Effective Revenue Management

Effective Revenue Management Jason Buckalew Director of Sales

Revenue Assurance Definition Revenue Assurance is the process undertaken to: Provide reasonable assurance that all of the different parts of the revenue management chain are being controlled and monitored effectively and maximum revenue is realized continually, while managing compliance with applicable laws and regulations (if applicable)

Revenue Assurance Business Need To be minimize revenue leakages To be aware about magnitude of risk exposure To establish control within the revenue chain To Comply to the regulations

Why Look At Revenue Assurance Revenue leakages causing losses to the operator Easy way to increase profit Revenue Leakage Number of customers required to compensate leakage Cost of Customer Acquisition $2,400,000,000 USD 1% =$24,000,000/ $96 (ARPU / year) $50 USD $24,000,000 USD 250,000 subscribers Cost of compensating leakage =$50*250,000 $12.5M USD

and comments revealed some interesting operator- and market-specific factors We have had such trouble in our market with interconnection charges rising four-fold Asian mobile operator Chaotic introduction of credit card and Internet payment mechanisms for our subscribers European alternative network operator (fixed and mobile services) Internal fraud has decreased because we have identified the source of loss and reduced it African incumbent operator What is the single most important thing that has changed the extent of revenue loss in the last 12 months? Acquiring new companies and having more systems to deal with International wholesale operator Revenue assurance used to be reactive; it s proactive now North American mobile operator 5

True Challenges & Complexities

Common problems Errors in switch that mean CDRs are not generated/ incorrectly generated Inadequate controls over the error/drop files Errors in tariffs or discount schemes Errors in the creation of accounts & customer information Sold services not billable Manual processing failures Numbering plans out of date Interconnect, roaming/tap file integrity issues Cancelled accounts not administered correctly Fraud! You are not alone!

Revenue Leakage in Next Generation Network IPTV System. X System Y Content Providers Real Loss in NGN IMS Components SMSC Switch Mediation Interconnect Billing System Application Providers MMSC GPRS Nodes Retail Billing System HSS HLR Order Management Provisioning Revenue leakage on settlement components such as reverse settlement if strong process is not followed Partners involved in almost every service causing revenue loss if revenue is not collected from the end-user Revenue leakages in transaction based services Revenue leakage due to high number of configurations required for charging and correlation of several components required Revenue loss in current circuit switched network

Revenue Leakage in Mobile Networks

Revenue Leakage in Fixed Line and Broadband

Case Study - The Problem 5%+ of active accounts not billing For billed accounts, fraud = appx. 60% bad debt appx. 11% revenue Network problems many CDRs had no purpose CDR time stamps and durations corrupted missing and unexpected CDRs lack of switch and IN controls

Case Study - Strategy Revenue Assurance Review (RAR) fraud risk and revenue leakage Fraud management infrastructure fraud team training FMS measurement business responsibilities defined CDR issues addressed Logical access controls Log monitoring & alerting New billing mechanism Customer risk assessment Product reviews Security IT, physical, logistics, people, supplier Organisation Policy & strategy

Case Study - Results Cost of strategy did not exceed $2m Quantifiable losses and savings Return on investment within 3 months Massive reduction in fraud and debt Cleaner network, extra capacity Active fraud investigations internal and external offenders Company awareness increased Greater confidence in billing accuracy

Building Your RA Team & Introducing and Aligning with Organization Processes & Procedures

A complete approach to revenue and profit assurance Customer & Supplier Management Revenue Protection Network & Platform Integrity Billing & Charging Integrity Receivables & Accounting Integrity Business Optimisation Sales process Contracts SLA s Order fulfilment Service management Service Assurance Customer care Complaint handling Churn management Customer risk Risk management Fraud prevention & detection Network security IT security Information security Business continuity Physical security Service setup, configuration & provisioning Service connectivity and use Usage record production, integrity & accuracy Switching-network component integrity & resilience Service Assurance Manual data collation & billing processes Mediation integrity Tariffing-rating accuracy & integrity Customer bill collation, production & delivery Interconnect & wholesale billing Mobile roaming settlements Collections & payments Accounting & financial control Debt management Interconnect, roaming & international settlements Platforms Processes People Policy Products Performance Monitoring & Management Organisation & ownership Strategy Policy Reconciliation & audit Measurement & reporting Training & awareness Process & procedure Regulation & environment

