Summary:

Convergence is one of the key information technology phenomenon happening in the latter part of the last decade and several organizations have made a significant foray in this direction. The objective is to have a presence in television and broadcasting content, the Internet space content as well as Internet access, and last but not the least, in the delivery of these through a single pipe to the end consumer.

This paper attempts to address several key issues in this scenario of convergence with respect to the technology, marketing and financial issues of presenting a convergent single bill to the consumer.

Convergence-A Rider:

For most of the technology world, the term "convergence" refers to something very specific: the perceived combination of television technology and online computers. We would like to define convergence as the intersection of broadcasting, computers, telephones, video and more. More specifically, it is the transmission of data, voice and video traffic using the universal TCP/IP protocol. Driving this convergence is the powerful discovery that all information - sound, pictures, raw data - can be converted into digital format (ones and zeroes) and reincarnated intact somewhere else.

There are however, stumbling blocks to this wonderful scenario of convergence. The principal obstruction is in the form of limited transmission and carrier capacity. As more users get online and as more and more complex applications and higher-quality videos vie for online real estate, we are straining our infrastructure. However, there are efforts to shore up our communications infrastructure, by using new "broadband" pipelines that should improve speed and volume and it is in this facet that cable plays a crucial role.

Potential service offerings over cable:

Cable has potential to offer a vast number of informative and interactive services in addition to its traditional role of providing analog TV channels. Some of these services have been outlined below:

Internet access: Upgraded cable networks are now able to provide high capacity access to the Internet to customers with home computers. With a cable connection to the Internet, businesses and consumers can pay a flat monthly fee for access (or even metered access) and can receive electronic mail, access to discussion groups, ability to connect to computers around the world via telnet, and access to information archives through file transfer protocol (FTP) and gopher. Subscribers receive Internet access through a cable converter box that does not interfere with cable television service and works at speeds hundreds of times faster than telephone modem calls.

Traditional TV channels: With the upgradation of cable networks with optic fiber and frequency spectrum of transmission increasing to 750MHz, MSOs are now capable of transmitting more than 100 TV channels simultaneously. This is in addition to other value added services to be provided over the cable pathway, including Internet over cable, possibly Voice over cable (as and when legislation permits), Video on Demand, Pay Per View services, Interactive shopping and advertising etc.

Cablecommuting: The cable industry's HFC infrastructure has the potential to increase the notion of working from home via the information superhighway. Cable's high-volume, high-speed broadband technology will allow millions more to "commute" to work through cable. This technology will lessen the burden of commuting for both businesses and their employees who may be geographically isolated, physically disabled, etc. In addition, technologies such as video teleconferencing and high-speed fax transmission that will be delivered via cable in the future will enhance cable commuters' options.

Video on Demand: Digital compression technology, which enables cable companies to offer a greater number of channels as well as interactive capability, ensures that video on demand will be part of the information superhighway's features. This service allows customers to select from a range of movies, sporting events, or concerts for viewing at their convenience.

Interactive Entertainment: With the pioneering technology that allows interactive capability, many new information and entertainment options are being created within the cable industry. Viewers can call up statistical information on players during sporting events, watch a synopsis of the daily news headlines, and choose the stories on which to receive detailed reportage, or even change the pace of an exercise program. Interactive commercials can also be made available so that customers may receive more information or discount coupons for particular products or services.

Interactive Shopping and Advertisements: Interactivity will permit cable subscribers to request consumer information on businesses, products, and services at the touch of a button. Customers can view real estate in full-motion video and to access details on contractors, mortgage rates, and lending institutions.

Interactive Education: A few companies have already pioneered the concept of online and interactive education in India.

Voice over cable: Cable has the potential to transmit voice over its channels using the Internet protocol (IP). However, this has traditionally been the domain of the telecom companies and cable companies need to lay a lot of infrastructure in order to match the reach of the telecom companies. Also in terms of technology, cable needs to become completely broadband in order to enable two-way communication, which is the prerequisite for Voice over Cable telephony. The Department of Telecommunication (DoT), which is the de facto regulatory body for telecommunication in India, is considering the implications of legalizing this mode of voice transmission.

