Achieving Revenue Excellence in Telecom: Strategies for Sustainable Growth

1. “Effective Strategies for Active Revenue Management” Jeremy Deaner, VP Group Sales EMEA TEL.COM Africa 2002, 24th October

2. 46 contact centres • Process > 50 billion CDRs per year in our 2 data centres • Over 530 million bills produced p.a. • Over 100 million end-users billed • Vital Statistics (2001) • 44,000+ employees • 3,800 in billing • Revenue: US$ 2.32 Bn • Billing: US$ 938M • R&D: US$116M About Convergys… Some customers globally include: Americas AOL Time Warner AT&T Wireless Cingular Cincinnati Bell Wireless Compaq iPAQ Cox Communications Palm Computing Sprint PCS Telesp Telepac Verizon EMEA BT Czech Telekom Telewest O2 One (Austria) T-Mobile (UK) Orange France Radiolinja Swift Telenor Mobil Vodacom DT Q-Tel Asia Pacific AIS Hong Kong Cable TV Indosat Satelindo Singapore Cable Vision Smartone Telkomsel Telstra/Foxtel (Australia) TVB, Taiwan

3. Minimising the cost impact of developing new revenue streams in a highly scaleable environment

4. Competing onnetwork Technology-drivenorganisation Competing on services Product mgmt-driven organisation Competing on customer value Customer service-driven organisation Billing must evolve with Customers requirements Efficient Customer- and Revenue Management Network Based Billing Convergent Billing Billing Industry Operator/Service Provider

5. Wireless OSS billing market: Operators’ challenges ranked in order of importance (world), 2001 • Although these are all issues, they are mainly historic, for which solutions exist. • Convergys also views the following as significant issues operators need to address: • Rapid time to market/new service creation • Unpredictable new product & service structure • Predictable, low capital and operational cost environment • Prepaid & postpaid convergence • Supporting m-commerce payments & settlements • Cost of ownership Source: Frost & Sullivan, Nov 2001

6. What are traditional issues with cost of ownership? • Bespoke legacy environments/In-house systems • New Service Introduction = new Billing System • Network Centricity - custom solutions for specific business models • Mixing business management layer and network management layer • Functionality < business requirements • Too many people needed to run the system • Lack of skilled programming staff

7. Market perspectiveRecent developments that have made matters more challenging • Slow uptake of Broadband services • Migration to IP transport protocol • Customer centricity in a multi-network, multi-service environment • Need for revenue management across value chains • Competitive pressures for rapid time to market • Revenue leakage awareness • Capex/Opex reduction needs

8. Functional perspectiveRecent developments that have made matters more challenging • Convergence of services • Convergence of prepaid & postpaid • Convergent view of all customer transactions • Multi-party billing across new value chains • Powerful discounting, bundles, loyalty, tariff plans of one • Real-time • Always On • Risk of over-engineering • Hard to keep up with pace of change • Pressure of tactical fixes rises

9. Scale has its own impact on costs • Scale requires workflow automation • Scale requires high availability and resilience • Scale requires an understanding of performance • Managing a large distributed application is a non-trivial problem • HW outage is not a real issue anymore, it’s mainly bad Software on the network • Complexity is the enemy of scale • RFI’s don’t focus on operational efficiency

10. Why is Active Revenue Management important?THE source of competitive differentiation Yankee Group, Dec 2001 • “The CCB migration strategies adopted by mobile service providers today will fundamentally affect their ability to compete over the next two to five years.” • “customer care and billing will continue to be a mission-critical investment for wireless carriers looking to both improve and upgrade existing infrastructure, as well as launch new services to market.” Prof. Jörg Eberspächer, University of Technology, Munich, October 2001 • “How to enable the future services and applications? … by providing the systems with more flexibility, modularity, configurability, openness, adaptivity, user friendliness…” Bear Stearns Equity Research • “We think that most providers will find their back office systems insufficient to migrate to next generation operations, thus spurring the upgrade and replacement cycle…” Gerard Klauer Mattison & co., Inc., October 2001 • “OSS software should continue to play key a role at service providers. … the confluence of worldwide telecom deregulation/ privatization, rapid technological change and intensifying competition among public voice and data network service providers is creating opportunities for software companies to streamline service provider operations and enhance the breadth and quality of their service offerings.”

