Accounting for Change

As smaller comunications service providers and resellers seek to solve their billing challenges, too often the market tells them the answer is to throw money at technology. Choosing to outsource billing capabilities through a licensed system or a managed service can produce positive results. As communications services become more complex and variable, and involve more third parties, finding a billing solution — at the right price — that doesn’t limit services or online capabilities is becoming more difficult. What’s most important is a long-term view that balances today’s expense concerns with tomorrow’s need to jump on new market opportunities, work with new partners and still have an accurate billing process that can scale in the face of rapid growth. This can be accomplished with an in-house or outsourced model, but not if future requirements are overlooked because of a “penny-wise, dollar-foolish” strategy.

In-House Success

Big River Telephone Co., based in Missouri, offers an example of one company that addressed its growing pains in house. It provides consumer and enterprise customers with voice and Internet services, but also has a growing white-label VoIP business with 12 cable MSO customers. Kevin Cantwell, president of Big River, says “When we bought this company there was a legacy billing system [in place].” Cantwell himself had sold billing services for a company called Intertech, and a number of folks within Big River had billing expertise. Rather than opt for a replacement system or outsourced service, the company decided to enhance the existing system itself.

Big River’s homegrown system also provides a basic invoice formatting capability that allows the company to include color and marketing messages clearly on the statement. Its mailing solution is manual. “I hire part-time college kids to stuff bills for us,” Cantwell says. “It’s archaic, but it works and it’s cost effective.”

For what Big River is doing today, Cantwell says the system “works like a champ,” be he concedes it may have to change in the future. One reason is that its VoIP wholesale customers are starting to ask for complete back-office support, including end-user billing. This, he admits, could require further enhancement to the existing system, but says that right now only a few wholesale prospects are inquiring.

Big River currently does not provide enduser billing for its white-label customers. Its MSO customers have sold more than 17,000 of its VoIP lines and are adding roughly 150 per day. “We send them CDRs every night … the MSO is responsible to format them,” Cantwell says. Real-time access to bill detail isn’t necessary because all of the VoIP services are flat-rate — usage is posted once per day.

One Size Does Not Fit All

Cantwell is in a strong position because his company had the internal resources to enhance a working system, but that’s not the case for many service providers. Sometimes a new system is needed or an old system can’t be upgraded and must be replaced.

Digital Realm Inc., of Ann Arbor, Mich., found itself in this position. The company began life as an ISP, but over time migrated into voice services. The company had been using, and continues to use, Tucow’s Platypus billing software for ISPs. It found that while it provides many useful features like an online customer portal and automated credit card processing, it could not handle the complex call rating or call detail critical to Digital Realm’s new voice business.

The company set out looking for an offthe- shelf system that would either integrate easily with Platypus, or replace it entirely and support the entire business. “We found that no one system out-of-the-box, in our $30,000 to $50,000 price range, would do exactly what we wanted,” says Howard Levine, executive vice president and director of operations for Digital Realm. “Any of them would require professional services to do what we needed, or to integrate with our current system, and at a price that was another third to half of the original price,” says Levine.

The main problem with Platypus, Levine says, is it simply lacked a call-rating engine. On the flip side, however, the voice-centric billing systems he investigated don’t provide many of the ISP-oriented features Platypus does. “If we went to a voice-oriented system, it wouldn’t have the online sign-ups we use and wouldn’t support billing for our data and Internet services,” he says. Instead, the company has had to compromise by investing in a relatively inexpensive voice billing system from P3 Millennium, which Digital Realm uses as an adjunct rating engine to support its Quantum Voice VoIP service offerings.

Levine says that the P3 system is useful because it can handle very complex and variable rate plans. “If we want to say ‘don’t charge for the first 1,000 minutes, but after that charge 4 cents a minute,’ it will do that well,” he says. Similarly, the system can support plans that, for example, spread 10,000 unrated minutes across 10 office lines. But, “it doesn’t handle ISP billing functions,” says Levine. As a result, Digital Realm instituted an external process where voice calls are rated in P3 and the totals are then moved into Platypus. Digital Realm currently is integrating the call detail from P3 into its Platypus-based online portal, which automates e-mail alerts, hosts bills on a secure customer site, and accepts electronic payments.

Like Big River, Digital Realm is finding challenges in working with resellers. In this case, Levine says, it’s accommodating resellers who want to offer private-label VoIP services on a small scale with no billing systems of their own. They can’t take in raw CDRs from the wholesaler, like Big River’s MSOs can, and perform their own end-user billing. Because Digital Realm’s resellers are at a lower end of the market, the company decided not to offer end-user billing for these resellers that it viewed as competitive to Digital Realm’s service. “We figure, if you want to be in this business, you should have to invest in some of the things we have — like billing,” says Levine.

While Digital Realm managed to put together an inexpensive billing solution, Levine realizes now that any early savings likely have been canceled out by the lack of functionality and added time it takes to process bills each month. “We might, after all, have been better off investing more up front to build or customize this, and we would not have spent all that much more than we have,” he says.

Outsourcing From the Start

Call One, a competitive provider serving small to large businesses in the Chicagoland area, found outsourcing has been a way to ride the ebbs and flows of the business. It chose to outsource its billing to DCA Services when the company was founded back in 1993. Since that time, Call One has grown to support more than 20,000 customer locations and has expanded its service offerings to include everything from POTS to VoIP, OC to WAN/ LAN services, and all of the backup, disaster recovery and related ancillary services that business customers demand. Yet, Call One has never changed its billing provider.

The original decision to outsource “was strictly about head count,” says Chris Surdenik, president of Call One. DCA performs all billing, invoice output and mailing services on Call One’s behalf. The key to the relationship, however, is the flexibility and commitment to partnership DCA has been willing to offer.

“Originally their costs were strictly per bill, which was very attractive,” says Surdenik. He says that after an initial set-up fee, which “was no barrier to entry,” DCA’s monthly recurring fees were based on the number of bills sent out, postage and paper used. “As we grew they developed a pricing model with a flat rate for a number of invoices and that saved us a considerable sum as we were growing very rapidly,” says Surdenik.

He says that DCA further supported Call One’s growth through a flexible system and a collaborative approach. “We feel as though we are part of their team; it is more of a collaborative relationship. When we say, ‘Guys, we see a need for a specific application,’ they will work with us to deliver it,” explains Surdenik. He says that because Call One offers its business customers a broad product scope “every customer is an individual case;” but, he adds, DCA’s system has been flexible enough to support each unique customer offering over the course of this 14-year outsourcing relationship. “We’ve had the opportunity to change platforms, but every time it comes up we’ve chosen to stay with DCA because of how well they’ve been able to perform and grow,” Surdenik says.

As for the financial benefits, Surdenik says that working with DCA allows him and his billing and IT teams to focus on creating new services and driving profitability, as opposed to wrestling with billing problems. “If we had to devote our people and resources to this, it would consume an enormous amount of resources here that are being used to develop new products and to save us money, and that’s the largest benefit,” Surdenik says.