Going over my mail I came across a letter from my bank, notifying me that due to some technical problem, they undercharged me last month.

I was wondering how much it cost them to correct the 1 cent error.
They probably had to invest resources in discovering the cause of the error,  correcting it in their systems, pay for printing the letter, as well as pay for mail delivery and waste call center resources.  And of course they have managed to harm their customer satisfaction (which of course has a dollar value)- did I forget anything?  Certainly you could claim that it would have been better to waive the charge, but it has its cost too, costs that might be even greater than the costs of claiming it.  The amount of under-charge might be high for some of the customers; therefore the bank needs to change some of its automatic processes and systems in order to implement the desired business logic. Moreover just waiving debts will require updating financial reporting, which also has it costs.

In the past six months, I visited two Revenue Assurance conferences. The one in November was a graveyard. Everyone was pessimistic and no one knew how the economic crisis will affect the industry in general and our field in particular. The one in March was completely different. While the crisis was still going strong, the conference was in full attendance and included many operators. In one panel session, five operators explained that while their budgets were left intact, they were expected to achieve more with it. In this climate, this consensus came as excellent news.

Now, I know we all say that Revenue Assurance is counter-cyclic and in times of crisis, it is the one field that operators cannot afford to neglect. However, it’s quite another to actually witness this. I’m happy to report that operators actually bought into this and share our view.  

Do more with less
Having said that, it’s always a good idea to achieve more with less, and more so during an economic meltdown. As it turns out, there are three main goals:
-         Identify more leakages
-         Recover more revenue
-         Prevent more leakages
To better understand these goals, let’s consider the TMF’s benchmark of RA standard KPIs:
-         1.19% of all revenue is lost as unbilled and under-billed leakage. This is an impressive number, especially considering it is actual, identified leakage, rather than an estimate.
-         About a fifth of this number is recovered by Revenue Assurance, which means RA contributes 0.25% to the operator’s revenue. Needless to say, no operator spends a comparable portion on RA. As a side effect, investment in RA is perhaps the cheapest way to increase EBITDA, profits and margins.
-         Unrecovered revenue is nearly 1% of operator’s revenue and 80% of identified lost revenue. This is a lot of money to leave on the table, in any economic climate. While unclear why it is unrecovered, it makes for a very good business case for proactive RA: active avoidance of leakage saves nearly five times as much money. 

Three Quick Wins
Using the three points from the study, we identify three possible quick wins:
-         In many cases, RA activities cover only a small portion of the revenue related data and processes. Increasing the coverage of RA activities is one easy way to generate cash and corporate good-will.
-         The ratio of recovered revenues out of lost revenues is barely one fifth. This is money that should have been collected by the organization. Automated recovery processes can take a big chunk out of this figure.
-         Finally, an ounce of prevention is worth a pound of cure. Proactive activities have a much strong economic impact than that of reactive RA. Unfortunately, it’s harder to demonstrate this to the management. Automation = Efficiency
Clearly asking the boss to “give me more resources and I will pursue all three points” is not the way. There are, however, more elegant solutions. The first is to automate RA processes, permitting existing personnel to focus on investigating data and preventing, finding and recovering leakages in a broader spectrum of the revenue streams. Automation requires external tools, internal developments, consulting etc. These cost money. But, the good news is that the vendors and consultants alike understand the situation and are offering many pricing models, permitting the operators to gain without doing substantial investments, e.g., revenue share, software as service, managed services, etc.  

Best Practices are good for you
Five years ago, there was no standard RA methodology. Each company tried to invent the RA wheel on its own. A lot was learned from these attempts, although at some cost, as learning processes are bound to. Today, Best practices and de-facto standards for RA are developed and maintained by the TM Forum and its members. Using these standards can increase the efficiency of RA significantly.  

I am a real fan of Skype and Boingo services.  They offer an option  called Skype zones that enables me to connect from my laptop to the web from  different places all over the world  for 7.95$ per month. I have been using this service since 2006, paying the same price, and being permitted to use Skype and data services (e.g., browsing, email). Certainly a great deal have been made that perfectly answers my needs.Just a bit of history: in 2005, Skype and Boingo launched the Skype zones service.
“The service is being initially offered at $8 a month for unlimited Wi-Fi access for Skype calls, which is significantly less than the $22 a month that Boingo currently charges for unlimited data access.”

The underlines are mine. The tricky part is that the Skype zones did not limit me (or other users as I know) from using it with data services. I could never conceive what made the difference between the two services ($8 service and the $22 service) apart from the price.

