Cable Wrestles with Single-Bill Concept

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The concept of consolidating charges for multiple services
into a single billing statement is gaining momentum as the cable industry wrestles with
the question of how to bill customers for expanding packages of digital video, Internet
access, high-speed data and telephony.

With 26 million households expected to have broadband
Internet connections by 2003 and the number of cable-modem subscribers predicted to reach
8 million, the idea of one consolidated bill delivered to customers each month is
appealing, at least on the surface.

And with technology and software readily available to make
it happen, the single-bill theory seems ready for primetime.

Yet anxieties persist about how consumers will react to one
bill that includes their phone, Internet and video charges -- heart-arresting
"sticker shock" could follow.

Mix in the potentially nightmarish logistical problems
hidden below the surface of the single-bill concept -- the back-office, regulatory and
taxation issues -- as well as the question of whether customers truly want one statement,
and the single-bill plot thickens.

In the meantime, the single- versus multiple-bill issue has
customer-care companies scratching their heads in an attempt to deliver flexible billing
systems using next-generation technology and software.

"When we began adding multiple services like IP
[Internet protocol] telephony and high-speed data, we approached the concept of bundled
statements from a systemic view, and we always knew there was a need to integrate with our
customers' systems. But bundling is forcing us to be better at single views of
customers," said George Rewick, vice president of product development for Convergys
Corp., one of the telecommunications industry's largest billing and customer-care
providers.

The issue is forcing a new way of thinking among billing
companies, as well. "Our role is shifting from just technology capabilities to
helping run the entire business," Rewick said. "It's not just billing
anymore: It's how you market; provisioning issues; how statements look; prices and
discounts; order entries; and back-office issues."

These issues are driving traditional billing companies such
as DST Innovis Inc. (formerly CableData Inc.) to retool and rethink their approaches to
billing for the evolving multiple-services cable industry and to address each customer
differently.

"One customer asks for a single bill next quarter, and
another says no way will they ever do that. So we have to offer an either/or option of
single- or multiple-billing statements. That's our best scenario," DST Innovis
vice president of strategic marketing Bob McKenzie said.

The single-bill approach has its downsides, including
unbalanced billing cycles and an influx of phone calls from customers regarding their
bills, he added.

"The billing cycles for all of the new services must
be the same, and right now, they're not. So operators must wrestle with that. And
because of the difference in the billing cycles of phone and cable service, the cable bill
may look the same, but the phone bill won't. That spikes the calls from customers
about that issue," McKenzie said.

About 25 percent of DST Innovis' customers currently
prefer a single bill. That requires more flexibility in the billing software, adding to
the complexity of the single bill.

Even more perplexing are the operational questions that
arise with the single- over multiple-bill debate.

"The short-term tactical issues are easy,"
McKenzie said. "But from a business-process aspect, what do you do when a customer
gets a $600 bill and pays $400 of it? Where is the money applied, and who gets their money
first -- the telephone company, cable, or Internet access? And which service gets shut off
first? They're all fighting on a first-in, first-out basis."

This leads to serious operational issues for both billing
companies and operators, slowing the single-bill momentum.

"Operators are embracing the single-bill concept, but
it's rolling out slower than expected," said Grant Gabrielson, vice president of
product management for CSG Systems International Inc., a billing and customer-care
provider.

Cox Communications Inc., which currently doesn't
deliver multiple-service charges on a single bill, will begin sending out single bills, or
"flexible statementing," in February, using a fully automated system that,
according to Cox, is ready to handle any single-bill issue.

"There are lots of different taxation and regulatory
schemes around the United States, but our system automates all of those, and it is fully
capable of meeting what's in front of us today," Cox senior vice president and
chief information officer Scott Hatfield said. "It can handle everything regarding
collections, and it can bill phone service in one-second increments. It could potentially
extend the system to accommodate new, enhanced services."

Cox's move to a single bill won't happen
overnight, however. "It's taken us four years to evolve the system this
far," Hatfield said, "so it won't magically evolve."

The evolution of a functional, integrated and flexible
billing system that can seamlessly deliver millions of single or multiple statements will
take time, Gabrielson said. "Managing all of the behind-the-scenes operational issues
-- like accounts receivable, delinquencies and collections, payment allocations, different
regulatory and taxation environments and marketing questions -- are all obstacles to the
single-bill concept," he added.

But the biggest obstacle is operational. "The
obstacles are operational, not technical. It's very difficult to integrate all of the
different groups inside a system used to running video and telephony separately.
That's where our role will change and have to evolve. We'll have to build
hardware and software to enable those things," Gabrielson said.

Flexibility, he added, is the key to a single bill.
"Our clients aren't saying single-bill only, and that means a very complex
challenge for us, like having to have two different accounts-receivable buckets for each
line of business. That adds a significant amount of complexity."

It's not likely to get any easier, Gabrielson said.
"Providers will add more lines of service and bundle more services and lines
together, so it will be even more complex, and we will have to sell systems to adhere to
accepted business rules, which are determined by the operators," he added.

"Business rules" determine the allocation of
partial payments, and they are developed by each of the service providers. They
essentially dictate who gets what share of partial payments, and they are stumbling blocks
to the single-bill concept moving forward.

"In some cases, there is a different collection
process because it's a lifeline-type service, so which do you turn off if the bill
isn't paid?" McKenzie asked, adding that if bills are paid by credit card for
lifeline services, what about nonsufficient funds?

McKenzie cited Portugal as a case in point. "In
Portugal, they're outspending their means, and they have a 65 percent
nonsufficient-fund rate," he said. "But you can't disconnect, and you must
give them two months to pay."

Yet the demand is increasing for single-bill statements in
the United States, driving billing and customer-care companies such as DST Innovis to be
flexible and creative.

"The demand for us is to be flexible with both single-
and multiple-billing systems, so we've designed those into our software and added the
ability to get information to our customers electronically or on paper," McKenzie
said.

The small-office/home-office (SOHO) business is expanding,
as well, prompting companies such as Convergys to provide more billing-statement options
for cable operators.

"We're trying to address the home and small
business, too, which is a growing segment for us," Rewick said. "But the
convergent bill isn't for every customer, and right now, most people want different
bills for their business and home. That's why flexibility is so important."

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