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Revenue Assurance using sample testing – a modern approach - March 2008

The Facts

Billing is the lifeblood of any consumer telecoms network company. At the heart of marketing campaigns, product launches, billing and collection management, customer relationship management, data warehousing and retention strategy management, it becomes the most critical operational system in the business. In recent years billing systems have had to deal with an exponential increase in complexity. This has been driven by a number of factors, not least of which is the variety, complexity, and lifespan of products delivered by the operator.

As this complexity has grown, so has the need for strategic revenue management and in particular, revenue assurance. Independent research continues to confirm that telecoms operators without a revenue assurance strategy and process in place may be losing anywhere between 5 percent and 15 percent of billable revenue. In fact, an annual survey conducted by SubexAzure globally has determined that operators are losing, on average, a massive 13.6 percent of revenue due to leakage. According to the same survey, the largest single factor is fraud (4.5 percent), leaving an average of over 9 percent due to non-fraud issues. What is particularly interesting in this latest annual survey is that according to the researchers, the operators who participated in the survey believe that their revenue loss is increasing! When you consider that the costs associated with the ‘lost’ revenue have already been incurred, you could argue that the lost revenue is practically equivalent to lost profits.

At the end of 2005, Dittberner and Associates estimated the global telecoms industry to have spent USD531mill on revenue assurance. This is an interesting fact - for an industry estimated to have generated nearly USD1trillion, only 0.5 percent of revenue is being invested into systems and services to plug leakage at least 20 times that amount.

Operator Lifecycles and Revenue Assurance

Historically, operators have tended to give revenue assurance high visibility within their organisations only as they reach the peak of their growth phases, and as they enter maturity. The reason for this is simple – the early days of telecoms network rollout were a ‘land grab’, with the strategic focus correctly placed on winning market share. Network rollout, subscriber acquisition, and marketing campaigns take precedence over worrying about a few percent of missing revenue. However as operating margins come under pressure, competitive threats increase, and shareholders expectations of returns increase, the role of revenue assurance gains significance.

Click here to view the operator lifecycle

As African networks experience unprecedented growth, the focus on revenue assurance will increase. Shareholders and management will continue to seek confirmation that revenue integrity is being measured and managed according to international best practices.

Leakage arises from many areas, including switch record production errors, incorrectly defined tariffs and billing rules, traffic overload conditions, incorrect subscriber service provisioning, fraud, and other areas.

Looking back in time, operators would be forgiven for reminiscing over how simple their businesses were even five years ago compared to the complexity and challenges they face today. The propensity for revenue leakage increases with the increase in the rate of change in their networks. Here are some examples of change areas that add revenue leakage risk into a network operator’s business:

Network rollout (capacity and scale of all systems)
Rapid subscriber growth (retention and acquisition challenges)
Increasing product complexity (bundling, new technology, new services, speed of launch)
Organisational change (restructuring, changing role of IT, management of new technology rollouts)

Tackling Revenue Leakage

Addressing potential revenue leakage is a complex problem, the nature of which depends on the operator’s business environment and the scale of the factors mentioned above. Today’s serious revenue assurance practitioner has a number of sources of theoretical, practical, and experiential sources to draw from to establish and implement a successful strategy. It is widely recognized however that successful a revenue assurance program is delivered through several mechanisms and techniques ranging from business process design through to the use of various tools and techniques. The specific application and priority depends on the business. A relatively small operator (say of less than 500,000 subscribers) delivering basic

voice services would find it easier to implement a revenue assurance function and some basic data analysis tools than a large operator of several million subscribers and a converged technology business model.

One internationally recognized approach to revenue assurance is the use of sample testing. This is typically achieved by deploying a test call generator and test event management programs to provide end-to-end revenue assurance. ‘End-to-end’ means that it is possible to generate subscriber-to-bill test cases to determine

the integrity of the operator’s systems in delivering, metering, and billing their services.

The benefits of sample testing are summarised as follows:

This technique is relatively simple and cost-effective to implement compared to other techniques
It provides a true subscriber-based view of both the quality and revenue integrity of the business
It provides a very effective and unique way of determining network switch metering accuracy
It allows testing across networks to provide insight into interconnect and roaming revenue integrity
It provides detection of problems that may be experienced by subscribers before network management centre systems detect these problems

The philosophy of sample testing is to generate actual events on the network, and track the network operator systems response to those events. By generating anywhere from 50,000 test events per month upwards (larger operators will generate millions of test events per month) the operator is able to cover a range of service usage scenarios, and validate network integrity. Some interesting examples are as follows:

Test Case	What to check
Voice calls from 1 second to 23hrs duration	Data service usage
Subscription SMS services	Bundled discount pool tariffs
Premium rate number calling	Partner network billing accuracy
International calling	Service availability and inferred customer satisfaction
National intra and inter-network calling	Billing boundary conditions (expiry of free minutes, tariffs applied at peak/discount crossover points etc)
Data service usage	Billing per byte, per type of service, per content

ATIO’s Revenue Assurance solution architecture is built to provide the operator with the ability to test a wide variety of test cases, permutations, and cover the latest telecoms technology including fixed line, 2G, 3G, HSDPA, and beyond.

Click here to view the solution architecture

The ATIO solution allows a small team of staff to operate a system which is able to cover complex service and billing permutations. Through automated controlled use of ATIO’s test call generators (Universal Autonomous Network Testers, or ‘U-ANTs’), regular sample testing of the network can be conducted. The basic operation of the system is as follows:

Test campaigns and test schedules are controlled through a central administration function
Schedules are automatically loaded into U-ANTs, distributed remotely across the telecoms network
U-ANTs execute actual test calls and events on the network, timing and measuring the service interaction with high accuracy
Results are transferred from the U-ANTs to a central Oracle database
Network Call Detail Records are loaded into the database, from various points across the network
Sophisticated comparison of network records versus U-ANT measurement results allows accuracy analysis and reporting to take place
An overall set of revenue assurance performance metrics can be defined and reported internally to provide management insight into the integrity of the network and billing elements.

This approach is regarded by industry experts as a foundation element of revenue assurance tools and services, and can be scaled and configured to suit the size and complexity of most telecom operators’ businesses.