On this subject, I just got an email from Boingo saying:

“Effective February 1, 2009, Boingo and Skype will discontinue the Skype Zones Unlimited service. But don’t worry - you can continue using Wi-Fi with Boingo!” 
They were nice enough to offer me a similar (meeting my purposes) service: 

“Boingo Global offers access to more than 100,000 hotspots in over 90 countries. This flat-rate plan costs $59 USD per month …”

Actually I found some little differences between the new and old services. The new service price is more than 6 times the price of what I am paying to Skype zones today, and almost 3 times the $22 USD Boingo were charging for “the none Skype zones” similar service in 2002, or 1.5 times $39 USD Boingo used to charge for a similar service, just a few months ago.

What can I tell you? I hope that this is a sign of prosperity of the world and telecom industry! At $59 per month it does not make sense for my needs. I hope that some company will come with a more sensitive plan for me, e.g. access for 30 roaming days per year.Skype is still advertizing a Skype zones service for €7.95.
Will it continue after February 1^st? Will this service be really restricted only to enable just Skype calls, and no data services? Answers will be provided next month. Meanwhile let’s just be happy that the economical prosperity permits to triplicate prices of some communication services

iphone is the talk of the town, there is no question about it. While everybody is  busy upgrading their devices, the Mobile Phone killer application for me is still an Alarm Clock. However I should recognize that some people have a different view and many are interested in Iphones.In the past, the Apple income from iPhones was based on a revenue share business model: getting a percentage of the revenues originated from the iPhones traffic.
On October 2007, the New York Times  reported about the revenue share deal between Apple and AT&T. On August 2007, the Financial Times reported about a similar deal with T-Mobile of Germany, Orange of France and O2 of UK.  Time passed and somewhere on the way the Apple Business model changed. Apple partially abandoned the revenue-sharing model  (see 1, 2, 3)  and passed  to a more traditional model where iPhones were sold to Service Provider in full price, and the Service Providers subsidized iPhones to their end customers.

Saul Hansell, the editor of the New York Times Bits blog, says in his blog that “Subsidies of $200 to $300 per advanced handset are common in the industry”. O2 UK prices are a good source to learn about the subsidy. O2 offers the following plan: get a free 8GB iPhone just commit to a 18 month plan for £45 per month, the same Iphone is offered at £342.50 to O2 prepaid customers at apple UK web store.
Therefore since the Service Providers take a substantial risk per handset, they have to ensure their margins; the common way of getting it is to commit their customers to 1- or 2-year plan. It can be risky; the operator that gives a significant subsidy per Iphone might lose money in case the buyer of the handset manages to avoid the long-term commitment. It’s even riskier if buying of the subsidized handset is separated from the activation and commitment to the plan. Today the AT&T site let you buy your subsidized Iphone at a third party retail shop, e.g., Walmart, and then activate it via the web, selecting and committing to the plan only at the activation time. Of course, this approach relies on the possibility to enforce the activation of the subsidized handset only at the subsidizer’s network, and only after getting the customer’s commitment to a long-term plan. However the risk is high and I can easily imagine 3 scaring scenarios:

1. The customer fails the credit check, he cannot commit to the long-term post paid plan. In the past such customers were given two options: to give a deposit or prepay. The second option increased the risk of losing subsidy by the Service Providers. It seems that today this loophole is blocked by AT&T.

2. The Service providers for sure lose their subsidies if a customer decides to deliberately beat the system: e.g., to use the new iPhone with an old Sim card engaged in a cheaper plan or even worse, to buy an iPhone and use it with a competitor company. It is true that both options require some hacking that might be illegal (I am not sure), but more and more sites are reporting on the ways how to do it (for obvious reasons, no links here).

3. Someone (a dealer, an employee of the dealer, a customer, etc.) starts to buy large volumes of subsidizes iPhones, unlocks them and sells the unlocked Iphones abroad at reduced prices, causing the service provider significant losses.

I hope that all the Service Providers that are or will adopt the marketing strategy of separating the sale of the subsidize handset from the activation and the commitment to the plan processes, are aware of these risks, and take the necessary measures to monitor and mitigate them.

I planned to find some interesting statistics about RA on the web for the year 2008. Unfortunately I didn’t find anything that is solid. However, going through the web trying to find the desirable data, reminded me that there are few  basic rules to be followed when conducting a research and investigation that of course apply when it comes to RA.
 

I wish you all great 2009, I hope you will enjoy this short anecdote, and remember to use it to recall the basics.

The TMF published in the Appendix A of TR131 v2, the number of pages found by search engines (aka hits), for several RA related terms, such as “Revenue Assurance” AND provisioning  in year 2004 (using yahoo) and in 2007 (using Google).I thought it would be interesting to repeat the test, using Google.

