Part 2: Bill It, Transactions Will Come

6/09/2002 8:00 PM Eastern

Last time, we dissected how billing systems became inextricable from the many automated processes that run the cable business, and how that inextricability decelerates the launch of new services.

(The condensed version, in case you missed it: Nested within the "Can we bill for it?" question about any new-service launch are piles of other questions. From customer acquisition to work-force administration to billing and collection, cable's billing systems are
the back office.)

This time, here are translations for three of the buzzwords that accompany the industry's inevitable march toward transactional services: Mediation, rating, and settlement.

The shift toward transaction-oriented billing is inevitable, because stasis is unacceptable. Or, as the saying goes: If you're not growing, you're dying. Business growth usually involves selling more things consumers want; consumers want instant gratification; instant gratification is more point-of-sale than monthly bill.

Which brings us once again to the heavy reality of how hard it is to launch new services if the billing system isn't nimble.


Shifting towards a transaction-oriented marketplace is considerably more complicated than, say, tacking $3.99 onto the monthly bill for a pay-per-view event. Maybe it's deciding on a Monday to offer a free month of subscription video-on-demand (SVOD) on Friday — perhaps for all customers who watched more than two movies that month.

Or maybe it's giving customers a way to rent a combo a telephone/broadband Internet line for the guest room, because Uncle Bob — the guy with the electronic tool belt and the phone growing out of his ear — is headed in for the weekend.

All the while, the new generation of transactions must know how to apply the right taxes to each combination of services.

And that's just for video and data. Adding voice services makes everything else look easy, billing aficionados say.

Just adding a new telephony customer means sending alerts to the emergency agencies or 911 centers, directory assistance and the national databases that route calls. That's before setting up the account for calling features, or making a way for a phone number to be returned to the local-exchange carrier if a customer moves.

Suddenly, there's lots more information that needs to be collected — from lots more equipment — in order to know what's going on.


The process of extracting the data needed to compile a transaction is known in billing circles as mediation. Tactically, mediation culls the data inside the headend controllers, for broadcast video services, or from video servers for on-demand services. Ditto for the cable-modem termination system (CMTS) and telephone switch, for data and phone activities.

But information is just information, without rules. That's where rating comes to life: It establishes what rate to apply to a transaction, based on pre-established conditions.

For telephony, mediation is what harvests a call-detail record from the switch. Rating is what calculates the price of the call, based on the time of day and the rate per minute. Or, in a multiple-ISP environment, mediation and rating are the enforcers of bandwidth-based contractual agreements (between the MSO and the ISP), making sure bandwidth overages are captured.

It's like a spreadsheet, in a way. The mediation data is what's in the cell; the rating is the equation applied to that cell to come up with the answer.

Then, there's settlement: the collection and remission of monies not related to consumer billing.

Example: Digital interactive customers who click on an enhanced ad and request something (thus making themselves a coveted "qualified lead") are worth something.

Or, a call from Denver to Tokyo may travel over eight different networks. Each hop has a cost. In both cases, something has to collect or remit money.

Billing, as it is today, is complicated. Billing, as it needs to exist tomorrow, is more complicated — just like everything else. That's why it's probably time to learn the rudiments of relational databases (like plastics, they're the future, son).

It's also probably time to warm up to those people in the computer department who come to your aid when you suddenly can't sync your Blackberry with the office mail server. Billing systems are their life, and so the entire back office is their life. Know them, and know where you're headed.

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