Example RA Organisation Structures Business Area Responsibilities Head of Revenue Assurance Fraud Monitoring Product Assurance Price Plan Control Analysis and Reporting Revenue Investigation Senior Fraud Analyst Analyst Senior Fraud Analyst Analyst Policy Business process assurance Product security Billing stream integrity Test call programme Price plan checking Price plan audit Monitoring price plan testing Fraud measurement Revenue loss investigation Case analysis Case management Intelligence management Police liaison Switch and billing reconciliation Inter-operator liaison Traffic reconciliation Sales channel analysis Churn analysis Interconnection and roaming analysis Collections and debt analysis Business out-payment analysis Management reporting Revenue follow-up Head of Revenue Assurance Business Area Security Responsibilities Manager Fraud Management Revenue Analysis Manager Security Manager Fraud Monitoring Senior Fraud Analyst Analyst Senior Fraud Analyst Analyst Analysis and Reporting Fraud measurement Case analysis Management reporting Intelligence management Investigation and Liaison Investigation management Case management Police liaison Inter-operator liaison Product Security Security policy Business process security Product development security Billing integrity Collections and debt analysis Sales channel analysis Churn analysis Interconnection and roaming analysis Switch and billing reconciliation Traffic reconciliation Business out-payment analysis Physical, Fire and People Security Asset protection Fire prevention and control People security Electronic and Information Security Network security IT security Policy and guidelines Information protection

Processes and User Procedures Revenue Assurance Processes and User Procedures are created to ensure that once implemented, the key system owners and users can work efficiently and effectively with the implemented system and functionality. The standard processes and user procedures needs to be followed are: RA case management & Analysis RA Case Monitoring RA Case Management Reporting RA Change Management process RA User Procedure for Data Analysis RA User Procedure for Reporting User Procedure for System Administration Daily Operations User Access Review of Logged Activities Back-up Recovery Major Recovery

RA Procedures and RA System User Procedures Process Owner Area Process Objective RA Manager RA Procedures Management Reporting Case Management Issue Analysis & Analysis Action Monitoring Change Management Security RA Analyst VCDR RA RA Application Administrator RA System/Database VCDR RA System/Database Administrator Administrator Visual RA System CDR RA User User Procedures Exception Reporting Data Collection Data Processing Data Parsing & Processing loading the Data Back Up Recovery Analysis Data Analysis Data Application Application Monitoring Revenue Assurance

RA Methodology

Revenue Assurance Process Reactive Detect issues within the network Unable to recover the loss Active Detect issues within the network Can recover loss using correction mechanisms Proactive Proactively identify revenue assurance issues before it impacts business

Leakage Categories Usage Large volume Reference source Switch Problems appear in patterns Correction - Recycling of records Mediation Retail Billing Interconnect Billing Subscription Smaller quantity of data Typically no reference point Need to compare between multiple sources Correction Each subscriber/ account WIN HLR Retail Billing Order Management Provisioning

How to identify problems Reconcile Account for data Compare Match data Trend data Compare history Thresholds Base-lined data Simulate Use test data 100 CDRs 3 Call types 75 CDRs 2 Call types 60 CDRs 2 Call types 25 CDRs 1 Call types 40 CDRs 2 Call types

Reconciliation Desired flow Switch CDRs Mediation Voice SMS Billing Voice SMS Voice mail records Voicemail Compare aggregates across control points Number of calls Total Minutes of Usage accounted Used extensively for usage based control points

Record Level Checks One-to-one record match Detailed and accurate Identifies Missing in one source Mismatch in one or more fields Used extensively in subscription as primary detection mechanism Customer records between HLR and Billing System Used as a diagnosis method in usage

Trending Monitor the trend of traffic/ No of subscribers or other controls Early indication of the problem Compare the values with historic values A dip in CDRs for few hours of the day could be an indication of revenue leakage CDRs not generated Rejected at the mediation or not transferred from switch

Data Integrity Checks High level checks without looking into contents Helps detect issues due to File corruption Late/ missing files Common checks File sequence Record sequence File checksum Inter file record time gap Intra file record time gap

Conclusion: Effective Revenue Management Lead By Strong Business Assurance Global average revenue leakage has increased dramatically to 13.6% of turnover from 12.1% last year With NGN, problems are only going to magnify because of the complexity Take advantage of systematic/automated Tools to counter the complexities and challenges RA Tool should be able to Close the loop: Monitor Analyse Correct Deliver rapid ROI Full Customer / User Control Manifold increase in analyst productivity Highly effective in both Traditional and Next Generation Network service environment Proven across various different operator profiles. Measure