to lead to a major power struggle as
various forces play their hands to control that payment mailbox, says AMS’s Boyle. Newer
carriers will lead this charge because the veterans are hamstrung by the lack of
flexibility in their legacy systems, but nevertheless, it will be a dogfight due to the
millions of dollars that are at stake.

"Service providers need to remember that billing is a business unto itself,"
says Network One’s Lane. "Carriers that are looking to save money should work hard to
reduce the costs of their networks, not necessarily their billing."

Peter Meade is Executive Editor of PHONE+ Magazine.