Have you ever received a rude awakening upon reading your monthly phone bill after a trip overseas? It is now technically possible for mobile subscribers to set limits to their usage as well as be notified if they are about to reach that limit. In an exclusive interview with Business Technology Asia, Mark Williams, Senior Vice President and General Manager, APAC, Acision talks about how telcos can help subscribers better manage their monthly bills.

• What are the main factors that contribute towards bill shock?

Factor 1: Subscribers’ lack of visibility into their usage

Over 60 per cent of users do not know how much mobile data actually costs when it comes to megabytes or kilobytes against pricing. The table below outlines how easy it is for consumers to incur bill shock with the lack of visibility.

*based on a local ball park roaming rate of S$5 per MB. Different local operators are charging slightly below or above this.

Without a clear metering of mobile data usage in relation to spend, users are bound to experience bill shock. When consumers experience bill shock for the first time, it can startle them into dramatically decreasing or halting their mobile data consumption. Over 90 per cent of respondents surveyed in Singapore indicated that they would readily adopt a real-time billing notification feature that would help them to get a clear view of ongoing spend.

Factor 2: Time delay between service usage and billing

Post-paid systems usually chart mobile usage and produce a bill at the end of the month. This means users only know of their mobile expenditure at the end of the month.

Take an example where a user has a data bundle of 500MB in their mobile plan. If a user has downloaded many large email attachments up to 520MB that exceeds their monthly data bundle, with a hypothetical cost per MB being S$5 for 20MB, that’s S$100 extra of unplanned mobile expense.  Imagine what would happen when this same user roams and is unaware that roaming data rates are often four to fives times the local rate.

For those users who are on a capped plan, bill shock becomes an issue when they roam. For example, a local Singapore mobile user with a capped data plan that offers unlimited local data at S$35 per month. When that user roams overseas, data roaming charges is typically S$20- S$24 per MB. When a user normally uses up to 200MB a month while on a home network, if that same user continues to use up to half of 200MB while overseas, that sums up to S$2,000- S$2,400 of just mobile data roaming charges.

These are just some of the classic examples of bill shock that can result from the delay between the service usage and billing cycle. With a real-time notification of mobile charges, consumers can prioritise how they want to spend their mobile data bundles, be it on a home network or roaming abroad.

• What percentage of users download video and content while overseas? How much of their total bill does this constitute?

Singapore mobile users are heavy consumers of mobile data services, with 61 per cent of Singaporeans accessing Internet on a regular basis, and 60 per cent utilising mobile applications on their phones. With a plethora of feature-packed smart phones available in the market, these devices have also enabled and encouraged this trend. With data costs being much higher than the cost of voice and text combined, total spend of data services is bound to represent up to 50 per cent of one’s mobile bill or higher, if the bill shock issue is not curbed.

Even if the subscriber is on a bundled plan locally, there is still a possibility of bill shock due to the lack of visibility. In a survey commissioned by Acision, over 60 per cent of respondents who happen to be on a bundled plan still do not receive any notifications when their limits are reached, and would like to be notified when limits are reached or exceeded. Currently, only 9 per cent of the respondents receive such notifications. Acision believes that if not controlled, bill shock will become a huge problem in the next 3-6 months. 

• How can mobile phone users monitor and reduce their mobile phone data charges, whether locally or during roaming? How will mobile broadband users benefit from lower data charges with improved telco infrastructure?

 
The ideal solution that operators can provide should include the following features:

• Allow the customer to set/select their limit

• Provide notification when they are close to reaching that limit

• Provide notification when the limit is reached

• Prevent further service once the limit is reached

• Support the option for the customer to buy additional services

• Allow the capability to be expanded to manage voice and messaging services

This provides a well-defined environment in which the customer can use data services with the confidence that they are not going to experience bill shock, resulting in a wider use of data services, and a positive impact on operator revenues.

Operators in some countries have introduced an iPhone application that can track the usage of mobile services on a daily basis. Users can view how much they are spending, but cannot set their own limits on certain services, for example on data usage.

