SAP Thought Leadership telecommunications

ONLINE CONvErgENt ChargINg

Software SolutionS for a MultiService world

the majority of consumers are uninterested in technology. they simply want to use services at the time, in the place, and in the manner of their choosing. thus the common denominator for any convergent charging system is that service pricing makes sense for the customer while enabling the service provider to differentiate in line with a sound customer ownership strategy.

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Executive Summary Convergent Charging improved customer loyalty with Service and Payment convergence differentiated Services with Prepaid and Postpaid convergence Business and Systems rationalization the Benefits of a converged Pre- and Postpaid Solution IMS Market Opportunities charging challenges for iMS Services Standardizing charging Integration and Business Benefits The SAP Approach find out More

ExECutIvE Summary

PreParing for the future

as service providers prepare for tough times ahead in a challenging macroeconomic environment, they are looking to reduce costs. the smarter providers are looking to go beyond simple cost cutting; they view the current climate as an opportunity to spur more innovation and gain market share.
one area that is coming under scrutiny as a source of potential cost savings and as a way to improve competitiveness is charging and billing. the cumbersome charging and billing applications that many large providers are currently stuck with are slow-moving and costly to maintain. they often suffer from revenue leakage, offer insufficient protection against credit exposure risk, and hinder business model innovation by making even moderate changes a long and expensive process. greenfield operators have seen the light and do not make the same mistake: they have chosen a different approach for charging and billing, adopting converged online charging from the beginning. now the established service providers are also mapping out a plan to wean themselves off their legacy systems and over to a single, converged online charging system. these service providers are recognizing that they can dramatically reduce their operating costs while improving their customer intimacy, reducing revenue leakage, and enabling more rapid change of their business model to get ahead of the competition.

SAP Thought Leadership online convergent charging

CONvErgENt ChargINg

deliver Both ServiceS and PayMent convergence

Improved Customer Loyalty with Service and Payment Convergence

the majority of consumers are uninterested in technology. they simply want to use services at the time, in the place, and in the manner of their choosing. thus the common denominator for any convergent charging system is that service pricing makes sense for the customer while enabling the service provider to differentiate in line with a sound customer ownership strategy. convergent charging systems must therefore deliver both service and payment convergence: Service convergence to enable the bundling of multiple services at the charging layer, enabling cross-product discounts and promotions Payment convergence to offer prepaid, postpaid, and blended payment mechanisms and capped postpaid mechanisms for all services this approach can result in the following advantages: centralized rating for all services, providing flexible pricing and packaging capabilities charging layer interacting in real time in close proximity with applications and service delivery platforms to obtain authorization and charging information for multiple services online rating and balance management so that customer balances continuously reflect actual usage with full protection provided against fraud and credit risk exposure Service platforms that can react

immediately when a subscriber allowance is reached or credit is exhausted interrupting the service and automatically making a relevant suggestion to the subscriber Significant savings in operating expenses with a single system and faster service introduction in some cases, reducing time to market from months to days differentiated Services with Prepaid and Postpaid convergence introducing pre- and postpaid convergence is an intelligent strategy toward customer ownership. if service providers can utilize payment mechanisms as tools to differentiate their service offerings, rather than be constrained by them, they can find ways to add value to new service bundles, differentiate offerings, and further reduce the likelihood for churn. Prepayment is the traditional mechanism for mobile users; prepaid voice represents more than 50% of the worldwide mobile subscriber base. however, prepayment mechanisms are growing in importance in both fixed and mobile environments as customers demand increasing control of expenditures. in developing countries, for example, customers are expressing preference for prepaid broadband services. the demand is also growing in environments where services are used concurrently, such as from thirdgeneration (3g) network devices. online charging provides up-to-the-minute charging information for unbilled transactions and opens the door to hybrid preand postpaid plans.

