The Future of
Mobile Data Billing


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The Future of
Mobile Data Billing
How to price and bill for data services
is perhaps the most pressing issue
facing mobile operators today. It is
a legacy of the 3G era, in which the
industrys key goal was the creation
of demand for smartphones, mobile
data services and the longer, post-paid
contracts with which they tend to be
sold. Pricing, in particular the use of
unlimited data plans, was structured to
stimulate that demand but there has
been a significant downside. Growth
in revenue from mobile data did not
compensate for the decline in voice
and text revenues and networks were
pushed to breaking point.
As the industry moves to LTE and
networks designed for data services
and devices rather than voice services
80
70
60
50
% 40
30
20
10
0 4
1 2 3 4
Fig 1: For post-paid customers do you think it is important that
data usage is available in the billing system in real-time?
and people there is an urgent need
for a new approach to charging and
billing for mobile data.
Much has been made of the fact that
LTE is a more efficient technology
than its predecessors, offering a lower
transport cost per bit. But revenue
per bit is not likely to exceed the level
achieved on 3G networks. Mobile
operators, the players funding the
deployment of this new technology,
must find new ways of making it pay.
In July 2012 Telecoms.com surveyed
more than 200 mobile operators
worldwide for their opinions on this
critical issue. The survey revealed that:
Mobile operators believe their
pricing and billing strategies for
1 Very important
2 Important
3 Neutral
Not important
mobile data services must become
more sophisticated and diverse
in the immediate term if they are
to maximise revenues from these
services.
Certain network controls and
a wider range than are currently
in widespread use are essential
to increasing that sophistication
and creating new charging
opportunities around mobile data
services.
Greater diversity in network
controls and pricing and billing
strategies cannot be achieved
without the availability of
real-time data to the billing
system and the integration of
that real-time data with policy
infrastructure.
Almost 80 per cent of operators
surveyed said their existing
post-paid billing system did not
currently provide real-time data
collection and rating. Almost 90
per cent said they thought that it
should.
Almost 80 per cent of operators
believe that bills should be
delivered to an interactive
smartphone-based application or
portal.
INTEL L IG EN CE
Getting the industry thinking
01

