Roaming on tollway and mobile networks

Summary

Metcalfe's law is a rule of thumb stating that the value of a network goes up as the square of the number of network nodes. A provider that supports roaming on a wide selection of additional networks can increase, in the customer's eye, the value offered by joining their network over another provider's.

Tollway and mobile network providers can negotiate 'roaming' agreements with other network providers for their customers' convenience and to their own financial benefit. Billing must support the transactions performed by both the provider's own customers, and those performed 'on network' by roaming customers from other networks.

What is roaming?

From a billing perspective, roaming allows a provider's customers operating on another network to bill as if they were still present on their home network. For example:

Some tollways capture customer journeys using electronic tags measuring the entry/exit or transit of their roadways. Their customers driving across country may find themselves on road networks (tollways) operated by other businesses.
Mobile phone customers who travel far enough, find themselves off their provider's radio network but still needing to make phone calls. For smaller domestic networks, the distances involved may be small, but off-network calls will almost certainly occur if travel is international.

In each example, customers can use alternative networks temporarily whilst outside the domain of their current provider. These customers will incur charges with payment options including:

Payment in cash: Tollways can accept coins and notes collected at the tollway exits; fixed line phones can be operated by coins. These physical solutions are inconvenient for the customer (spare change, delayed in queues, search for a working phone) and expensive for the network operators (labour costs, money handling, security, building and equipment maintenance).
Use of day passes (tollways) or phone cards: Temporary network access can be granted and billed for discrete blocks of time (day pass) or money (prepaid phone card). Customers must find (search) and use the local mechanism used to collect these charges. Network providers may find that a substantial margin percentage is consumed providing the call centre, plastic card (payment token), distribution channel and/or interactive voice response unit (IVR) to enable these methods for a minority of their customers.
Charge consolidation on the 'home' provider's customer bill: Customers' incurred charges are collected by the other networks, forwarded to the customer's 'home' network and billed as if they had occurred on the customers' home networks. From a billing perspective, these customers are 'roaming' on another network as if they were still present on their home network.

This column will use tollway and mobile phone networks to outline the billing characteristics of roaming. Network specifics will vary by provider, network type and the provider's technology choices, but the concepts involved are similar.

Today, most mobile phone networks have roaming agreements that allow their customers to use their phones on different (compatible) networks, especially when traveling internationally. [refer Telstra and AT&T roaming websites]

Two examples where compatible tollway tags facilitate cross-network roaming are:

Australia: Electronic tags that support roaming between CityLink in Melbourne and the M2 in Sydney
USA: E-ZPass that supports roaming across many tollways, bridges and tunnels around New Jersey and New York

Roaming and Network Providers

Where it makes sense for their network, industry and location, network providers may support the 'roaming' of their own customers on other networks, and the corresponding roaming of the customers from other networks onto their own network. The concept of roaming will not find application in all networks (e.g. water utilities), but for those networks where it does:

The cost of building out a network is reduced - Network providers can use their funds to build their (expensive) local networks where the bulk of their customer base is located. For a modest expenditure, network providers can 'borrow' their roaming partners' networks seamlessly allowing customers to roam between co-operating networks. The roaming partners' customers may also roam onto the network provider's network as well. The collective network provided in aggregate to the roaming partners' aggregate customer base will be much larger than any member could develop alone.

Tollway operators build, or enhance, a roadway and won't necessarily own or operate any other tollways in the local area. Mobile phone networks will establish towers and radio coverage across a finite geography (whether state-based or country-wide) and won't have time, access, or money to build network presence to all the locations where their customers may travel, especially internationally. Roaming support allows each provider to offer their customers more valuable market offerings than would be available using just their own network.

Increased network utilisation = $ - Network providers will raise additional revenue from their network's use by roaming customers. For example, roaming tollway customers may use a tollway instead of alternative routes more frequently if the billing is straightforward. For the tollway operator, each additional journey raises additional revenue for little additional cost.

Mobile phone networks, which are more likely to have local competitors than tollways, will collect revenue that might otherwise have gone to a competing network. In addition to the charges levied against roaming customers who perform calls, SMS and MMS transactions, the network provider can charge other networks to complete transactions originating from other networks (i.e. interconnect billing).

Customers charged premium rates or levies - Charges incurred on roaming networks may be charged at a higher rate, or a levy may be applied for the 'convenience' of consolidated billing. The home network provider may charge calls at a higher rate due to lower competitive pressures, and to recover the additional processing costs incurred.