Prepaid functionality can be combined with postpaid accounts where caps on spending can be imposed. Postpaid customers can predefine amounts that they are prepared to pay per month, and as they reach their predefined limit, they can receive notification. Such payment methods are already in practice by european triple-play providers, for example, that offer capped postpaid services. Spending limits can also be applied to individual services, with wallets being associated with specific highend services such as pay-per-view films from a broadband or cable service. Business and Systems rationalization Prepaid intelligent networks (in) are proficient when delivering high-performance, real-time capabilities for call control, authorization, rating, and balance management for decrementing and recharging accounts. however, these systems were not designed to support sophisticated multimedia services and thus render new-service introduction a complex and lengthy process. Most prepaid in systems today are in fact focused on voice and just a few simple data services. these systems tend to be highly restrictive when introducing discounts and promotions and in managing hierarchies for corporate groups or family plans. Postpaid billing systems, on the other hand, offer extensive possibilities in terms of the services that can be introduced, the hierarchies that can be managed, and the end-of-month promotions and discounts that can be applied. yet new-service introduction often does

SAP Thought Leadership online convergent charging

entail very lengthy, complex coding and development lead times, and promotions and discounts can only be applied at the end of the month. further, postpaid billing systems have not been designed for real-time operations but instead for mass, offline batch processing. Subscribers for both types of systems are usually distinct and managed by entirely separate databases and, typically, by two different teams with diverse skill sets. the inevitable result is huge operational costs for running
Legacy architectures today: Secure Copy Call Control Sessions Service Logic

these two systems in tandem. the objective of any new convergent charging architecture must now be to combine the benefits of existing prepaid and postpaid systems and create one costefficient, next-generation charging system able to ease the rapid deployment of new services (see figure 1). next-generation convergent charging systems are designed to rationalize the architecture for lower total cost of ownership and higher return on investment by creating a single system to handle

all services. to meet future demands, charging, rating, and service control must go online with real-time functionality at the heart of the system. an online charging layer delivers: consolidated real-time rating centralized call and session control account balance management convergent pricing and packaging

The Benefits of a Converged Pre- and Postpaid Solution

one of the most attractive benefits of a converged approach is cost control. a single cost-effective platform enables providers to manage balances and service wallets for all subscribers and services, independent of their payment method of choice. in addition, this solution supports service differentiation. Providers can: Support subscriber groups with sets of interrelated pre- and postpaid balances for families or corporate customers, for instance enable flexible configuration of spending caps, allowances, credit limits, and service-specific wallets Manage dynamic charging where the balances to be charged are determined per transaction at runtime ensure real-time, online operation with high performance and high availability

Billing (offline batch-processing) Mediation Rating Account Management Discounts Promotions Hierarchies Invoicing Payment Collection

Convergent Charging architecture: Online and Offline Charging Call Control Sessions Service Logic Account Balance Management Balances, Wallets Hierarchies Convergent Rating Events, Sessions One-Shot, Recurring Discounts Promotions Recharge

Invoicing Payment Collection Billing

Figure 1: Comparison of Legacy Systems and Convergent Charging Architecture

SAP Thought Leadership online convergent charging

CRM and Financials

Network Elements

CRM and Financials

Network Elements

Account Management Balances Wallets Prepaid IN (real time)

Rating

Recharge

Service providers can now offer family or group plans that combine multiple account balances that interrelate, with some members of the group on prepaid plans, some on postpaid, some with postpaid allowances and spending controls, and other balances shared across the group (see figure 2). they can now even associate specific wallets to specific services. a parent could, for example, determine a limit on the number of movie or music downloads a child is allowed in one month. Parents could recharge their childs prepaid account via their own postpaid account. increased subscriber controls are likely to increase customer loyalty and reduce churn.

Figure 2: Combining Multiple Account Balances That Interrelate

Postpaid Family Account

$ $ $

Postpaid (limit) - Mother Data Services Prepaid - Father Prepaid - Child Music Services

the objective of any new convergent charging architecture must now be to combine the benefits of existing prepaid and postpaid systems, and create one cost-efficient next-generation charging system able to ease the rapid deployment of new services.