Future charging
models
It is accepted industry-wide that
mobile data billing needs to evolve
from its current form. While there are
a number of early moves and movers
in this regard, billing by volume of
traffic is by far the dominant approach
in mid-2012. Almost 90 per cent of
respondents to the Telecoms.com
Future of Mobile Data Billing survey
reported that data transactions are
rated and charged by volume in their
businesses (fig 2).
Unlimited data plans are still very much
in effect, with 38 per cent of operators
continuing to offer them. These plans
are part of the charge-by-volume mass
as, despite the name, they almost all
feature usage caps.
Operators are experimenting with
different parameters. Charging
structures that price by event, by
duration of usage and by speed tier are
all in use by roughly one quarter of the
operators surveyed in mid 2012.
100
80
60
%
40
20
0 5
1 2 3 4 5
Fig 2: How do you currently rate and price data transactions?
1 Not used
2 Used by a minority of operators
3 Used by about 50% of operators
4 Used by a majority of operators
5 Heavily used/becoming the industry norm
28.9%
2.1%
8.9%
16.3%
9.8%
43.7%
13.9%
By volume (e.g. MB)
19.7%
Asked to forecast their mix of charging
31.8%
models 12 24 months into the future,
24.9%
operators offered a fair diversity of By event
(e.g. a downloaded song)
opinion, reflecting the reality that data
charging will never be addressed by a 6.4%
17.4%
one-size-fits-all solution. 15.7%
They are clearly keen to phase out
24.4%
unlimited transaction plans, with just 36%
By time
over half of all respondents believing (e.g. 2 hours browsing)
these plans will be either obsolete or
7.1%
in use by only a minority of operators 13.0%
come mid-2014. But this might be 20.1%
wishful thinking. More than 30 per
32.1%
cent of respondents felt that unlimited
27.7%
data plans would still be in widespread
By speed tier
use in two years time.
11.7%
15.6%
Volume is expected to remain by
far the most favoured parameter 15.6%
for data billing, with 43.7 per cent
38.5%
of respondents believing it will be
18.4%
Unlimited transactions
used by a majority of operators not priced
in the near future and almost 30
per cent expecting it to still be the Fig 3: How do you believe operators will be
rating and pricing data transactions in 12
industry norm. Of the emerging 24 months time?
models, charging by speed is a clear
front runner, with 32.1 per cent of
respondents expecting it to be used by
the majority of operators.
Operators are less universally convinced
by charging based on event or
1 By volume (e.g. MB)
duration. These models were rated as
2 By event (e.g. a downloaded song)
being most likely to be in use by only a
3 By time (e.g. 2 hours browsing)
minority of operators in 2014, although
4 By speed tier opinion was split. Around one quarter
Unlimited transactions not priced of respondents believed that 50 per
cent of operators will be using these
models in two years time.
INTEL L IG EN CE
Getting the industry thinking
02
Network
Controls
Many new and future mobile data billing
models depend on network controls for
effective implementation. Fair usage limits
cant be applied without some kind of
action when the limit is reached and no
kind of tiered service, be it by application
or by user segment, can function without
controls.
Today the network control most in
use by 61.5 per cent of operators
is throttling, where throughput
available to customers who have
exceeded their usage limit is restricted.
Related, and offered by 28 per cent
of respondents, is service cessation in
response to the same user behaviour.
Bill shock monitoring is the next most
widespread, offered by 47 per cent
of operator respondents, with speed
tier by customer segment, network
congestion control and service
prioritisation for high value customers
all moderately popular (see fig. 4).
Looking forward two years, operators
expect these early indicators to be
80
70
60
50
% 40
30
20
10
0 10 Network congestion control
1 2 3 4 5 6 7 8
Fig 4: Which network controls do you currently provide as part of your data plans?
1 Not used
2 Used by a minority of operators
3 Used by about 50% of operators
4 Used by a majority of operators
5 Heavily used/becoming the norm
3%
12%
25%
borne out. Throttling will remain 22%
widespread and respondents expect
a surge in the use of the moderately Fair usage limits reduction
38%
popular network controls mentioned in network speed
above. More than half of operators 3%
16%
surveyed believe speed tier by customer 20%
segment will be in widespread use.
37.5% 23.5%
Application-based tiers are not Speed tiers by customer
Segmentation (e.g Gold
expected to be quite as popular, Silver, Bronze, etc.)
with 33.5 per cent expecting half of
3%
operators to be using them and 27.5 17%
19%
per cent believing they will be used by
the majority.
31%
30%
Service prioritisation for high value Service prioritisation for
high value customer
customers had a strong showing, with
48 per cent of respondents expecting 4%
it to be in widespread use and 30 per 28.5% 17%
cent predicting that around half of
operators will be using it by 2014.
21.5%
Network controls to prevent device 29% Bill Shock monitoring,
alerts and service bar
tethering also ranked reasonably
4%
strongly in respondents forecasts, 17.5%
16.5%
along with a continued enthusiasm for
bill shock monitoring.
30.5%
31.5%
Network congestion
control
1 Fair usage limits hard cut off/cessation of service
2 Fair usage limits reduction in network speed
Fig 5: What network controls do you expect
3 Speed tiers by customer segmentation to see being used in 12 24 months time?
Speed tiers by application
4
5 Parental controls
The message is clear: as the types and
6 Service prioritisation for high value customers
volume of traffic continue to grow,
7 Service QoS control
operators are looking to introduce
8 Device tethering/modem detection
a system of relative values that will
9 Bill Shock monitoring, alerts and service bars
enable more appropriate pricing,
as well as helping them to manage
9 10
network resource.
INTEL L IG EN CE
Getting the industry thinking
03
Enabling control the
importance of Real-Time
and Policy Management
Just as new billing models depend Furthermore, for seven of eleven
1 Tiered pricing
on network controls, so those separate operator services about which 5

controls themselves require input.
The availability of real-time data in B/
OSS is perhaps the most important
enabler of these controls; something
reflected emphatically in the survey.
While real-time data is a routine
element of prepaid billing, it has been
viewed as less important in the post-
paid environment, which has always
adhered to monthly billing cycles.
respondents were asked (see fig 6), 2 Shared balance bundles
real-time data was given an importance 4
3 Usage bundles such as
rating of 4 or 5 (where 1 is not hybrid accounts
3
important and 5 is very important) by 4 Communications direct
to customers device
a majority of respondents. In the other
2
5 Loyalty point control
four cases, the share of respondents
scoring it at 4 or 5 was between 45
1
and 49.5 per cent.
0
Operators rated real-time data even 1 2 3 4 5

more highly when asked about its

The survey found that 94 per cent
of operators believe the availability
of real-time data to be important or
very important for operators looking
to apply network controls and
notifications.
importance relative to a number of Fig 7: How important (1 5) is real-time data to the
following charging models?
emerging billing models, such as shared
tariff plans, tiered pricing and post-
paid/prepaid hybrid accounts (see fig 7).

of operators believe 5
that existing post-paid 1 Bill shock
billing systems need
real-time rated data 2 Parental controls
usage records. 4
3 Real-time costomer care

of operators believe that
existing post-paid billing
systems need real-time
balance and quota
management capabilities.
4 Loyalty offers
3
5 Turbo boost services
6 Third party content billing
2
7 Toll-free billing
8 M2M variable billing

1 9 Chatty Apps

10 Video management
of operators believe all
traffic should be handled 0 1 2 3 4 5 6 7 8 9 10 11
11 Congestion control
in real-time until events
are sent to existing B/OSS
systems.

Fig 6 How important (1 5) is real-time data to the following services?