Where a standardised charge is applied on the roaming network regardless of customer affiliation (e.g. specific tollway journey = $X for all vehicles), a levy / surcharge may be applied when included on the customer's home bill. Alternatively, the home provider may receive a percentage of the standardised charge for performing the billing and payment processing.

Establishes a point of marketing differentiation - Customers may find the home network more attractive if they can use their current service (mobile phone / vehicle electronic tag) on other networks. This can be especially appealing to customers that travel off-network regularly (e.g. international business customers), or where multiple networks are co-located (e.g. tollways and bridge crossings).

Saves money in revenue collection - Network providers may collect revenue from their 'home' customer base efficiently, but they must also collect from customers who may appear on their network only once. The different behaviours of these two customer groups generates additional costs in areas such as call centres, business procedures and billing systems. Roaming allows the 'exception' group's size to be reduced and the additional costs minimised.

The Customer benefits of Roaming

Benefits from roaming involve 'making it easier' for customers to use the network and include:

Queue avoidance - Customers that can roam do not have to queue to pay for their tollway use, find where pre-paid access can be purchased, or spend time on the phone to pay, purchase or enable access to the other network.

Unmeasured use - Customers billing back to their home network are more likely to use the network. Their use will be unconstrained by the 'transaction costs' of finding spare change and queuing, and won't be continuously cognisant of the preset, pre-paid access limit they have purchased.

Reuse of customer details - Customers can use the customer and billing arrangements they already have to perform network transactions without 'signing-up' to use a network that will be used only occasionally, or perhaps never again.

Customers can be contacted on their existing mobile numbers instead of having to release (and remember) a temporary number to all those who might contact them. Customers can drive their cars through tollways without needing to establish additional billing arrangements.

Use of home network services - Mobile phone customers roaming on another network may continue to enjoy the network services available on their home network. The execution of this may require non-trivial development in the networks and cooperation between the network providers, but these network services are likely to be those value-added, higher-margin products that providers wish to offer across their commoditising access network.

Billing development required to support roaming

Inter-network transaction brokers - Network providers are likely to exchange their transaction details with other network providers via a centralised broker. The broker collects roaming transactions performed on the provider's home network by other network's customers, and provides transaction details performed on other networks by the provider's customers.

The provider can negotiate one contractual relationship and one technology interface with the broker rather than one with each roaming partner. A nett financial balance to be paid / received based on the aggregated transactions performed on and off a provider's network.

Authentication / Authorisation / Accounting - Customers who roam onto the provider's network must be authenticated (who are you), have their access authorised (you may use this but not that), and have details of their network access and use accounted for and collected for billing.

In support of this, a biller that supports roaming may have:

Retail billing for their own customer's transactions performed 'on network' - Roaming transactions performed 'off network' will be passed here and placed on the customer 'home' account.
'Wholesale' billing for transactions performed by roaming customers on the provider's network - Details of roaming need to be passed to, and billed against, external networks. This billing will be totaled by broker or network rather than by specific roaming customers. Transaction details may be passed along with the total payable amount.
Reconciliation functionality: Transactions performed by the provider's customers 'off-network' will be totaled elsewhere and passed to the provider for payment. The network provider can use the reconciliation process to agree to or dispute the bills they receive by confirming that transaction details billed against the provider align with the amount payable.

Balance management / credit limits - Customers operating on their home network may use pre-paid limits to curtail their use, or be monitored against credit limits to avoid bad debt and fraud. Customers roaming on other networks will need to have similar processing performed, but the mechanisms will be separate since a different network, and possibly currency, is involved. The agreement between network providers must determine how limits present on the customer's home network and the capabilities available on a roaming network will be aligned.

If no balance limits are placed on pre-paid customers then limits will be breached and uncollectable transactions will be incurred. The roaming network will expect payment from the home network provider who will be unable to recover their total cost since the amount paid by the customer has been exceeded.

Post-paid customers unmonitored for excess use may have unexpected sticker shock (excessive bills), may be unable to pay (uncollectable debt), or be the victims of fraud (transactions performed with stolen details).

Separately identified rates and products - Transactions performed off-network will need to be identified to the billing and surrounding systems to support differentiated processing. The rates charges may differ, the financial postings may be totaled separately, the descriptions on the bill may reflect the different network sources, and the processing performed may be performed separately (e.g. wholesale versus retail billing). Transactions collected from external networks may have pre-determined rates that must be retained unchanged.

Tags: Billing, Networks, Roaming