Billing: Big Trouble for Carriers
Trouble is brewing for carriers on the merge--and it has nothing to do with the Federal Communications Commission (FCC).
Sources say the high-profile merger struggles of providers such as WorldCom Inc. http://www.worldcom.com (Nasdaq: WCOM), Sprint Corp. http://www.sprint.com (NYSE: FON, PCS), US West http://www.uswest.com (NYSE:USW), and Qwest Communications International Inc. http://www. (NYSE:Q), are just a prelude to the biggest problem of all: billing.
Carriers who merge, acquire, or join forces with other providers (in other words, most of today's large carriers) need to sync up the different systems they use to track and invoice customer usage of voice, data, and Internet services. If they don't, they risk spending huge amounts to maintain disparate billing systems. And they stand to lose revenue from existing services, or lack the nimbleness needed to roll out new ones.
How much all this is costing carriers and their shareholders can only be guessed at. Some sources say information is lurking in company financials. "Look for large numbers of uncollectible receivables, post-billing adjustments, and customer care billing expenditures," says Andrew Burroughs, chief marketing officer at Apogee Networks Inc. http://www.apogeenetworks.com, which makes content-rating software for IP networks.
Using that yardstick, it's still tough to pick figures from current reports. But WorldCom's 1999 annual report does state that "provision for losses on accounts receivable" amounted to $951 million in 1999.
"Billing is a gigantic systems and engineering project," says Peter Tierney, chief operating officer at Sphera Optical Networks Inc. http://www.mopticalnet.com. Tierney, who worked at MCI in its pre-WorldCom days, says sources there told him billing systems weren't integrated with one another when the carrier acquired new companies. Instead, separate billing systems would continue to be maintained in the background--even if the information from different systems wound up in one bill to business customers.
Unless WorldCom has amended its ways, he says, it must now have hundreds of billing systems in its roster--and a multimillion-dollar integration challenge on its hands.
A WorldCom spokesperson admits the carrier has not made integration of its billing systems a priority -- until now. Customer who buy business and wholesale services, for instance, will get two different bills. She states that "hundreds" of billing systems sounds "mighty high," but concedes that the carrier is working to fix things.
Whatever the scope of WorldCom's challenge, it's not alone. Other carriers say billing is getting to be a huge problem. "It's difficult, there are no easy answers," says Randall Reeves, manager of billing systems at BellSouth Corp. http://www.bellsouthcorp.com.
When carriers merge multiple billing systems, the project can take years. He notes that the tools used to track and bill customers for packet-based Internet services don't match those used to follow usage of circuit-switched data and voice networks.
Some industry groups are trying to help. The Ordering and Billing forum http://www.http://www.atis.org/atis/clc/obf/obfhom.htm of the Alliance for Telecommunications Industry Solutions (ATIS), for instance, is trying to create a standard format for billing voice, data, or Internet services. Another group, the IPDR.org http://www.ipdr.org, has actually devised a format for the IP portion. But reportedly, there's controversy within and between these groups about just how billing should be done. It's clearly going to take time for the dust to settle.
In the meantime, most providers, says Reeves, are keeping numerous separate billing systems--each with its own maintenance, support, and upgrade costs. This does not change when carriers merge, acquire, or align with other providers.
-- by Mary Jander, senior editor, Light Reading http://www.lightreading.com