INTEL L IG EN CE
Getting the industry thinking
04
Enabling control the
importance of Real-Time
and Policy Management
Real-time billing data can be useful
to a range of other systems in the
operators back office. But chief
among them, in particular when
considering future mobile data billing
models, is policy management. Asked
to rate the importance of real-time
data to a number of other systems,
again on a scale of 1 5 where 5
is Very Important, 70 per cent of
operators rated it as 4 or 5 for Policy
Management, putting policy second
only to Customer Care.
Policy function is crucial to a number
of mobile data billing models that
operators expect to become much
more widespread in the near term
including the control of bandwidth
according to application, service
tier or customer profile. The survey
reveals a clear link between the need
for real-time data and policy to be
well integrated if new, more effective
charging models are to be introduced. 80
Operators conviction around the 70
importance of real-time data for post
60
paid billing is clear 88.1 per cent of
operators surveyed said they believed 50
their billing system should provide real-
time capabilities. % 40
30
So the discrepancy between the
number of operators who want real- 20
time data and the number of them that
have it was perhaps the most arresting 10
discovery of the survey.
0
Yes No
Just 22 per cent of operators surveyed
Fig 8 Does your existing post-paid billing system provide
had a post-paid billing system that
real-time (less than 1 second) data collection and rating?
provides real-time data collection and
rating, a statistic that creates a sense of
real urgency around the availability of real- 100
time data if mobile data billing practices
are to be changed for the better.
80
60
40
20
0
Yes No
Fig 9 Do you think that your post-paid system should
provide real-time capabilities?
INTEL L IG EN CE
Getting the industry thinking
05
Future billing interaction
The growing importance of real-time of data usage to put them in control of
80
data to post-paid billing systems their consumption.
with post-paid taking on some of the 70
characteristics of prepaid illustrates In order to make truly effective time-
60
a trend that has been gathering sensitive offers to consumers, however,
momentum for some time. The the method of bill delivery needs to 50

historical segmentation of customers evolve along with the charging model. % 40

as prepaid or post-paid, and the While many operators have successfully
30
assumptions that went along with it, reduced their reliance on paper billing,
are no longer valid. persuading customers to visit their 20
desktop internet sites to manage bills,
10
respondents to the survey felt that they
havent gone far enough. 0
Yes No
of operators said they
need real-time visibility
of data usage to drive
marketing offers.
Almost 80 per cent of operators said Fig 10: Do you see bills delivered to smartphones as the
that they believed that the ideal way to ideal way for operators to deliver bills?
deliver a bill to the end user is to the Respondents to the survey believed
smartphone, via a portal or application that upsell for top ups and for real-time
of operators believe that
customers need real-time (see fig 10). By delivering the bill right contextual services like short term speed
visibility of data usage
to put them in control of to the device, operators are more boosts, parental controls, shared plan
their spend.
likely to be able encourage upgrades management and usage alerts should all
and extension spending from their be made available to customers through
customers base. the device (see fig 11).
of operators believe
that real-time data
enables them to provide
enhanced services to
enterprise customers. 4.5% 1.5% 1% 7%
1.5% 9.5% 13%
26.5% 25%

When asked, 65 per cent of operators 43.5%

20.5%
20.5%
said that it should be possible to
41%
treat a subscriber as prepaid or
post-paid depending on the service 38.5% 46.5%

or the circumstance. This has crucial Upsell (top ups) Parental controls Shared plan management
importance to future mobile data billing
1 Should not be made available
models, as it allows operators to sell 1% 1%
to customers
4% 8% 5.5%
post-paid customers one-off products 16.5% 2 Only available for a small number
33.5%
and allowance extensions when the of customers
55.5%
need arises. 31.5% 3 Neutral

4 Should be made available to all

43.5% relevant customers
Almost three quarters of operators
5 Definately should be actively promoted
agreed that they need real-time visibility
Usage alerts Upsell (context sensitive offers) to all relevant customers
of data usage to drive marketing offers
and more than three quarters agreed
that customers need real-time visibility Fig 11: What other services do you think should be made available through a mobile portal?

INTEL L IG EN CE
Getting the industry thinking
06
CONCLUSION
The Telecoms.com Future of Mobile
Data Billing survey, carried out in
association with Openet, showed that
operators see the need for change
in their data charging practices and
believe that change will occur in the
short term.

While their support for different

charging models varied from case to
case, operators were emphatic in their
conviction on three key points.

1)
The availability of real-time
data in the post-paid billing
system is essential to the future of
mobile data billing.

2)
The integration of that real-
time data with the operators
policy function is fundamental to
the creation of the kind of diverse
network controls that will enable more
sophisticated data billing solutions.

3)
Bills should be presented
to users on the device to
increase customers control over their
own usage and to create lucrative
opportunities to sell them extensions
and upgrades on an as-needed basis.

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INTEL L IG EN CE
Getting the industry thinking
07