Time and distance based billing models are dead!

By: Conor Ryan
To survive in the rapidly expanding services market, service providers have to overhaul their traditional billing and accounting models. The flat rate, monthly subscription, unlimited usage for a fixed price is a ‘going-out-of-business’ model, and it is widely accepted amongst consumers and providers that future billing for present and emerging services will be content and usage based.
This poses the question as to why consumers are not being charged for content to a greater extent already. Up to now the widespread and continued usage of the flat rate model has been attributed to the fact that most existing service providers have been accustomed to distance and time based billing. It is the comfort zone. It has always worked in the past and it will always work in the future, and, above all, it is simple. However a lot of new services, and some existing services, are Internet Protocol (IP) based. In an IP world, geography is irrelevant. Distance-based billing just does not work. Time-based billing presents even more catastrophic failures, as it is perceived that it discourages the user from using the network. Also, until recently, service providers were locked into the ubiquitous flat-rate business model by their fear that nobody would pay for content when they could get it, or something similar elsewhere for free (similar to freeware software scenario). The Service Providers could also, justifiably, explain their resistance to wringing content for value (through usage, value, service, application or transaction-based charging) by pointing to the absence of sophisticated billing systems adapted to the IP environment by virtue of their ability, extract detailed network usage information and exchange usage/accounting information etc.
The proliferation of consumers’ Quality of Service expectations has also highlighted severe inadequacies with the service providers’ flat-rate based business models. If one considers a simple comparison of the two models whereby, in the traditional model a consumer requests a download of a movie of size three hundred megabytes, but the actual download took 332 megabytes because of some retransmission issues. The provider can only charge for 300 megabytes and hence has lost on 32 megabytes while also failing to provide a quality service (perhaps because of a fault with the network provider). In a content-based model the consumer is charged for the movie not the megabytes i.e. the movie download cost is EUR19.99 irrespective of the time or size of the download or from where it is downloaded.
The Telecommunications Software Systems Group (TSSG) has spent the last five years researching billing and charging software systems to support such a billing model. The TSSG has recently gained recognition for this research through receipt of a substantial grant from Enterprise Ireland to fund the development of a commercial rating product labelled the Rating Bureau System (RBS).