Today’s much talked mantra - “the new revenue stream” from value-added content services seems to have blind folded players as they run the marathon of me-too, with investments and upgrades of infrastructure to support NGN services. With IP infrastructure in place and with billing system upgrades, or content aggregator’s billing system, the operators try to keep with the pace of the market through content services roll out. Perhaps it would be too late before they realize that they are not able to retrieve revenue from this so called “new revenue stream”.

While operators have revenue assurance systems in place to plug their visible revenue leakages via transaction and process audits, bundling in place to attract new customers, and loyalty programs in place to retain their customers from the growing competition; seldom do they have systems that can comprehend their revenue spillage. What is more striking is the fact that it is the system inflexibilities that blocks this visibility for the operator. Industry stands witness to some classic cases of operational losses and shutdowns due to such system handicaps.

For e.g. many US MVNOs had to close operations due to revenue loses they faced. These were fundamentally due to system inflexibility to strategically segment customers, price and bundle adequately based on customer relationships, and run focused and profitable loyalty programs. Thus the providers need to have systems that give them the flexibility and intelligence to segment customers based on their usage patterns and account duration and subsequently enable the provider to arrive at profitable price plans, bundles and loyalty programs focused to each customer segments. Otherwise these inflexibilities would stand culprits to the providers being denied of their righteous revenue!

Sustaining profitable relationships with customers has become the biggest challenge for banks. With eroding interest revenues, fees now play an integral part in the make up of financial companies’ income. Fees comprise up to 40% of a bank’s revenue and will continue to become more popular in retail banking space compared to say what was 10 years ago when fees accounted to just 3% of a bank’s income.

As banks start concentrating on the fee income, customer complaints have started soaring on the charges levied by banks. In an era when cost of acquiring a customer is mounting and banks are virtually fighting for market share, customer dissatisfaction over issues like overcharging is giving sleepless nights to bankers.

Lately, customers have started complaining about the excessive fees that banks are charging, most of them related to penalty charges. You would be aware of public backlashes against the charges levied by banks in countries like UK, South Africa, Australia, Israel and Czech Republic, many of them leading to litigations.

In 2006 alone claims from customers have soared by as much as 40%. The top 5 UK banks have so far paid GBP 400 Mn as refunds to customers. The soaring customer complaints have led to government interference. Regulatory bodies like The Office of Fair Trading (UK) and Competition Commission (South Africa) are conducting investigations and measures to control the charges levied by banks.

No wonder ‘Pricing’ is fast becoming the ultimate competitive differentiator.

Pricing decisions have never been more important for Communication service providers. Wrong pricing decisions could be deterrent to growth and are bound to have adverse long-term consequences. For instance, in a cable network, extreme internet users might consume more than their fair share of the access bandwidth. These ‘abusers’ might congest a major portion of the operator’s network leading to dissatisfaction among a majority of customers.

This situation arises when service providers have back-office infrastructures that are only capable of offering and pricing “All you can eat” services.  The infrastructure, though capable of measuring usage, is not able to price based on actual usage.  Hence the resulting inequity in network usage leads to Revenue Spillage.

In addition to the inability of the operator in providing Usage-Based Pricing, revenue spillage also results from their failure to accomplish content-value-based pricing. A case in point could be a latest movie being priced same as an old movie or TV serial, in effect, inadvertently pricing the latest film at a loss.