Idea of convergence billing:

The basic issues this paper seeks to explore are the ideas of convergent billing itself, its strategic and marketing importance and finally a look at a few of the existing models which have been proposed for convergent billing.

The telecommunications industry has essentially defined convergence billing as offering a single bill with cross product discounts. We take a broader view in defining it as providing a single point for all systems processing and planning in the food chain of customer care and billing (CC&B). This includes a convergent view of all aspects of the carrier's business from marketing a convergent service through to operational rating and billing, financial processing and integrated customer care.

Quite simply it is the ability for a carrier to offer multiple services over a single pipe to customers and provide them with a bundled invoice. Operationally, we have to offer a seamless service to our customers. The billing must be integrated, not just electronically stapled to the bill. This integration should accommodate key business processes. For example, full customer care across the various services or product service bundling to provide multi-service discounting.

The term convergence billing is often confused with the terms consolidated and combined billing. Consolidated billing is a product the industry has offered for a long time, primarily to large business customers, by aggregating department and/or subsidiary billing to a higher level for single bill payment and customer analysis. Combined billing is a more recent term used to label electronic stapling for providing wireline and wireless billing, from divergent platforms, in a single envelope with summary pages, limited cross product discounting and a single balance due. Convergence billing defines the new paradigm of integrating all processes of customer care and billing into a new businesses operating model.

Billing as a Marketing tool:

An integrated (convergent) billing system also makes the company more marketable because it accurately illustrates the customer database and buying patterns. The objective is to lock in customers to a certain degree by offering bundled services. By billing for these services on one invoice and offering the customer a volume discount, the aim is to reduce the turnover rate. Also, if the customers are getting a single total price for the services offered, it will be much more difficult for them to 'single' out a specific service for competitive comparison - that is, the customer will be less likely to shop around.

The premise is that customers who choose a single bill option will be savvy customers who understand their service options and expect high quality service at reasonable cost. Their choice of a single bill will manifest these expectations into options for cross product discounts and a knowledgeable single point of contact, with personalized service, for their full range of product and service requirements. In essence, offering customers convergent billing and payment options, will be viewed as a new way of doing business with their provider and raise expectations of customer service in response to giving all their business to one company. One caveat here, often discussed, is sticker shock and whether large payments due in one envelope will trigger a curtailment in services to reduce cost e.g. we would rather see a Rs. 2,000 balance on three cards than a Rs. 6,000 balance on one. The jury is still out on this issue.

From the perspective of service providers, offering convergence billing, with a creative new family of convergent products and services, is expected to create loyalty, reduce turnover and focus on a more profitable market. More importantly, a convergent view of the market as one for all products and services instead of segmenting the market for specific offerings will change the way we sell, service, and use customer information. Positioning this for some will require new ventures, partnerships and acquisitions, in order to provide the full range of wireline and wireless products and services customers want with a single bill offering.

Issues regarding convergence billing:

• Bringing together the diverse cultures supporting different businesses, even within companies under the same group umbrella, to resonate a new convergent culture. It is important to have common, synergistic goals and objectives. This is also important from the customers' point of view as they look at one company providing all their service needs.
• Integrating business practices in a convergent environment is critical. These include credit checks, non-payment policies, fraud detection and responsibilities; disconnect policies, collection practices, rewards and incentives. Although trying to act as an integrated company, in some cases, as in fraud, existing practices that are different may and should remain in effect to protect receivables and cash flow.
• Anticipating the customers' reaction to a large consolidated bill. In the convergence model, sending a customer a twenty-page bill may appear comical. Summary bill alternatives should be considered.

Technology perspective and issues:

Several software companies and products are on the verge of offering truly convergent customer care and billing systems that can process, rate, discount, and bill multiple services on one platform. However, the preceding customer and service provider issues will need adjunct technology and systems integration to effectively blur the distinction among the individual legacy platforms proliferating the industry today.

There are technical impediments in billing of services provided on the Internet also. A major stumbling block is the difficulty of pulling relevant information from the IP network. Traditional switches can generate Call Detail Record (CDRs), which represent the calling number, the called number and the call length. In an IP network, the data needed to produce a similar record are distributed throughout the network. To overcome this problem, the most widely accepted solution is to collect information from various routers, generally through analyzers or probes placed in the network specifically for that purpose. That usage data can then be aggregated and correlated to represent a specific event. That record can then be sent to the billing system. Some companies advocate the use of Internet Protocol Detail Record (IPDR) to collate such information.