SAP Thought Leadership online convergent charging

ImS markEt OppOrtuNItIES

iMS aS a driver for convergent charging

convergent charging solutions are a necessary complement to both iMS and SdP architectures. they ensure that applications are network independent and can be introduced quickly, and that they can be flexibly priced and packaged across diverse access technologies.
example, a triple-play customer could be watching an iPtv movie service, launching an iM application, and even chatting away on a voice call to a friend, all at the same time. these numerous communication exchanges inevitably generate a host of simultaneous charging information. a constant exchange of information is therefore necessary between the network layer and the charging layer to manage the authorization to use each service. this exchange is also required to initiate charging requests as a service is consumed to enable the rating procedure. finally, an account balance management function may come into play for providing real-time balance updates, either for decrements to a prepaid balance or simply for real-time billing updates for the user to control spend. Standardizing charging as the standardization process for iMS has evolved, there has been a growing consensus among various standards

the iP Multimedia Subsystem (iMS) is driving the need for real-time convergent charging systems. iMS was born out of the needs of mobile operators by the third-generation Partnership Project (3gPP) standards body, and its unified architecture is now being adopted over a range of fixed technologies in order to promote the rapid and lowcost introduction of new multimedia services. on the it side, vendors are also offering their own service delivery platforms (SdPs) with the same objective for simplified and rapid service deployment.

convergent charging solutions are a necessary complement to both iMS and SdP architectures. they ensure that applications are network independent and can be introduced quickly, and that they can be flexibly priced and packaged across diverse access technologies.

Charging Challenges for IMS Services

the Session initiation Protocol (SiP) is the signaling protocol of choice for iMS, facilitating the use of multiple sessions and applications concurrently. for

SAP Thought Leadership online convergent charging

bodies, such as the 3gPP working groups and the telemanagement forum, that an online charging layer is required in complement. this new charging layer will sit close to the network and interact in real time with applications, dynamically gathering charging information to enable flexible pricing, rating, charging, and convergent account balance management. in simple terms, this translates into providing the customer access to all services irrespective of payment method, be it prepaid or postpaid or even a combination of both (see figure 3). an online charging layer applies realtime technology to manage the multiplicity of services. it enables an exchange of information between the charging layer and the network element or applications in real time; the information exchanged can affect the delivery of service for the end user. the interaction is to handle authorization, rating, credit control, and subscriber accountbalance management. an offline charging function is necessary to handle postpaid subscriptions. the charging information does not affect the service rendered in real time, and the final result of this charging mechanism is the forwarding of rated call-detail record files to the billing domain. Key elements within the 3gPP standard for online charging are the following: independent and centralized rating engine for all services calculating a number of nonmonetary units (service units, data volume, time, and events)

Charging System
... Ro

Network Elements and Applications Servers

Voice Data Messaging Video ... Rf

Online Charging ___ Session and Events

Account Balance Management

Balances Offers Promotions Counters

Recharging Server

Rating Engine Offline Charging

Rated Content Data Records

Charging Gateway

Postpaid Billing

Figure 3: Architecture for Convergent Pre- and Postpaid Online Charging

calculating the amount (price) of monetary units for a given number of nonmonetary units determining the tariff based on the subscribers contractual terms and service being requested Managing counters applicable for rating account balance management function for prepaid services holding the subscriber account controlling adding and deducting monetary amounts from accounts Performing credit reservations on the account Managing counters applicable for the account handling functions such as requests for session- and eventbased charging via a charging layer according to general industry discussion, the standard most likely to be adopted soon will be the key networkto-charging layer standards ro for

online and rf for offline charging, respectively. the online ro interface is defined using the diameter protocol, which grew out of work in the internet engineering task force (ietf) to expand on the older radius access, authorization, and accounting protocol.

