Rating and Charging in telecom billing form a critical financial foundation for all kinds of telecommunications services, including utility services and digital offerings. It ensures that users are charged accurately based on their consumption behaviour, service type, and subscription plans. The major components of the Billing Process are Rating and Charging Mechanisms, which are indispensable for revenue assurance and customer satisfaction.

The term Rating refers to assigning a price to a particular service or usage event. It determines how much the customer is going to be charged for the usage of any services based on the particular voice calls, SMS messages, internet data, or streaming consumed.

Example: When a downloaded film costs $5.00 by your subscription plan and the category of content, then it is rated by the system.

🟢 Type of service offered (voice, data, messaging)
🟢 Duration or quantity consumed
🟢 Time of day
🟢 User’s geographic location
🟢 Subscription plan (prepaid, postpaid, etc.)

Charging is the process of calculating the cost (final amount) of a service based on various factors like subscription plans, pricing strategy, captured usage, duration, etc., and applying it to the customer’s account.

🟢 Online Charging (Real-Time Charging – Prepaid Billing)
🟢 Offline Charging (Postpaid Billing)

There is also a flexible model, called Hybrid Charging, which features both.

Online Charging (Real-Time Charging – Prepaid Billing)

The online charging is a process of calculating and deducting the charges in real-time from the customer’s account as soon as a service is consumed. It involves checking whether or not a user has a sufficient balance before and during usage consumption.

• • A prepaid user wants to access a data session.
  • The system checks the balance.
  • If that checks out, it authorizes the session and charges that data usage.
  • When the last unit of balance is exhausted, the session is automatically stopped or asked to be recharged.

• • Control and update real-time information.
  • Fraud and revenue leakage elimination.
  • There is no possibility of a user exceeding their balance by any means.
  • This allows promotional offers and rewards in real time.

Offline Charging is a type of postpaid billing system whereby the customer is billed after the consumption of services. Rather than instant deduction of charges, the system collects the Call Detail Records and Usage Data Records and processes them at the end of a billing cycle.

• • A postpaid endeavour makes calls, streams content, or uses data.
  • System usage logging takes place.
  • All usage is assessed and billed at the conclusion of the billing cycle, typically on a monthly basis.

• • Monthly bills for a postpaid mobile.
  • Bills for utility (electricity, water).
  • Payment for services with subscription-based streaming.

• • More flexible for high-usage customers.
  • Convenience for enterprise customers.
  • Enables bundled services and family plans.

It joins together a multitude of billing methodologies by utilizing both real-time and post-paid strategies – giving the best of both worlds with real-time control when necessary, and delayed billing where appropriate.

Mobile data charges may be applied in real-time, whereas roaming charges could be incurred while offline. Or the company offers prepaid voice calls and post-paid internet access against one subscription.

• • It enables the supplanting of individual services with differentiation on a single account.
  • It includes complex packages such as roaming, premium content, and on-demand services.

Only charging by the event or by the transaction, regardless of duration or data size.

Examples:

• • An SMS sent
  • Downloading a ringtone
  • The purchase of a game or app
  • Best applied to a small, one-time service

Examples:

• • Internet sessions (e.g. costing up to 500MB)
  • Voice calls (e.g. costing per minute)
  • A video streaming session

Examples:

• • First 1GB at $1.00
  • Next 2GB at $0.80
  • The next 5GB is $0.50

Example:

• • Discounted night calls
  • Free social media access during weekends
  • Premium charges during office hours.
  • Used by Telecom and ISP providers for traffic balancing

Examples:

• • Roaming charges.
  • Local versus international call rates.
  • Location-based promotions (free internet on campus).