Introduction

1. Compensation Analysis of Next Generation Services28 – 31 March 2006Dagstuhl Seminar Internet EconomicsProfessor George Huitemag.b.huitema@rug.nlgeorge.huitema@tno.nl

2. Introduction • University of Groningen (RuG): Mathematics, in particular dynamical systems (quasi-periodicity) • KPN Research: 1988 – 2002, TNO Information & Communication Technology: 2003 – now, Senior Strategist (www.tno.nl) • From 2001, RuG, Professor of Telematics; Faculty of Management & Organization, Research School Business & ICT • Member Executive Council Global Billing Association (GBA, www.globalbilling.org) • Research Area: Billing and Customer Care • Billing Knowledge groep at TNO ICT: • Support of end-to-end billingprocesses; • Specification of business, functional and technical requirements; • Design of billingarchitecture and –systems/processes; • Testing, audits; • 1st time enigineering in state-of-the-art Billing Lab.

3. Overview • Introduction • Basic Billing Steps • Billing Developments • Current Operations • Current Research • Compensation • Compensation Complexities • Basic Compensation Case • Extended Compensation Case • Compensation Agreements

4. IntroductionBilling Basics Service Service Provider End-User € • Output • Invoices • Notifications • Input • Customer Information • Pricing Information • Accounting Information Billing

5. IntroductionBilling Subprocesses Payments, Collections, Reconciliation Invoices Notifications Bill Presentment Customer Information Billing Pricing Information Rating Mediation Accounting: Accounting Details

6. Trends & Developments Billing Developments Operations • Billing of Packagers • Convergent Billing • Flexible Pricing Models • Mobile Content Billing • CRM & Billing • Mobile Payments Research • Compensation • Ambient Networks • Sensor Networks

7. Trends & Developments 1. Billing of Packagers Servers Access Networks Service Providers Service Applications Platform Operators Partners Partners Packager Service Billing Examples: Fixed Mobile Convergence, Multiple Play, . Customer

8. Trends & Developments 1. Billing of Packagers Service Providers Mediation Operators PRM Packager Partners Billing Service • Partner Relationship Mgt (PRM) Customer

9. Trends & Developments 1. Billing of Packagers Trends • Customers choose Brands not providers, operators • Customers want a single point of contact • Billing done by specialized Billing Service Providers Key Success Factors Operators • Roadmap and Implementation plan for Operators wide Packager architecture • Availability of adequate PRM system

10. Trends & Developments 2. Convergent Billing Converged Services Customers Partners Application Control Network Mediations Layer Med-1 Med-2 Med-3 Wholesale Retail Postpaid Billing Wholesale • No stove pipes • Horizontal convergence • Mediation, • Rating, • Billing Retail Prepaid

11. Trends & Developments 2. Convergent Billing Trends • IMS Presence & Core • VoIP • Fixed Mobile Convergence (FMC) • Prepaid/postpaid convergence Key Success Factors Operators • Roadmap and Implementation plan for operator wide mediation, rating and billing architecture

12. Trends & Developments 3. Flexible Pricing Models Services Customers Partners Mediations Layer Rating Billing Retail Wholesale • Pricing models fit customer needs better • Pricing models support new business models and new services

13. Trends & Developments 3. Flexible Pricing Models Trends • Multi Contract SIM • Energy Bill • Prepaid top-up methods • Customers want more transparency and cost control • More event based pricing, bundles, cross product discounts, bonus constructions, flat fees, group-based rate plans, home zone constructions, … Key Success Factors Operators • Flexible and powerful rating engine • Online/Real Time interfaces with Customer and Product Databases

14. Trends & Developments 4. Mobile Content Billing Trends • Content becomes Infotainment • Mobile content is dominated by 3G (Girls, Games and Gambling) in Video Messaging • Mobile TV Key Success Factors Operators • Enabling communication of triggers, stimulation (e.g. conversational content: personal, interactive, self-expression) • Billing/rating of events (triggers) and of VAS: downloads/streaming/interaction • Implementation of adequate DRM – Billing solution

15. Customer Trends & Developments 5. CRM Usage Data • Shift from customer acquisition to customer retention • Implies shift from product oriented to customer centric approach CRM Data Billing Network Customer data Info Service

16. Trends & Developments 5. CRM Trends • Customers want to • control their costs • be treated as an individual • have end-to-end control over service • Customer Lifecycle Mgt • Customer Revenue Mgt • Best Plan Advice Key Success Factors Operators • Offering online secure access to billing and CRM data • Supporting packaged propositions

17. Trends & Developments 6. Mobile Payments Trends • National (bank) solutions, no international solutions (Simpay debacle) • Korea/Japan develop successful m-payment solutions based on NFC • Strong foothold for credit card • M-payments • Micro payments • EBP & payments Key Success Factors Operators • Supporting Payment Service Providers with introduction of m-payment solutions • Fixed Mobile convergence

18. Trends & Developments What is beyond 2008? • Current billing trends will stretch out over the horizon • Increased focus on customer satisfaction and customer care • The move to IP • Prepaid becomes more about financial risk mgt than servicing low-value customers • Real-time billing infrastructure gives better control over service usage and accounting • Next-generation mobile content and data services require flexible OSS and Billing systems (self provisioning and self care)

