Increasingly complex telecom networks are leaving more openings for revenue leakage from technical errors and fraud, a recent study suggests; and without proper revenue assurance practices, losses may get worse.
The annual study, conducted by Analysys and paid for by revenue assurance provider Subex Azure, found that average revenue leakage increased from 12.1% to 13.6% of turnover from the 2006 to 2007 surveys.
Geoff Ibbett, director of product management at Subex Azure, said that many companies are in denial about the amount of revenue that -- for one reason or another -- is never collected or accounted for.
"There is an attitude in the industry that we're not part of that, we're [losing] less than 1%," Ibbett said. "Until they actually monitor it … they really don't know."
Those losses come from a variety of sources, he said, and even if a provider has a handle on one area, other areas can quickly cause problems.
Some of the problem areas the survey highlighted are:
- Poor processes and procedures
- Poor systems integration
- Applying new products and prices
- Invoicing system errors
- Rating or prepaid charging failure
- Incomplete or incorrect usage data
- Interconnect and partner payment errors
Ibbett said Subex Azure has developed a suite of tools to help quantify revenue loss and tie it to specific issues.
The system works alongside the billing agent, ideally collecting information as close to the subscriber as possible. The system then looks at the billing information and models projected usage both from the subscriber-side data and from billing data to compare actual usage and data patterns with what the billing system is reporting. That data is analyzed for discrepancies, which can be further studied to find fault points in the current system.
These faults points can range from consumer or operator fraud to services deployed without proper billing rules being in place. Ibbett gave one example where an engineer created a rule discarding any call longer than five days as a system error. While few voice calls ever lasted five days, plenty of data connections did last that long, and important revenue streams were being discarded as false operator errors.
Revenue assurance can also mean more than making sure proper billing was being implemented, Ibbett said. Complex systems often overlook the "recycling" of resources from cancelled services, so networks are oversupplied with connectivity even as some users leave. Subex Azure, he said, can rapidly find these unallocated resources and alert the provider to the error.
Critical to a provider's handing over revenue assurance to a third party is the need for security and for the revenue assurance not to disrupt the current billing operations.
"Subex Azure's system works independent of existing systems within the billing chain," Ibbett said. "So we don't put the billing chain at risk; we sit parallel to it."
By sitting outside the chain, these solutions can not only audit the information in regular reports, they can also be set to regularly alert the operator of corrective actions to take (such as billing a customer for provided services) or even take the corrective actions automatically, with the provider's monitoring.
Ibbett said that revenue assurance has come into its own as a discipline only in the past few years. As some vendors continue to discover major revenue losses, the field is becoming more formalized and comprehensive.
The next step, he says, is taking the traditionally separate departments of revenue assurance, fraud and credit risk and being able to see them in the larger context of revenue assurance as a whole. This holistic view is particularly important as convergence makes networks more and more complex -- and open to loss.
"Subex Azure is merging its systems to provide a consolidated view of these things," Ibbett said. And despite all the major revenue loss issues already highlighted, network convergence, cross-network interoperability and new technology platforms like IMS will continue to open up new ways for critical revenues to disappear.
"[The survey is] just really scratching the surface in terms of issues," he said.