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To the long "to do" checklist for aspiring 3G operators, here's another item: billing. Yes, we know billing has come a long way from simply generating call records. But the opportunity--and the complexity--of 3G comes from the richness of its services and applications, from user-driven photo messaging to streaming downloads. That means some heavy lifting is required from the OSS back end for billing, mediation, rating, interconnect, settlements and CRM.

The good news is that, thanks to 2.5G, operators and their billing vendors are already moving in this direction. The bad news is that it's still a moving target. As David Peters, CEO of Australian vendor Emagine International, puts it, "Nobody knows what is going to work, so the [billing] platform needs to cover 95% of everything."

By contrast, when GSM was introduced more than a decade ago, the billing methodology--setting down the presentation and content of call records--was spelt out in detail by the spec. There is nothing that simple in 3G, or even 2.5G.

"Implementing real-time and pre-order rating of content services is one of the most arduous tasks in implementing a 3G billing system," said IDC wireless research manager Natasha Tan. "In the wireless voice world, rating a call is as straightforward as billing. However, rating is a different ball game with 3G IP, particularly when it comes to content."

To make it worse, the transition to supporting rich data services is not the only one acting on mobile operators. They also must deal with convergence of fixed and mobile, and be able to support both prepaid and postpaid services.

But this perhaps underlines the nature and significance of the billing and customer care engine today. As Peters puts it: "Operators go through tremendous sort of leaps. They just catch up and then the technology changes again."

With 3G around the corner, IDC sees four main challenges. Operators--and vendors--must first replace, or migrate to, legacy 2G and 2.5G OSS platforms with 3G IP OSSs. Second, they must differentiate the usage collection for voice and data services. Third, they must deal with third-party content settlements and revenue sharing, and fourth they need to implement real-time and pre-order rating of content.

The decision-making process in solving these starts with the customer experience for each individual service, says Peters.

"How is it going to be activated? How is it going to be billed? How is it to going to be managed? And how to market effectively to customers and maintain their profitability for that service?

"They need to look at these requirements generically. There are going to be 50,100 new services, and they are going to have to do those four processes with every one of the new services."

Settling up

A critical part of this is the settlements with content and media partners. UK mediation and interconnect billing specialist Intec Telecom says content settlement is basically another form of wholesale billing, with some new twists.

Wholesale billing has long been a headache for operators, says an Intec paper, because interconnect charges can account for as much as half of their operating overheads.

However, 3G interconnect rating differs because it is "always-on", and the business relationships with content partners can also vary significantly. Some content providers charge a fee for the distribution of their content; others, like advertisers, actually pay the operator for access to their customer base.

The other twist is that, instead of dealing with a handful of mobile and fixed operator partners, 3G operators may be dealing with hundreds of content providers.

Then there's the thorny issue of identification, which does not exists in the voice world. In PSTN networks, the interconnecting carrier is identifiable through their switching and trunk networks, in 3G and any other IP network, this does not exist.

As a result, the interconnect rating needs a more flexible algorithm which allows for recognition of the partner from its IP address, for example. It also needs to be able to switch between different rating algorithms.

Real-time analytics

The sharp end of this is felt in the carrier marketing departments, which must become more dynamic to meet the expectations of customers--and senior management--to respond ever more quickly to the market.

"We're in the whole new regime of content services. The breadth and depth is increasing exponentially," says Peters. "You have to design something that can take into account any and all of those kind of permutations. It starts with the billing system and then goes through to all the customer marketing systems."

Indeed, in the world of marketing, UMTS and cdma2000 operators are going where no marketer has gone before. "There's a lot of talk about real-time analytics," says Peters.

But that is some way off, and although Intec Telecom has just launched a real-time charging platform, right now 24 hours is the magic number. Within a day an operator can see the numbers on a new service or download, enough to tell them whether to dump it, tweak it, or expand the capacity.

This is on the cutting edge of marketing in any industry. Other sectors such as banks, credit card companies, airlines, insurance companies similarly have large customer bases with fast-shifting requirements. But none of them are close to the speed and volume of services now being offered and ramped up in mobile.

IDC's Tan says once the services get beyond the basic apps such as stock quotes and ringtone download and into movies, online games and music, the price packaging of services becomes complex.

"Further, as content services become value-based, customers may very well want to know what this content will cost before purchasing," she says. Thus, while real-time rating is going to become mandatory in 3G, the next challenge will be to be able to offer pre-order rating.

There is a point to all this, however, and as a result of the extra strength and robustness of their OSS back-ends, mobile operators will have an even deeper view of their customers. "Telcos already know a lot about their customers. They know when they call and who they call and how much they are prepared to spend on calls," says Peters.

Now marketers will be able to build individual customer profiles from the way customers use information and other content services. They can track usage by the size of the download, type of download, or the type of transaction. If a customer who usually sends five SMS messages daily stops sending messages, an operator can send an offer of five free messages. Or if a game is popular, send a message out to other customers about that game.

Important also for mobile operators is that they can get some visibility into prepaid customers. In most markets, operators don't know who they are or where they live.

Says Peters: "Finding out that customer likes golf more than basketball is of limited use of itself, but once they can harness all the power of the data you are really seeing the ability to be able to get close to your customers and anticipate their needs."

TA30 TELECOM STOCK INDEX 14 July--15 August, 2003

2.8% slide ends four-month streak

The TA30 index slid 2.8% to 922 points for the month, bringing four months of consecutive gains to an end as falling stocks exceeded gainers.

Ironically, the period was filled with better-than-expected quarter and interims results by Asian telcos, including SingTel, AIS, and SingTel Optus.

The biggest rise was from Samart Telecom, which jumped 49%, partly driven by Thailand's promising economic outlook. KDDI shares rose 18% on its solid quarterly results, boosted by its popular cdma2000 1x service. Rival Japan Telecom slipped 6.1%, but could recover next month following the long-awaited sale of its fixed-line unit to Ripplewood Holdings.

China Telecom edged up 9.7% on its strong subscriber growth in its fixed line business and the Little Smart branded limited mobility service.

By contrast, both China Mobile and China Unicom fell by 7.8% and 8.9% respectively. China Mobile's 13% increase in its first half profits failed to offset investors' concerns over accelerating price wars.

It was also a gloomy month for PCCW, which still failed to impress investors even after making its third early repayment pledge on its bank debt. Investors also fear PCCW might follow rivals into a price war.

Most guidance around the sector was conservative for the rest of the year, suggesting any growth in the next few months will be hard-won.