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Boost your revenue

By Ludvig Lindqvist, Product Manager, Basset Telecom Solutions

A popular expression used today is revenue assurance, which is defined as “actively seeking out the sources of lost income from network operations and decreasing your costs”. How can you, as communication provider, begin to take control of revenue leakage? The solution is to analyze the functionality and health of hardware and software to ensure that the maximum profit is generated, which instantly increases your margin and revenue. Generally speaking, any source of income is also a potential risk of losing income.

Up to 20% of revenue loss
The general opinion is that communication providers lose 3% to 8% in revenue leakage each year. In some cases losses have reached even 20%. How is this possible?

Most people in the industry will readily tell you what generates a communication provider’s revenue. But if you ask why they are losing money, the answer is not always as obvious.

Why do I lose money?
Let’s start defining, some example areas that could be a potential risk for losing money:

  • Data loss
  • Bad data quality
  • Fraud
  • Interconnect
  • Roaming
  • 3rd party solutions
Analyzing your company’s situation one should start with the systems that deal with the most valuable data, calculated in monetary value, because it will likely have the biggest impact on your revenue.

Data loss
You may collect 100% of chargeable information from your switches or SS7 probes. But do you manage to track and bill everything? If you compare the total amount of chargeable data with the amount actually billed, it is very likely that you will discover a mismatch caused by errors, misconfiguration or simply bad software.

By analyzing each step a chargeable event has to take from source to final destination, you can find the loopholes in your network. Steps that need to be analyzed are, for example, the switch, the mediation device, the billing system and the roaming system.

A typical revenue assurance system collects the data at different checkpoints within the network and analyzes it at a central point to determine whether there is any data loss and, if so, why you are missing the chargeable data.

By minimizing the data loss of chargeable data your revenue figures will actively increase with a minimum amount of work.

Bad data quality
After locating the data that you never knew was lost, the next step is to analyze the quality of the data. Bad data quality in the network can directly impact your end subscribers, for example via incorrect invoices. Incorrect billing also slows down revenue collection.

Possible causes of bad data include errors in the functionality of the billing system, such as the rating engine or invoice generator, and misconfiguration in any system transporting the data from switch to invoice.

Incorrect bills entail a great deal of work, because the bills must be recalculated and customer dissatisfaction handled. They can also make it hard to get the real financial picture.

To increase the quality of the data, you must ensure that no data is considered unhandled or is incorrectly deleted by any system, and that tests are constantly made to validate the correctness of the systems' configurations.

Telecom fraud is not a new phenomenon and the awareness of the problem has increased over the last few years. When analyzing existing investments to achieve a high margin, minimizing fraud is a must for every communication provider.

Fraudulent calls within your own network can be a huge problem since you are not just losing revenue but also bandwidth, which can lead to incorrect decision about infrastructure investments.

However, fraudsters damage your business even more when they roam in your network or call international destinations and premium rate numbers.

Fraudulent calls will then not only be a loss of income; you are also forced to pay out of your own pocket to your roaming or interconnect partners. This means that each call will even decrease your margin!

Interconnect charges are a legitimate cost, but can you be 100% certain that you are not overcharged by your interconnect partners? When there is disagreement about interconnect statements, the assumption is usually that the organization sending the statement is right. But is the statement reliable?

Your interconnect system should be able to handle reconciliation of statements in order to easily identify differences between your actual usage and what you are being charged for.

The roaming functionality is being constantly developed to reflect the changes of chargeable services. Always using the latest standards for example TAP files, will ensure that you are billing your roaming partners on already invested functionality in the network. You may wonder if roaming is really part of revenue assurance, but remember the definition “actively seeking out the sources of lost income from network operations and decrease your costs”.

3rd party solutions
Since the future is finally here, and your 3rd party suppliers or content providers start to provide the 3G networks with valuable services, you suddenly provide services that are not billed in seconds anymore. Either you bill in amount of data or in a one-time high value event with your M-commerce applications.

Your top priority should be to have systems that are able to control these transactions and allow you to bill them correctly and to make sure that you are not overcharged for any service or exposed to new types of fraud.

From start to finish
When your marketing department demands that you launch a new service, remember to put at least the same amount of effort into ensuring that you can make money from it. In many cases communication providers have first launched the service and only then started to think about how to charge the customer for it. The whole chain of actions is important when new services are introduced.

Are you focused?
Today's communication providers often focus on finding the causes of churn, which costs them many man-hours. It is therefore an understatement to say that churn adversely affects revenue. Because of churn, existing investments in technical platforms and infrastructure can also turn out to be totally miscalculated, adding to the total loss and extending payback time.

In times of decreasing margins and fierce competition this is quite unacceptable. As a communication provider you must actively seek out the causes of what causes you to lose income and decrease your costs!

Achieve your goal
There are four major areas that need to be considered to successfully tackle the revenue assurance problems.

The first step in your hunt for revenue leakage is acquiring Awareness & Knowledge. What needs to be identified is the potential areas of losing money and what actions you should take to minimize the leakage.

The second step, when you have the awareness, you must enable your Organization to take on the task of minimizing revenue loss, because the problem is most likely widespread within your whole company.

The third step to get your hands on the revenue leakage is to ask yourself why, where, and how. The answers of your questions should work as Procedures, which your organization should work according to.

The last step in the hunt for your money is to investigate if new investments of Technology and Equipment could help increase revenue. Typical technical investments that work as easy money savers, and already proven, are fraud systems, revenue assurance systems, and analysis tools.

There is no single solution to the problem of revenue leakage but combining the above four hands-on solution areas is essential and relatively straightforward.

When looking for a technical solution to identify and stop revenue from slipping through your fingers, it is important to either complete the analysis and increase awareness internally or have a supplier that can provide not only the technical platform but also a pre-study and education about revenue assurance.

Purchasing new software is often a time-consuming and costly task, both calculated in money and man-hours. However a system that saves money and increases revenue would most likely be one of the easiest systems to apply investments money for.

The payback time should be calculated in months; therefore your focus on functionality should also be combined with focus on minimizing maintenance cost and the workload of your organization.

And remember: any source of income is also a potential cause of revenue loss!

For more information, please contact:
Ludvig Lindqvist: ludvig@basset.se

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