The first result that I obtained was quite surprising; in December 2007 according to TR131, “Revenue Assurance” generated 518,000 hits. Surprisingly enough in December 2008 it generated only 323,000 hits. I believed that the difference in the figures does not mean that people lost their interest in RA.

My assumption was that the reason for the gap in the figures is due to some change in the way Google is calculating hits. However, I was not able (using Google) to find any justification, or contradiction to my assumption It was clear to me that I should not rely on the number of hits to analyze changes from previous years.

Therefore I decided to look at another parameter -  the change over the years in the ratio between the number of hits of “Revenue Assurance” together with some terms  like provisioning or mediation or leading to the number of hits of “Revenue Assurance” alone.

Looking at this yield some interesting results: the number of hits including both terms “Revenue Assurance”  and “leading” was 319,000; the number of  hits of “Revenue Assurance”  together with “rating” was 319,000. The coincidence in the numbers was a bit surprising so I googled to see the number of hits pages that include the 3 terms “Revenue Assurance”   and “leading” and  “rating“. Surprise, surprise  319,000.  Now I was puzzled, it did not make sense that in ~99% of the pages in which “Revenue Assurance”  appears, also “leading” and  “rating” appeared.

I went one step further checking how many hits I get for pages in which “Revenue Assurance” appears  but “rating” does not appear and the result was 274,000. Combining the number of “Revenue Assurance”  and “rating” (319,000.) + the Number of Revenue Assurance”  and not “rating”  (274,000)= should give me the total number of  hits with “Revenue Assurance ” (323,000) Clearly enough I proved beyond any doubt that  319,000 + 274,000 = 323,000 J. Now seriously, Google number of hits is only estimation ( ref1), however, the estimation, at least in our case, wasn’t good enough to do any significant deduction. 

It was time to give a chance to other search engines;

I proved there some new mathematical theorems

MSN:  43,100,000 = 46.600 + 42,100,000
Asks:  114,200 = 57,600 + 105,800
Yahoo 2,470,000 = 495,000 + 2,250,000  Clearly I could not use these numbers to yield any significant conclusion regarding RA. Well my short investigation reminded me of some really basics rules that we all tend to forget from time to time. Always have them in mind they can be the difference between doing an outstanding job and making a fool of yourself. 

1.     Always distinguish between facts, calculations, and estimations
2.     Do not trust numbers always double check them, and always apply sanity checks
3.     Coincidences exist, but many times they are not coincidences
4.     The real meaning of a number is not necessarily what you want it to mean
5.     Information even if it come from serious sources can be completely incorrect
6.     It is better to admit that you cannot deduce something, than to deduce something without solid foundation

Have a great 2009, and if I may quote Monty Python, in today’s situation remember to always look at the bright side of lifeGadi 

A service providers RA status should be analyzed by two complementary methodologies developed by the TeleManagement Forum. The first, quantitative methodologies, the Revenue assurance standard KPIs (RASK), which reveals information as leakages and recovery percentages. The second methodology, the RA maturity model, reveals the maturity of the RA activities and procedures in the organization.   A service provider that discovered a high percentage of leakages and limited recovery of these leakages might be in a completely acceptable situation. For example, an operator with low maturity level taking its initial steps in the RA journey. However the opposite will occur in case of a Service provider with high RA maturity that should be doing effective proactive RA, and hence preventing most of the leakages. Last year the TMF performed a benchmarking study on the RASK which yielded very interesting results (please send me an email if you want a copy of a presentation) and will perform a new one by April 2009.     These days the TMF is launching a new study on RA maturity. Participation in this benchmark doesn’t require a lot of efforts, only answering a questionnaire of 50 multiple choices questions.
The  benefits are major, each participant will receive a report which will enhance his RA knowledge enabling him to understand its relative maturity, spotting its weak and strong points, and the participant can use to the report to learn what he needs to do in order to increase its RA maturity.  The participation is free for Service Providers who are TMF members. Since this is a new study, the TMF is likely to allow a certain number of SPs that are not members of the TMF to participate for free.For more details see http://www.tmforum.org/page36873.aspx or send me an email 

We are all aware of the financial crisis  by now .There is no doubt the world financial crisis will cast its spell on every sector, and that  most people would feel it one way  or another.
Although it makes little sense asking what it would mean to one component, it is an interesting question how it will affect the Revenue Assurance (RA) discipline in the Telecommunication sector.

Before starting analyzing the impact we should  first know that there is  a clear distinction between the effect on RA vendors, and on the RA discipline.
The impact on  RA vendors is depending mainly upon  their financial situation and structure before/when the crisis began. While some will gain, others might lose.
It is a different picture when looking at the RA discipline that exists since the year of  2000 .
In spite of the year 2000 Telecom crisis the RA discipline has successfully managed to stay relevant. it has got even more solid afterwards, since SP’s moved from a “gain subscribers at all costs” approach  to “increase revenues and profitability” approach .

