Note 41: Additional Rating Mechanisms

Posted: 12 November 2007

Billers can employ the mechanisms outlined above to obtain a raw price for a transaction, but additional processing provides choices that can alter the result passed downstream to the rest of the billing process.

Minimum and Maximum Charges

The biller can calculate a transaction's price, but retain the option to limit the minimum and maximum that will be charged. A minimum limit may be used to ensure a level of revenue, or encourage the customer's network use by setting a quota of use within the minimum price. Alternatively, billers may set a maximum charge (per transaction) to encourage customers' use without worrying about the amount appearing on their bills.

In both circumstances, the threshold values will need to be carefully selected so as to be neither too high a minimum that it discourages use, nor too low a maximum that customers routinely exceed the limit generating high network utilisation but reduced revenue collection. Of course in certain circumstances these may be the intended short- or long-term outcomes.

Units of Measure (UOM)

Transaction metrics captured in a wide range of units may need to be converted to a standard measure for billing. For example, phone calls measured in the network to the second can be converted to minutes, or data downloads measured in bytes can be converted to megabytes (MB). The rating and billing systems will require tables that provide the standard factors that allow translations between different units-of-measure.

Charging Block

Part of a rate plan's definition is the standard charging block that will incur the indicated rate. Aligning the unit-of-measure of both the transaction and the rate plan is an important part of rating before the price is calculated. The charging block indicates the level of granularity used in the rating calculation. An internet dial-up rate plan could charge for data based on individual bytes, but is more likely to charge per megabyte (or a higher level of aggregation).

A simple example using time demonstrates four charging blocks. A call of sixty-three seconds can be charged:

Per second: The call would be more expensive if it were one second longer.

Every six seconds: The call would be charged as eleven blocks of time (10 blocks of 6 seconds + one part period). This is charging by the tenth of a minute.

Every thirty seconds: This is half-minute charging and the call would incur three charging units (2 blocks of 30 seconds + one part period).

Every minute: Using this charging block, the call would incur two charging blocks even though the call only just exceeded one minute.

The unit-of-measure translation tables would use factors such as 1, 6, 30 and 60 to map from the transaction's call duration metric measured in seconds to these four charging blocks.

Using these examples, the customer benefits when the rates are calculated using a finer block level due to the reduced chance and size of a part period. Units of measure that generate large numbers (such as the number of bytes downloaded) are more likely to be rounded up to use a coarse block level for readability (e.g. Megabytes, Gigalitres).

Algorithm Combinations

Determinants and algorithms, preselected when the biller defines each rate plan, can be used individually or combined to provide additional rating versatility. After rating has identified a transaction's service and ownership, the applicable rate plan will also be identified. The appropriate determinants of that rate plan can then be calculated and/or obtained and used to select the appropriate rates within the rate plan's definition.

For example, a tollway (e.g. the New Jersey Turnpike) can use vehicle type (truck / car), rate period (peak / off-peak / weekend) and 'from / to' (tollway entry / exit) to select a fixed rate charged to each customer. Additional determinants could be used to select rates that varied between market segments (general public, commercial) or for specific customers (transport companies).

Interim consumption records

Where consumption is performed across an extended time period, the network may generate interim (or partial) transaction records that report details of a customer's network use 'to date'. Examples where interim records can be useful include long held phone calls (measured in terms of hours and days), and measurements of the data traffic against a website. Interim records are useful in five ways:

Consumption details do not require excessive storage in the network: Continuous draining of the data stored in the network simplifies both the processing in the network and avoids the risk that network storage may be filled. Off network storage in the mediation, rating or billing applications is more substantial, and can be provided in a more cost effective manner.
Centralised processing is more easily updated: With all records collected centrally, a biller can choose when and how to modify processing more easily. Changes can be implemented in a consistent way without needing to update multiple network collection points. If processing differs by (say) customer segment then this can be implemented and modified without complicating network processing.
Lowered financial risk on network failure: If all consumption details are stored in the network until completed, then an equipment or software failure may remove all chances of the biller recovering details of services provided. Moving details out of the network can support partial charging if a failure occurs.
Customers can view (or be billed for) their interim consumption: A customer's consumption (transaction) may last for hours, days or weeks and without some information from the network the biller will have no choice but to wait before billing and receiving payment. Interim consumption records allow billers the option of interim billing customers. Interim records also provide details the customers can view to understand their consumption to date.
Billers can monitor for excessive consumption: High consumption by customers may expose the biller to excessive operational costs (with third-party suppliers), or result in unrecoverable customer debt. Monitoring of each customer's ongoing consumption allows billers to terminate consumption proactively, or alert customers of their behaviour (avoiding sticker-shock when their bill arrives). Inappropriate and fraudulent consumption can be addressed proactively, unwitting customer consumption can be reduced, and valid consumption can be turned into billed debt and collected. prepaid billers (e.g. prepaid mobile phones) use pro-active monitoring to identify when the customer's balance has reached zero and their connection must be terminated or suspended pending additional funds.

Tags: Billing, Charging Block, Interim records, Unit of Measure