11. What is Active Revenue Management?It’s not just about ‘billing’ anymore • Turns billing from a passive pricing and invoicing process into a powerful new tool for managing and developing your company’s revenue streams • True, multi-service convergent rating & billing with carrier-grade performance • Customer-centric rather than network-centric • provides a single customer view enabling relationship management across multiple products, services and networks, so helping to generate new revenue streams and increase ARPU • Flexible and service-independent • reduces delays in introducing new services, products and packages • Event driven • almost unlimited range of products & services can to be charged for in real-time providing increased levels of customer responsiveness and choice • Able to support multiple parties in a single transaction • gives the ability to manage complex value chains, including mechanisms for handling content on behalf of third parties

12. Active Revenue Management as a competitive differentiatorIt’s not just about ‘billing’ anymore • The new world of Active Revenue Management has 3 main requirement strands: • Minimise costs • Enhance revenues • Enhance delivery (operations) • Benefits of ARM • generate new revenue streams • increase revenue per user • reduce costs • reduce churn Profitable • Minimise: Capex, Opex, Churn • Maximise: Utilisation, RoI, Buying power • Integrate with legacy assets and property consolidation • Increase revenue • Manage diverse, complex, assured partner & SP relationships • Individual customer relationships & choice of payment methods CFO Revenue Cost CEO CMO CIO Delivery Effective Efficient • Carrier-grade: • Scalability • Functionality • Operability • Availability • Assurance & settlement • Exploit: • Convergence • Closeness to customer • Immediacy • Location

13. The revenue advantages of rapid service introduction

14. Rapid Time to Market Historical issues • The “old world’s” static product and service environment means legacy systems were not engineered to be flexible or rapidly changed • “Limitations in existing operations processes and systems have prevented the rapid introduction of high transaction-volume services” – Gerard Klauer Mattison, June 2002 • Classic example: introduction of ‘Friends & Families’ style discounts in the USA could not be matched for months by competitors • Legacy systems require: • Days - Weeks to set up new tariffs • Weeks – Months to set up new services • Months to set up new products • But we’re moving to a real-time world: • “Real-time technology might even prove as important for speeding up the information flow in business as the telegraph, invented in 1837” – The Economist, February 2002 • But to be real-time firstly means that new products and services need to be set up in minutes – not months

15. Rapid Time To Market It’s crucial • Rapid implementation timescales • Bring new services to market fast • Generic, flexible, event-based, data driven • New products & services defined by the operator • Rapid introduction of new tariffs • Even change the basis of pricing within hours • Case for competitive advantage almost self-evident • Many Next-Generation services will have very short lifecycles – “Mayflies” • Number and variety of new services and partners requires simple, quick self-configuration • Unpredictably of successful data services formulae (death of the ‘killer app’) requires high flexibility as well as rapidity

16. Providing value-added services, including content and commerce transactions across multi-party value chains

17. NEXT-GENERATION APPLICATIONS & SERVICES Transaction Value MOBILE COMMERCE COMMUNICATIONS CONTENT TRANSACTIONS USER GENERATED Postcards Humour Webpages Real-time Voice Video Data Messaging SMS E-mail instant Services Banking Share dealing Goods Coke Car wash Books TRANSACTIONAL CONTENT Ringtones MP3 download Video clips Browsing News Daily horoscope Weather Communications, Content & Commerce When people talk about Next-Generation services, they may mean many different things – each will have its own unique business model

18. Content and Commerce – The Challenges Content and commerce business models require new thinking • Establishing new business models • Determining who charges whom for what, and on what basis • i-mode is leading the way, but is not appropriate to all types of content • Managing thousands of content and commerce partners • Partner Relationship Management • Automated revenue sharing with each partner • Revenue assurance: it’s no longer just bandwidth you’re giving away! • Partner care • Payment mechanisms • Allowing customers to pay in appropriate ways • Ensuring transactions are appropriately authorised

19. Access Providers Content Brokers Content Vendors Customers Multiple parties to each content transaction Supports multiple branded providers ¥ € £ $ Automatic payments between parties Diverse Business Models

20. What is Convergent Prepaid? More than just prepaid! • Prepaid style financial control is available to postpaid customers • Makes sense to treat a postpaid customer as prepaid for roaming purposes • Delays in TAP records • Effect real-time balance control • No need for deposits • But current prepaid roaming systems are not up to the mark • Reduces fraud and bad debt • Reduces churn • Pre-event rating, advice of charge and authorisation • Transaction, service, application and bearer level control • Full integration of prepaid and postpaid accounts • Prepaid & postpaid accounts can be part of same hierarchy • Shared allowances, offers and discounts can be across all prepaid and postpaid accounts in a hierarchy • Single database for all customers, services and tariffs

21. Conclusions

22. Billing  Active Revenue Management = Revolutionary Change Move to a rating, billing and customer care architecture that can support fully convergent prepaid and postpaid services for all customers wherever they are

23. THANK YOU FOR YOUR ATTENTION ANY QUESTIONS? Jeremy Deaner VP Group Sales EMEA Tel: +44 1223 705000 E-mail: jeremy.deaner@convergys.com Web: www.convergys.com