SPs’ have realized that RA, especially when there are low hanging fruit, is perhaps the most cost effective way to increase revenues and optimize  profitability. These led many operators to start or enhance their RA activities.

When the 2000 crisis passed people asked, will RA continue to exist?
Surprisingly to some, predictable to others, RA continued to flourish; the saturation of mobile handset penetration, alongside  the ARPU limitations, and the lack of real new killer applications, didn’t allow SPs’ to give up the positional  revenues associated with RA activities,  and convinced SPs to invest even more in RA.

In parallel RA increasingly developed from a sideline activity status in the organization to a discipline (RA as a discipline is still far from the maturity level of accounting, but it is advancing). Now what will be the effects on the RA discipline in the current financial crisis?My forecast is that it will help the RA discipline.
On one hand SPs are already aware of the economical benefits of RA (recall that by 2000 RA importance was not really proved/accepted as a fact by the industry), and especially in a crisis time these benefits are crucial. 
On the other hand SPs are conscious of their expenses, and they will want to embrace industries good practices, and not to reinvent wheels. Therefore I believe that RA will be a much stronger and well applied discipline as a result of this new financial crisis. 

Don’t believe everything you read, is a very common advice, however people intend to forget it. Last week (10-Sept-2008),  I read a story in Reuters and Forbes about the drop in the United Airlines parent company UAL (nasdaq: UAUA) share prices; an old story, originally published by the Chicago Tribune in December 2002, on the bankruptcy filing of UAL Corp, found its way to the Bloomberg financial news service, giving the impression that the story was current.

The result were hurtful the UAL share fell 76 percent. Although once the error was found the share recovered a large part of its original price, the damage was cut and clear. BTW, for those interested in UAL situation according to Forbes (08-Sept-2009), “It filed for Chapter 11 bankruptcy protection in December 2002 and emerged from it in 2006. Despite its struggles, the company has given no indication it plans another bankruptcy filing”I couldn’t avoid thinking about the difference between relying on primary data sources, vs. using data already processed. It reminds me of an ongoing debate over retrieving data in Revenue Assurance. There are two main approaches:
The first which I strongly support is that whenever possible, RA systems should get raw data from the primary data generating systems (switches, SS7 probes, billing systems, etc.).
The second approach advocates that in order to reduce costs, RA should try to get, whenever possible, data that was already put in some kind of data repository or Data Warehouse even if it is somehow processed data.Using primary data has it costs, but not using it might have unforeseen higher costs.  

Last week I participated in the IBC Revenue Assurance & Fraud management conference in Rio de Janeiro. At the conference I heard several RA vendors presenting, one of them gave a presentation in which he attacked the RA best practices and standards recommendation, published by different industry bodies. 

From what I heard and understood the presenter blamed these bodies of creating an unrealistic and detached standards and best practices recommendation. Therefore his recommendation was to be in contact with these bodies, to hear what they have to say, but in the end to do what fits best to your organization.
He also mentioned several times that although his company is a member of committees that published these best practices he found the need to say it.  It was very clear, even though I do not recall him saying it out loud that he included the work of the TMF, as part of these “not really serious” best practices.

I must say I took it personally, I am very proud to be part of TM Forum creating these best practices recommendations. I was offended for all the companies and persons that collaborated in this effort, and I was upset for the Service Providers that adopted these standards.
BTW, some Service Providers that already adopted part of the TMF best practices where right there in the conference room, one of them gave an excellent presentation, in which she emphasized how helpful it was to base hers corporation strategy on the TM Forum RA best practices recommendations.

I decided not to publish here the name of the vendor that attacked the best practices; I do not want to transform this methodological discussion into a commercial one.To conclude some recommendations to the attacking vendor (do not accuse me of not being an altruist)

1.      I think it isn’t such a good idea to attack best practices recommendation after a Service Provider tells a success story of adopting them.

2.      If you are a member, in a body, that according to you gives impractical recommendations, do something about it. Try to be more constructive, contribute to the community and help to formulate, what you consider to be, more practical and better recommendations. 

Hola,

Quiero dar la bienvenida a todos nuestros colegas hispanoparlantes, el RA-Blog, pasa a  ser bilingüe. Para entrar a la versión en español, vallan a http://ra-blog.org/spanish/  y por supuesto pueden seguir leyéndolo en Ingles en http://ra-blog.org

I want to welcome our Spanish speaking colleagues; the RA-Blog is now bilingual. You can read the Spanish version in http://ra-blog.org/spanish/ , and of course you can continue to read the English version in http://ra-blog.org

Gadi