By Larry Foster
This blog is the first of a three-part series that takes a behind the scene look at the complexity involved with billing in the telecommunications industry and how collective efforts of solution providers and enterprises can help untangle the ambiguity and influence universal change across the industry.
Have you looked at your telecom bill and asked yourself, “Where are all these charges coming from?” You also probably noticed the different variations in the billing details. You’re not alone. If you’re like me, when it comes to making a personal purchase, you most likely wouldn’t accept the level of complexity and ambiguity that is often associated with telecom. As George Bernard Shaw famously once said in his book “Man and Superman”:
“The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
It’s only natural for us to logically rationalize with ourselves in order to justify and adapt to a situation that’s presented to us. But, taking things at face value can have implications if you’re not paying close attention. This is especially true when it comes to telecom billing.
Telecommunication procurements typically encompass a full spectrum of high-volume, low-cost transactions through a larger, less-frequent (and complex) transaction. Because of the level of complexity and ambiguity, your organization may be operating from a disadvantage point.
Let’s explore a few examples to help you better understand. A good example of high-volume, low-cost transactions can be found in the restaurant industry. By law, most restaurants are required to provide itemized receipts for each transaction. As a customer, you want to know exactly what food and services make up the total charge. The receipt contains all of the financial details you need to quickly assess the charges and feel confident knowing precisely what you’re paying for (e.g., advertised price, applicable taxes and mandates in service fees, etc). Most people would agree this is a reasonable expectation when it comes to fulfilling a transaction.
However, when we compare the above to the high-volume low-cost usage-based business transactions in telecommunications, the details of a specific usage transaction are not as transparent and often require subject matter experts to determine whether the actual cost correlates with the expected or original contracted rate. Unlike the restaurant industry, the bills for telecom services are not immediately available following a transaction. Without specialized, computational software, this is also not a timely event. This is because many of the details aren’t directly assigned to each individual record. Validating transactions that occurred 30-to-60 days prior requires detective-like skills to manually collect and analyze the details to confirm accuracy. In a large organization where millions of high-volume usage transactions are generated within a typical billing cycle, it becomes impossible to validate each usage transaction manually. (In part 3 of this blog, you’ll understand how the expansion of digital services is providing new insights while at the same time making this process even more complex.)
When it comes to long-term financial commitments, such as purchasing a car or a house, most people will do their homework beforehand to educate themselves and to ensure they are getting the best offer available. Before completing the transaction, the buyer is provided with all of the details, including taxes and fees associated with owning property and must acknowledge each related variable. Unfortunately, in the business domain, this level of administrative oversight isn’t as realistic, especially considering the volume and nature of procurements that are made on a daily basis. Many organizations will task experts in telecommunications procurement with the responsibility to perform a competitive due-diligence for transactions such as expanding, upgrading or replacing their WAN or acquiring a new on-demand digital service. The transactions may or may not be completed under the governance of a contractual agreement. Also, these experts are leveraged to help rationalize communication services to support an organization’s financial forecasting related to acquisitions, mergers and facility changes such as moves, closures, and consolidations.
There is a duopoly that exists between telecommunication providers and multiple levels of government agencies that further complicate the details. Utilities, like telecommunications, are responsible for collecting large quantities of taxes. Hidden deep within contracts are references to multiplicative variables to published tariffs and fees whose values can change independently of the terms and conditions of the contract. Public Utility Commissions (PUC) operate completely independent of telecommunication utilities and can assess charges that the utility companies are mandated to collect. These variables can change the monthly rate of a network segment within the same metropolitan city based on the specific address of the provisioned service. All of these contingencies are very difficult to navigate on a daily basis and can create “sticker shock” when reviewing your bill.
Whenever there is a challenge, there are solution providers that can help. And if a problem is big enough, a competitive industry forms to help resolve issues. In part 2 of this blog, I will provide insight into how solution providers perpetuate some of complexity and add to the tangled web of telecom.