Some of the key issues, which are to be addressed in this context, are as follows:

• Synchronizing multiple billing dates with an eye on potential cash flow implications.
• Building an external database for cross product and volume discounts.
• Producing a single bill as an option through 'electronic stapling' or other techniques.
• Providing customer service representatives access to the divergent systems for adjustments and credits.
• Establish a business practice, with consideration of regulatory requirements, for handling bad debts and partial payments with a single balance due.

Financial billing models:

When the Internet first came upon the scene, service providers simply offered one-size-fits-all services - generally, a flat monthly rate. Unfortunately for them, that business model has proven to be less than profitable.

Working with the assumption that the usage of the service (Cable TV, associated services like Movie on Demand, Pay Per View etc. as well as Internet access) can be monitored technically, the following theoretical models can be considered for revenue sharing:

1. Metered Charging:
   
   This pricing model is already in use with many Internet service providers (ISPs) and European mobile and fixed line telephone networks. The model involves charging the subscriber for the connection to the service provider on a monthly basis and then charging on metered usage of the service. The usage is usually measured in units of time and there is often a 'free' period of usage included with the monthly fee. Variations on this model include having scaled subscription charges that increase with the metered usage.



2. Fixed Price Charging:
   
   The network service provider sets a fixed rental charge for the cable connection with metered charging used for Internet usage. The advantage of this charging model is that data for cable usage for TV etc. does not need to be collected and processed, providing a commercial saving for the network operator in the billing systems and mediation systems infrastructure.
   
   Disadvantages of this model include no added revenue for the service providers in terms of above average usage on the network, and congestion may also become an issue if the network is under provisioned for the number of possible subscribers at peak times. This provides a strong argument for using charging and billing to improve congestion control by dissuading subscribers from using the network through higher cost for the provided services.



3. Packet Charging:
   
   Packet Charging is specific to Packet Switching networks and involves the capturing and counting the number of packets exchanged in a session. This is a proposed method of metering Internet traffic and being able to cross-charge between networks as well as ISP and cable subscribers. This model requires the implementation of packet counting systems in the network and complex billing systems that can process the packet data on a subscriber and customer basis.
   
   The advantage of this method of charging is that the absolute usage of the network and services can be metered, calculated and billed for very accurately, as long as the packet information can be captured efficiently.



4. Paris-Metro Charging:
   
   This charging model introduces the concept of travel class, as used on public transport systems, to network traffic and relies on providing differentiated levels of service based on customer usage pricing only. The scheme assumes that subscribers will assign a preferred travel class with an associated cost for their different network traffic. The class assigned may be simplified to first and second-class, as used on the Paris Metro system that inspired this charging model. The choice of class may be made dynamic and the subscriber may also use the throughput of the network to determine which class to use for their required traffic. The network may become self-regulating at periods of high usage. When the network becomes congested and all the capacity in first class is filled subscribers may downgrade to second class to improve their own network performance.
   
   An advantage of this charging model is the flexibility given to the network subscribers and also the control they have over the cost of their network traffic. This model has the disadvantage of introducing mathematical complexity to the network's behaviour and a tariff class decision overhead to the network subscriber.

Technical possibilities: In view of the above, the technological issues are outlined below:

1. It is technically possible to monitor the usage of CATV services such as PPV, NVOD etc. However, the requisite software and network tracking mechanism needs to be introduced.
2. The tracking software for CATV subscription and usage can be seamlessly integrated with the Internet usage tracking software.

Conclusion: Having examined the different possible scenarios for Internet over Cable transmission and the charging models, we conclude by a few general observations about the importance of convergent consumer billing.

The technology pull for convergence capability will take time. As a result, presenting a convergence business to customers will require interim technology solutions to support a new way for companies to behave and compete in this new paradigm. The pull for technology may be accelerated due to the economic value of replacing multiple customer care and billing platforms with one. We believe that now, and over the long term, companies should focus their resources on best of breed systems and integration for customer care that enables their customer service representatives to support a convergent environment.