With new technologies spurring competition, and margins tighter than the 2000 election, the network is becoming a mere commodity--just table stakes to enter the game. Innovative, value-added data services will become the new differentiators for ICPs. Just as important, a new approach to billing will help ICPs own the transaction.
That approach is called multiparty billing, a critical enabler of partner relationship management. Multiparty billing provides the flexibility to create value-added services to attract and keep customers, and, most importantly, to create new revenue streams by managing transactions between multiple partners.
"Multiparty billing is going to be a central part of any billing solution in the future," says Mike Allen, OSS and billing support systems analyst for the Aberdeen Group (www.aberdeen.com), a Boston-based information technology research firm. "The back office will need to work across multiple trading partners as service providers seek an edge on the competition."
Why bother? Because ICPs are missing a revenue opportunity. Today, ICPs offering data services are typically unable to earn a share of e-commerce revenue streams since customers purchase content directly from content providers via credit card. For this reason, ISPs have endeavored to establish their websites as the point of access, or portal, through which they broker a range of content. Successful ISPs, such as America Online Inc. (AOL, www.aol.com), can take commissions on content purchased through their portals and generate advertising revenue because large numbers of customers visit their sites.
Multiparty billing levels the playing field. It encourages ICPs to add value to customer services and take ownership of the transactions they facilitate by partnering with third-party content and commerce providers. The resulting revenue streams increase margins, helping ICPs turn greater profits and invest in future operations. Third-party content and service providers get greater distribution, while ICPs earn a stronger brand identity.
Along with billing end users or accounts for services, multiparty billing also manages third- and fourth-party partners who deliver value-added services over the ICP's infrastructure. These services include web hosting, video streaming, multimedia content, VoIP and videoconferencing. Multiparty billing puts service providers at the center of a new value chain that will shape ICP business plans as they develop strategies to capitalize on enhanced data services.
Multiparty billing scenarios include:
Credit Card Model: The ICP could bill its customers directly for the content or commerce purchased from third-party partners. The "phone bill" would begin to look more like a credit card bill, and the ICP would generate regular invoices from its multiparty billing system, indicating the amount owed by the ICP to each content provider (purchase price less commission). This allows the ICP to consolidate large volumes of low-cost business transactions (or micro-payments) over a billing period. This benefits customers and merchants by minimizing costly per-transaction service fees that a credit card company might charge.
E-channel Model: Users can purchase content directly from a provider with a credit card, but the ICP would charge its partners a commission for transactions enabled by its network.
Multiparty billing classifies every network transaction as an "event." Service providers define and configure events to apply unique rates and tariffs to different parties in the value chain. One event could potentially generate multiple charge records that are guided and billed to the different parties. For example, the retail customer could be billed for access, call duration or data transfer, while the system generates an invoice or commission to other parties who provided service or content. As opposed to simplistic revenue-sharing models that provide a percentage of revenue to other parties, multiparty billing differentiates itself by enabling the service provider to rate the events by totally different attributes, in real time, with all the necessary carrier-grade assurances that are expected of a Tier 1 billing system.
An ICP offering enhanced data services, for example, may host a web portal linking customers to local merchants. Say a customer clicks on "movies" to see what is playing at a specific local theater. Then she clicks on a specific title to watch a preview, spurring the multiparty billing system to action.
When the customer clicks the preview link, a multiparty billing system calculates an advertising fee based on the video stream's QoS and charges it to the to the movie producer (e.g., Disney). When the customer clicks again to purchase tickets, it charges the movie theater (e.g., Loews Cineplex) a small fee for brokering the business. Multiparty billing reconciles all transactions between all parties. It generates a converged customer invoice showing charges for all services, as well as an invoice or commission for the other parties involved, Disney and Loews.
Taking multiparty billing one step further, the ICP can also use it to trigger promotions with specific partners. It could generate a "free popcorn" coupon with the purchase of a movie ticket to thank customers for using the service, providing value to the customer and an incentive to use it again.
Multiparty billing adds considerable value to the merchant directory service, for both the ICP and the customer. The customer perceives the ICP as the provider of high-quality video streaming and commerce services, events that earn the ICP real money. Additionally, the customer is rewarded, thereby improving the ICP's brand equity and customer loyalty.
Moving "up market," an ICP can offer users e-mail stock quote alerts. The ICP can partner with a third party to "push" the information to end-user e-mail boxes. With multiparty billing, the ICP can also partner with Charles Schwab & Co. (www.schwab.com), TD Waterhouse Investor Services Inc. (www.tdwaterhouse.com), Merrill Lynch & Co. (www.ml.com) and others to bring business to them. The alert may announce positive news about XYZ Corp., and ask the user if she wants to buy some shares. Clicking "yes" takes the user to the Schwab trading page, where she buys 1,000 shares.
Behind the scenes, the back office is hard at work. Multiparty billing records every event. When the user clicked "yes," and then proceeded to trade, the system charges Charles Schwab a small commission for enabling the resulting transaction. It also charges the news alert provider a small advertising fee for the link to Schwab.
Back-Office Essential
The marketing possibilities are compelling, and the opportunities large. Multiparty billing enables the service innovation that will differentiate ICPs in an increasingly competitive market. It handles complicated transactions involving several vendors, enabling the service provider to tap new commission revenues. It can rate and bill single events uniquely, applying multiple tariffs to different parties through user-defined rules.
As competition gets tighter, and ICPs continue their quest to provide one-stop-shop communications services, multiparty billing will prove an essential back-office differentiator that drives new revenue and successful customer and partner relationship activities.
Idar Voldnes is president of Geneva Technology Inc. (www.genevatechnology.com). He can be reached at (800) 437-1397.
