BCE Will Enable New Revenue Streams and Automated Settlement

 In Blog

Implementation is most cost effective when partnering with a data clearinghouse“, Kaleido Intelligence.

Wholesale roaming is a microcosm of carrier operations as a whole: modest growth from traditional revenue streams allied to increased costs, derived from issues such as the need to accommodate the surge of MIoT (Mobile Internet of Things) traffic. The net result is a squeeze on margins which will continue without remedial actions.

Traditional techniques for charging, reconciliation and settlement are simply not equipped to cope with a world where the growth in roaming traffic events is increasingly driven by devices such as cars and industrial equipment rather than smartphones. Those techniques, exemplified by TAP (Transferred Account Procedures) were designed to manage voice calls: unable to differentiate between devices and network technologies, they mean that operators in turn are losing revenue by being unable to optimise the monetisation of IoT.

BCE (Billing and Charging Evolution) is a simplified and flexible optional settlement method, designed to address the weaknesses in TAP and specifically enabling (via an automated process) the differentiation between different kinds of devices and traffic, and thereby facilitating the introduction of far more tailored, nuanced billing.

One of the key benefits to be derived from BCE is the automation of the wholesale roaming process. The system is based on bilateral agreements, with BCE reports and settlement occurring at agreed intervals: annually, quarterly or monthly, rather than relying on the traditional, rigid settlement windows. This in turn enables MNOs to save on monthly and annual settlement costs, while the combination of automated settlements and flexible settlement periods provides greater efficiency in cash flows.

BCE also allows for the introduction of new commercial models for roaming, such as charging on a per IMSI per day basis (where records would be combined into a single monthly report), volume-based charging or threshold-based charging (where the charging, or the discount applied, changes when a threshold is met). For example, this allows differential charging per GB depending on whether aggregated traffic is LTE or NB-IoT. It can also support use cases where the wholesale amount is a fixed charge regardless of the usage or number of devices connected. Additionally, BCE supports mutual forgiveness in instances where the charges are zero.

For example, Kaleido predicts that by implementing the BCE-based day pass model, where operators are able to monetise permanently roaming low-traffic IoT devices by charging a fixed fee per IMSI per day, operators can generate around $2 billion in additional revenues annually by 2026. Kaleido estimates that there were around 125 million permanently roaming devices generating low volume traffic of less than 10MB per month in 2020.

Indeed, it is BCE’s ability to distinguish between (and therefore facilitate the monetisation of) different types of IoT traffic, particularly over NB-IoT, that is perceived by their operator clients as the most compelling reason for deployment in the first instance.

Although BCE and blockchain both present clear opportunities for carriers to address some of the key challenges around wholesale roaming, some players have the attitude that “if it ain’t broke, don’t fix it”: that the cost of deploying BCE and/or blockchain might ultimately exceed any savings made or new revenues generated, or that the technologies might be complex to integrate with existing platforms.

Furthermore, some carriers, particularly smaller players with no plans to launch 5G or NB-IoT and who are not dominant in IoT roaming, might feel they have no reason to deploy the technologies.

Clearly, the extent to which these represent barriers to adoption will vary from operator, but in the first instance it is important to understand that in most instance the route to deployment is relatively straightforward, particularly if the roadmap is followed with a trusted partner such as a clearinghouse which can shoulder much of the “heavy lifting”.

In these cases, the operator will not need to concern itself with the minutiae of BCE compliance (or, in the case of blockchain, node management) as the infrastructure can be run by third parties.

Operators can alternatively outsource the entire settlement and reconciliation process to their BCE agent, as a majority already do with TAP. In cases where different MNOs involved were served by different vendors, then they too would be a party to the agreements. Thus, the raw data would be extracted for both TAP and BCE, before being sent to the agent in the agreed format. The agent then separates and packages the traffic according to the given criteria, generates the TAP and BCE reports and reconciles incoming BCE reports with the served network data before settlement takes place.

There are several other attractions of using an outsourced approach. To begin with, it means that MNOs are not obliged to maintain dedicated compliance specialists in-house: even for Tier 1 operators, the roaming department would typically comprise a small team within a much larger IT department, and thus keeping abreast of both evolving standards and issues such as pertinent local regulations (and indeed maintaining local systems to comply with these regulations) would be a time-consuming (and inefficient) process.

Secondly, by using a third party providing a combination of revenue assurance and an automated reconciliation process, with reporting tools covering both traffic streams, the risks of duplicated traffic and charging can be avoided.

Given the continuing trend towards managed services, not least around the cost savings involved from employing dedicated specialists with extensive experience and expertise in settlement processes, technologies and compliance requirements, most operators are likely to take this approach and opt to maintain a relationship with data clearing houses.

To learn more about TOMIA’s BCE , please contact us: marketing@tomiaglobal.com