SAP Thought Leadership online convergent charging

INtEgratION aNd BuSINESS BENEfItS

SolutionS for new entrantS and incuMBentS

a decision to invest in any convergent charging system will be driven by a need to gain flexibility and reactivity to meet transient market needs. the ability to rapidly price, rate, and bundle any combination of services together and introduce cross-product discounting and promotions will determine the ability to differentiate in the marketplace. as service providers address their new service pricing and packaging challenges, they are also evaluating solutions that will address pre- and postpaid convergence in the future. incumbents and greenfield service providers come from different perspectives and are each taking different approaches with regard to convergent charging. greenfield providers have the benefit of a clean slate when deploying infrastructure and information systems, whereas incumbents are constrained to a vast extent by their costly existing

legacy systems and investments. however, investment in a new convergent architecture can be quickly offset by the cost savings and business opportunities that convergent systems deliver. greenfield operators and new entrants can choose convergent systems and benefit from lower capital and operating expenses and a single system for managing all services from day one. they also have the advantage of being able to provide value-added service offerings from the beginning, allowing for greater market differentiation. incumbent providers have too often failed to utilize their legacy prepaid and postpaid systems to their full potential. it therefore makes more economic sense to introduce an adjunct charging system, allowing the legacy billing system, or the existing prepaid balance management systems, to remain in

a decision to invest in any convergent charging system will be driven by a need to gain flexibility and reactivity to meet transient market needs. the ability to rapidly price, rate, and bundle any combination of services together and introduce cross-product discounting and promotions will determine the ability to differentiate in the marketplace.
place for existing services. the new rating and charging systems can manage the sophisticated pricing and charging requirements for new services. existing services can then be migrated gradually over time to the new system to offer more comprehensive service bundles, thereby ensuring an roi from both old and new systems.

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SAP Thought Leadership online convergent charging

thE Sap apprOaCh

SaP convergent charging

the SaP convergent charging application is a flexible solution, designed with convergence in mind and meant to adapt to the potential needs of telecom service providers. it complements traditional in architectures by providing sophisticated pricing and rating functionalities. the application can deliver a comprehensive convergent charging solution complete with online and offline access for both incumbent and greenfield operations. SaP convergent charging is also aligned with the emerging standards for online charging, and SaP developers are closely following developments in this area. native convergent functionality makes SaP convergent charging ideal for emerging iP services such as mobile data and multimedia broadband services. the application is also designed to meet the needs of demanding service providers by offering combined preand postpaid services to millions of mobile and broadband subscribers. the extensive, standards-based application programming interfaces (aPis) and integration framework enable SaP convergent charging to be integrated into a range of charging architectures in a variety of carrier environments spanning mobile, broadband, and on-demand services. Key features include the following. Unconstrained pricing designed to deliver complete pricing flexibility with high performance and no compromises, SaP convergent charging virtually eliminates functional or technical limitations to developing offers for different types of services. an intuitive gui enables visual programming in which

components for making choices, dynamic table lookups, macros, and arithmetic computation are assembled into a decision tree to build a custom algorithm that will calculate the price of a service. Pricing and profit simulation SaP convergent charging enables what-if analysis that allows pricing managers to get answers to define optimum price structures and bundles for customer segments, for example. they can better determine which partners are best to use and how lowering costs can improve profit margins. Advanced rating features time, date, geographic, content size, content type, shared plans for friends and family or corporate plans, bundled offers, crossproduct promotions, and instant discounts: all of these different types of rating can be combined within a single rate plan. event-based, recurring charges and one-shot charges are also managed as a coherent whole by the rating engine using the same intuitive gui. Modular online balance management online balance management provides convergent pre- and postpaid account management, delivering full control over the totality of the pricing of services and bundles. Subscriber controls Subscriber policies held at the charging layer equip parents and employers with appropriate spending controls on a per-service basis and even according to predefined times of day.

High performance and scalability Proven in tier-1 mobile operator environments worldwide, the solution offers high rating performance in aggregate and per cPu. SaP convergent charging has multiple references in the challenging environment of real-time online and prepaid charging, where low latency, high throughput, scalability, and five-nines reliability is delivered. Compatibility with related applications SaP convergent charging is designed to integrate easily with the SaP convergent invoicing for telecommunications and SaP customer relationship Management and order Management for telecommunications packages to form a comprehensive consume-to-cash solution. thus, service providers can manage both customers and their accounts with an integrated solution.

Find Out More

to learn more about SaP convergent charging and the SaP for telecommunications solution portfolio, please contact your SaP representative today or visit us online at www.sap.com/telecommunications.

SAP Thought Leadership online convergent charging

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