Operators need to implement measures that address customers’ pain points, empowering consumers to manage their mobile spend by providing a high level of clarity on data billing and curbing bill shock. In a simple example, let’s say a consumer has a bank account, which allows for online monitoring of the transactions that are taking place in their accounts. However, it is pointless if they are unable to take control of the transactions and plan their spending. When it comes to bill shock, an element of awareness is simply not enough.

When operators combine the element of awareness with an element of control, they effectively empower consumers to manage their own mobile spending confidently, thus improving the user experience, leading to a more loyal, high value and content mobile user.

• How receptive our telcos towards your solution? Do they really want their customers to know how much they are spending while on-the-go? How do you make it a win-win situation for both parties?

Operators do understand that when consumers incur a high mobile phone bill unexpectedly, or get bill shock, one of the first thing that consumers do is lodge a complaint with the operator’s customer service department. The next action is to immediately and drastically decrease or completely halt the usage of mobile data services. This means lost revenue for operators.

Operators need to protect consumers from the bill shock experience and must do so with an understanding that the more subscribers use mobile data services without clarity on the true cost of data, the higher the bill becomes. This issue needs to be addressed before it creates an adverse consumer experience, and they opt out of using mobile data services altogether.

• Would you be able to give an example of a telco in the region that has adopted your solution?

 
We are working with a few operators on implementing a solution but we are unable to disclose actual operators, due to confidentiality.

• Based on your experience, what sort of cost savings can users expect?

Users can avoid bill shock and save on hundreds, if not thousand of dollars in unplanned expenses.

• Three tips on how mobile phone users can better manage their monthly bills.
   

#1 Know your plan: Only 32 per cent of the respondents have a capped plan and know what limits of their plan. 23 per cent of respondents do not have a capped plan or are unsure if they have a capped plan, while 39 per cent have a rough idea of their plan limits. It is important for mobile phone users to understand their plan and find out how much data do they really consume on average per month. Consumers should also ask their service provider if they are on the right plan, or should upgrade to a plan more suited to their mobile usage needs.

#2 Understand the cost of data: 60 per cent of respondents do not know how much mobile data costs. Mobile data has three cost components; how much the service or applications costs, what is the download cost in terms of total MB and cost of updating that application on a regular basis. When consumers know the total cost of buying, downloading and running the application, only then are consumers optimally equipped to manage their phone spend.

#3 Know what your operator is offering: some operators may offer special bundles or promotions, which will help consumers increase their savings when using their mobile devices. For example, consumers can surf the Internet within a certain time period when rates are cheaper. For the use of data roaming when overseas, consumers should check with their operator on what the charges are, and what options or services are available to help save on costs without compromising their usage.

• Future trends in the mobile broadband market. Where is it headed?

No new revenue driver comes without a major challenge. For mobile broadband this is bandwidth consumption. Traffic levels driven by P2P and video services are expected to grow to over 20 times today’s volumes by 2012, dramatically outpacing the predicted revenue increase. This development will result in a declining Average Profit Per MegaByte (APPMB). Clearly, the demand for mobile broadband is here, but is there a sustainable business case?

For mobile broadband, operators should acknowledge that long-term profitability is essential and can only be secured if operators acknowledge the challenge of the expected increase in traffic growth and the serious threat that this could have on their network infrastructure.  First of all providers need to accept the Average Profit Per MegaByte (APPMB) paradigm, where the main focus lies on raising the profitability per delivered MB instead of the traditional ARPU model. 

• Per megabyte of data – with SMS, an operator would get about US$257 of revenue, but with mobile broadband, the revenue is about seven cents

This will require operators to:

• Evolve beyond today’s crude monthly quota limitations and introduce sophisticated policy management capabilities which control application access for each individual consumer, especially during highly contested periods or locations.

• Optimise traffic flows from any device to bring down the billions of additional backhaul investments.

• Build truly compelling and distinctive offers leveraging their unique mobile capabilities. Examples include home packages with dongles for all family members, as well as roaming, gaming, person-to-person downloading, entertainment and business oriented packages.