Note 30: Transaction Collection / Mediation

Posted: 01 May 2007

Previous notes touched on the two key considerations that drive the functions of collection and mediation. First, it is difficult to communicate with complex and diverse networks. Second, the raw information collected from a network may be insufficient for billing and require manipulation before it becomes usable.

Collection and mediation act as the plumbing between the (possibly) decentralised network and the centralised billing systems. Each biller's network will differ in its size, distribution, technology and homogeneity. This variability complicates the collection function. The information collected from the network will differ from what billing and other systems expect. The steps needed to manipulate the network information into the expected formats complicates the mediation function.

In more complex operating environments, the software performing the collection and mediation functions may be supplied by different vendors to, and operate separately from, the billing systems. This vendor specialisation allows the collection, mediation and billing systems to think of the other 'in the abstract', simplifying the integration required, and avoiding the need for detailed knowledge of every system's internal operation's. Using this approach, the collection and mediation functions each perform mapping and translation roles between different software systems.

In a biller with many networks, especially networks of different ages, the collection and mediation applications are likely to vary by, and be specially tuned to each network. Older (legacy) networks may have their transactions collected by systems unable to operate with newer networks. Newer collection systems are likely to support both older proprietary network protocols and newer networks using standards-based industry protocols.

The collection and mediation functions capture and process details of customers' (network) usage information rather than their recurring or non-recurring charges (which are processed in the billing systems). Billing decides which usage transactions are charged to the customer or appear on the invoice. Collection and mediation just capture and manipulate the details and pass them on.

Historical Comparison: Fixed phone versus Utility network

The history of fixed phone networks can illustrate the change journey that has taken place in that industry and provide a pointer to what may take place in utility industries.

Early phone processing measured calls using meters, similar to water meters, located in the phone exchanges. The meters measured the number of 'metering pulses' registered against the customer as they made phone calls. The pulse rate was faster during peak hours than off-peak periods. Periodically, the phone meters were photographed and the 'pulse count' was entered against the customer's account by the biller's staff. The difference between one reading and the next was used to charge the customer for their phone use. The billing system had little leeway to differentiate its billing because of the paucity of information available. The network's 'meters' had already determined how the calls would be measured.

Over time, the individual phone line meters were replaced by computerised exchanges that captured more detail of each call made by a customer. These call details were batched up and passed to billing where the additional information could be used to provide differentiated billing by customer segment, time of day, destination and other measures. Initially transaction rating was performed at the exchange based on 'standard' rates, before later developments transitioned processing to a centralised billing model where customer-specific rates could be applied. The phone network was still separate from billing and supplied transactions in bulk only after they were completed.

The introduction of prepaid processing in fixed line (and especially mobile) phone networks now requires a real-time connection between what is happening in the network and the information held in billing. A prepaid customer making a call, or wishing to download content such as a mobile phone ring tone, has their credit balance checked against the cost of the call or content before the transaction is connected or authorised. After the transaction is completed, the transaction amount is promptly reflected against the customer's balance. Future transactions are then verified against the reduced balance.

Utilities, with their large distributed base of installed meters, have been at the start of this network transition. The utilities' historically 'dumb' meters were not connected to a centralised IT system (e.g. billing). The collection task was also complicated by the meters' location at the very edge of the network on the customers' premises, rather than partially centralised as the phone networks were in the exchanges. Utility meters are also an integral and physical part of the utilities' networks making them more difficult to replace. This has meant that, to date, the collection process has been a labour intensive task for utilities, just as the meter photographing and transcription once were for phone companies.

Improvements in computing and telecommunications networks are enabling utilities to improve their transaction collection process by becoming more connected to their meters. Parallel improvements are happening in:

Meter technology: Rather than being 'dumb' physical boxes, meters now include small embedded computing devices that can capture more detailed measurements. These details can be captured electronically by the utilities' meter reader workforce, or provide scope for remote access and transmission.
Meter replacement: The regular maintenance cycle replaces older meters with newer devices. The additional information available from the newer meters provides the utility biller with increased scope to measure their business and differentiate their billing.
Connectivity: Utilities can use modern telecommunication networks and the improved meter technologies to automatically receive meter readings. This reduces labour costs and transcription errors, and can make the information more timely. Collection options include remote reading by vans that trigger meter readings using radio signals as they drive by in the street, using the mobile phone networks to provide periodic short messages to a centralised location, and using the electricity lines that run into each property as a transmission conduit for meter data.
Remote control: Historically, utilities have been passive recipients of the customer's network use. Utilities could only measure customers' consumption long after the fact using summarised monthly data points. By using better information about the customer's current consumption level, and two-way connections with the meters, utilities have scope to temporarily 'turn off' or reduce a customer's network use. Electricity utilities, can use this capability to temporarily disconnect (with permission, and possibly lower charges) some of a customer's network use during periods of peak load. This timely and remote control of customers' consumption allows the electricity utility to manage their energy purchases in real-time through better knowledge of their customers' current use, and by reducing their customers' consumption when prices are high.

Utility processing taken to its telecommunication-equivalent conclusion would provide detailed, timely information in real-time with centralised control over customers' access to the utility's network. This would allow utility billers to provide the same billing differentiation that can be provide by telecommunication providers today.

Tags: Billing, Transaction, Collection, Mediation