19. Compensation • What is Compensation? • Basic Compensation Scheme • Compensation Examples • Ambient Networks • Sensor Networks • Compensation Complexities • Thanks to Ralph Kuhne (Uni Tubingen/Siemens) for some slides

20. What is Compensation? • Instead of hierarchical billing we consider peer-2-peer billing • Therefore we speak of Compensation • Note that the compensation relationship may vary per service (session) • With Compensation a compensated party (charging party) and a compensating party (charged party) are involved. • The compensated party provides some service for which it gets compensated. • The form/amount of compensation is negotiated • Or already determined in a pre-established agreement or contract Service Compensated Party Compensating Party Compensation

21. Basic Compensation Case resources Party 2 CF Party 1 CF compensation • Interworking Steps • Advertising (service, network) • Evaluation of Compensation • Agreement (price, payment method • Record format, split of comp. functions over • two or more parties) • Interworking • Ending (also of compensation) • Compensation Functions in CF • (Compensation Functional Entity) • Accounting • Charging • Billing • Presentment • Payments (Collection)

22. Compensation Analysis in Ambient Networks • Ambient Networks is an Integrated Project within the 6FP (IST-2004-2.4.5) • Aim is to develop a new networking concept beyond today’s fixed and 3G mobile standards • Networks will become more technically heterogeneous, accommodating old and new access systems as well as applications and services: migration and service roll-out will be not a one-off activity but a constant activity • Today’s systems will be complemented by a diverse mixture of other networks – personal, vehicular, sensor, hot-spot and more. A network of networks will have to form and re-form dynamically (self-composition and self-management) • Smooth transition from legacy networks • Task Leader Task TG3: Compensation (82PM); 2006 -2007 • Partners: DoCoMo Labs, Elisa, France Telecom, Siemens, Telefonica, TNO, VodaFone

23. An Ambient Network Scenario

24. Example Compensation in Sensor Networks Utility Company Customer Front Office Back Office Front Office Back Office Mediation Smart Meters (sensors) Customers may also be Energy Providers and hence are compensated by the Utility Companies

25. Compensation Complexities

26. Extended Compensation Case: Compensation Service Provider involved • A Compensation Service Provider (CSP) provides some functionality necessary for compensation to take place, e.g. • it maintains the account of one of the involved parties • it collects information about resource consumption and rates it (delegation of charging task) • A CSP may buy the claim of the compensated party and sell it to the compensating party (both interactions may involve negotiations) • More than one CSP might be involved Service Compensated Party Compensating Party Compensation Compensation Service Provider

27. Extended Compensation Case • payments • accounting resources Party 2 CF CF Party 1 compensation • Compensation Info • invoice (postpaid), • decrease of account (prepaid) • Compensation Info • usage records • Compensation Info • Prices • customer details Compensation Service Provider CF • Mediation • Charging • Presentment • Management of accounts

28. Compensation Complexities (1) Seamless Interoperator Handover subscription Home -Mobile NO Otto Visited -MobileNO compensation agreement access handover Visited -MobileNO dynamic compensation agreement

29. Compensation Complexities (2) Otto provides a relaying service subscription Home - Mobile NO HotSpot Otto compensation agreement compensated party compensating party „Compensation Service Provider“ (provides Otto‘s account) access Theo • Otto is compensated by the HotSpot for providing • a relaying service • Theo compensates the HotSpot • (is not aware of Otto’s extension) compensating party

30. Compensation Complexities (3) Otto moves to another domain unaware of the underlying network Service Provider compensation agreement compensated party HotSpot I HotSpot II Otto Otto compensating party • Otto compensates Service Provider • SP compensates HS I • Otto moves to HS II while having • seamless handover of service • Hotspot II compensates Hotspot 1 • What if HS1 drops out or HSII raises the price?

31. Compensation Complexities (4)Independent Compensation of Service and Access € (compensation for services) • Example: User makes use of service offered by SP, access is by Operator • User has business relationships with SP and with Operator • Therefore user compensates SP as well as Operator Service Provider CF service € (compensation for access) Operator CF

32. Compensation Complexities (4a)Dependent Compensation of Service and Access • Example: User makes use of service offered by SP, access is by Operator • User has only business relationship with SP and therefore compensates SP • SP compensates Operator € (compensation for service + access) Service Provider CF service € (compensation for access) access Operator CF

33. Compensation Complexities (4b)Dependent Compensation of Service and Access • Example: User makes use of service offered by SP, access is by Operator • User has only business relationship with Operator and therefore compensates Operator • Operator compensates SP Service Provider CF € (compensation for service) € (compensation for service + access) Operator CF

34. Compensation Complexities (5)Aggregator Compensation Scheme € (compensation for aggregated service) Service Aggregator CF € (compensation for service) € (compensation for access) Service Provider CF Operator CF

35. Under construction • Definition of • Compensation Agreement • Compensation Functional Entity • Transport of Compensation Data between networks over interfaces • Business Models and Compensation Configurations • Online or offline charging • Dynamic Compensation Agreements (dynamic pricing) • Re-negotiating Compensation Agreements • Compensation and Security • Input to Standardization Bodies (IETF, 3GPP,..)

36. Discussion