The HotSpot Revolution— and how to bill for it
While there’s no magic solution to monetise hotspots, the problem is far from insurmountable, observes Rothin Bhattacharya.
Mobile providers worldwide are evaluating public wireless LAN (WLAN) networks as the newest way to provide communication services to consumers on the go. With so many consumers around the world eager to download content, delivering content through mobile devices has proven to be a viable means of generating profits. Analysts state that ring tones, logos and other personalisation services generate huge revenue worldwide, and that the market is still growing.
In the Indian context, wireless telephony has achieved tremendous growth (though penetration is still low), the landmark achievement being that it has exceeded wireline connections in a short period of about ten years. LAN and hotspots have also shown impressive growth, thanks to the falling prices of WLAN equipment and laptops. However, India is still in the nascent stage as far as access to data though the wireless medium is concerned, and it holds immense opportunity. Individuals and enterprises gradually understand the need and benefit of data access while on the move, and this is offering a new opportunity to service providers.
WLAN service providers are in an excellent position to make the best use of this positive environment. However, in order for wireless service providers to understand how to bill and collect the revenue for WLAN services, they must first know how to exploit the technologies that will power a successful WLAN programme. When to invest in the new or upgraded systems and when to leverage existing solutions are the key issues for service providers.
The replacement myth
The myth that operators need to replace their existing billing systems to support billing for WLAN is dissolved by the simple fact that WLAN billing is essentially handled in the same way that other mobile data services are rated and billed. Simply put, WLAN is just another way to access data. Operators’ systems that can handle billing for mobile data can handle billing for WLAN.
As the core of the billing system should handle billing for basic WLAN services, operators have the choice to invest in complementary software to handle more complex WLAN offerings. Roaming and revenue sharing solutions not only enhance the WLAN experience for consumers, but can also be used as an opportunity to grow service providers’ revenues and preserve their brands as users roam from hotspot to hotspot.
Wherever & whenever
Mobile users are growing more familiar with accessing customer service when and where they choose—including via small PDA devices that are WLAN connected. Extending online self-care applications to the travelling PDA user will enable wireless providers to take advantage of reduced customer service costs and allow them to deliver a timely self-care experience that increases customer satisfaction.
Reducing customer care costs by offering self-care applications has proven to be a significant return on investment for service providers. Gartner estimates that (in the US) on an average it costs an operator $5.50 each time a customer contacts a call centre compared to just 24 cents for electronic customer self-care. In addition, giving consumers the opportunity to update their account information or change services at their own convenience inadvertently fuels loyalty to the provider—thus driving customer retention.
Another way to profit from offering WLAN services is to partner with venues that can offer hotspots and with third parties which have the content that consumers want. These types of relationships require revenue sharing agreements so that the parties involved are able to set up clear revenue sharing parameters and split profits among the players. If the service provider uses an automated revenue sharing solution, they control the management of the partnerships and the reconciliation of the revenues, putting the service provider in charge of the revenue flow.
Hotspot venues, aggregators, network operators/ WISPs will all need to be able to share revenues. They also need to be able to make settlements with content, application and merchant partners. The complexities grow as partnerships become more diverse and the number of partners increases, so it pays to be in charge of the revenue flow.
Trying and testing
As WLAN services grow in popularity, the organic growth will permeate across all business models and payment methods. New and casual users will opt to pre-pay for WLAN services if the choice is presented to them, as the pre-pay payment method has a much lower perceived risk. Since WLAN is a relatively new service, many new users will want to first try the service through several different providers before signing up for a subscription. In addition, the individual WLAN provider typically has a limited network coverage, which is why consumers find it easier to pay as they travel rather than sign up with multiple vendors in order to ensure they always have WLAN coverage whenever they need it.
However, many legacy prepaid billing systems cannot handle service authorisation and session management fo r multiple users accessing data, content and voice services. Existing billing systems can usually handle the simple ‘pay in advance’ single session authorisation used in most hotspots. Nonetheless, for WLAN services that complement 3G data and content services, real-time multi- session service authorisation systems must track simultaneous user sessions and determine when to stop or re-authorise a user session.
In a world where staying connected is important—especially for the business traveller—a roaming solution is essential. The user should be able to access the service in a familiar way, and service charges should be added to the regular bill, or debited from a pre-paid account. Therefore, as customers use different hotspots linked to different wireless providers, transaction information must be sent between the providers so they can appropriately bill the end-user.
Roaming is particularly important in the WLAN environment as coverage may only be a few hundred metres. UK consultancy BWCS recently stated that wireless service providers risk losing up to 30 percent of potential hotspot revenue if there is no roaming agreement in place. So while the industry awaits a universal standard for WLAN roaming records to be established, accepted and implemented, providers must have WLAN roaming solutions that allow them to export and import usage records for multiple roaming interfaces, some of which are proprietary. A seamless service and a single bill for consumers—regardless of whether the hotspots used are in a coffee shop, airport or hotel at different ends of the region—should be the result.
Key to revenue
The keys to capturing revenue from WLAN services and cutting customer care costs are in the effective use of billing and customer care systems. As hotspots continue to populate airports, coffee shops and other public arenas, service providers can reap the benefits by re-evaluating current systems for maximum return on recent and future investments.
The author is Country Manager, CSG Systems India.
E-mail: rothin_bhattacharya@ csgsystems.com