Visit my supported websites: Epping Life  |  Rye Meads Ringing Group  |  Epping Horticultural Society  |  Simplicated  |  Contact

Wednesday 5 August 2009

Prepaid/postpaid convergence - is it worth it?

Suppliers of billing software to the mobile industry are advancing the capabilities for prepaid/postpaid convergence in leaps and bounds - but like many a handset feature, is it something customers really want?

It is worth remembering that operators developed the prepaid market largely because of the fraud risks with postpaid: the period from a new user being granted service, to first bill, reminders and dunning processes, to service cutoff could be up to 10 weeks. Therefore operators set a high creditworthiness threshold, and so limited the market sector they could address.

It was the advent of IN platforms for in-call management - initially aimed at number translation and routing services - that provided the opportunity for developing prepaid services. These proved very popular with customers: people liked being able to predict costs with no surprises at bill time, and also appreciated the simpler and more immediate buying experience.

However, as a result, operators ended with two distinct systems infrastructures for rating, billing and customer care. This got more complex with the advent of various data services and increasingly diverse billing arrangements. But does that matter?

There is no doubt that running two significant infrastructures is costly. This is true from a pure IT point of view, but even more so from a business point of view. The different capabilities of prepaid and postpaid billing systems tend to mean that an operator will have separate products, with separate marketing and product management functions (and a more complex marketing message), impacts on staff training and sales, considerable complexities in migration of a subscriber from pre to post or vice versa, probably separate call centres and all of the CRM that goes along with that - rewards, customer retention and recovery, revenue assurance and fraud detection, and so on. Simplification of these business functions would bring management and cost benefits.

What about the customer point of view? Would a convergent solution provide additional customer benefits?

Well, there are certainly customer options available with a convergent solution that can't be made available (at least easily) on a diverse solution. For example, it would be possible to vary payment method by date/time, or by numbers called or services used. Consider these scenarios:

1. A business provides an employee phone where calls during the working day are postpaid by the business, and calls made during the evening are prepaid, with top-ups the responsibility of the employee. The business can provide a phone for business use without preventing reasonable use by the employee, whilst the employee can use the phone for personal calls when not at work without worrying about the company view of the cost.

2. Parents can provide phones for their children knowing there will always be enough credit available for them to call home or to receive calls, but that they will not run up big bills on calls to friends, or downloads, games or mobile surfing to Facebook etc, for the parents to pay.

3. A business can provide phones to its delivery drivers but limit usage to calls to the company office or corporate VPN, paid by the company. The driver can still use the phone for personal calls on a prepaid basis if he tops up the credit.

There is no doubt too that there are benefits for the operator in being able to treat all customers the same however they pay. Any product can now be sold to any customer, greatly simplifying the marketing message, since payment method becomes just a purchase option. Any postpaid account can apply a top-up at any time. Discounts applied to hierarchies can be more easily applied to mixed pre/post hierarchies, with again a simplified sales message. And of course with only one solution architecture to update, new products should be more easily and more rapidly introduced.

But still - is it worth it? If you were a new operator with greenfield systems and processes, no doubt you would go the convergent route. But for a major operator with long established legacy systems - which will by now be horribly complex and intertwined - unpicking this to become convergent is a major undertaking: costly, risky, and lengthy (and hence highly impacted by business change). Some operators have taken the plunge, but they are still a minority. A large mobile business needs a lot of convincing that the benefits justify the pain of getting there. And as a customer, there are many more important factors when buying your mobile service.

So whilst I envisage convergence slowly increasing its presence in the industry, I don't expect to see convergence revolutionising mobile sales in the High Street any time soon.


No comments:

Post a Comment