What is Billing Mediation?

Mediation is a process of converting or translating a piece of information from one form into another, such that the resultant information becomes useful for the recipient. We often come across the term ‘mediator’ in cross lingual discussions or meetings. The role of the mediator is to understand what one person is saying in one language and then translate that information into a language that is understood by others. If the ‘mediator’ was omitted from this process, the information received by the recipient would not be understandable or useful. 

 

The Billing Mediation is a process of converting a set of raw, chargeable events (or Call Data Records abbreviated as CDRs in Telecom) into a set of records that can be consumed by the Billing Platform and charged onto the customers’ invoices. The process of Billing Mediation is carried out by a software system called the Billing Mediation System. 

The Billing Mediation System is a software engine which works with the billing system in the background to rate and charge the calls and other usage events for the subscribers that are consuming various services from the consumption based charging businesses. The examples of these businesses are a Telecom Company, an Internet Service Provider, a Cloud Company, a Power Company and more. 

All these businesses typically charge a fixed subscription fee, but a large portion of their bills involve a variable fee based on the actual consumption of the service. The ‘Pay as You Go’ model is used by many cloud service providers that track the actual utilization of cloud based resources by their customers and then charge only for the time those resources were used. Similarly, in Telecom, the subscribers are charged for the actual duration of the calls or total gigabytes of data consumed in the mobile data sessions. 

The billing mediation system provides the ability to accept such varying usage events, rate them as per the pricing model or strategy and accumulate the charges in such a way that they can be charged onto the invoice in a summarized form. 

The billing mediation could be required by many business domains, in fact it is useful for any business where consumption based charges apply.

Industry/Domain

The Billing Mediation or Usage Rating and Charging applies to any metered usage consumed by customer or company in several industries. We have already talked about Telecom and how CDRs (Call Data Records) are used for charging a subscriber’s consumption. There are several other industries where consumption based charging is very much in use. 

The biggest other industry is the Energy or Power sector where metered reads are a common way to charge electricity consumption by users. IoT is another sector where paying as per the use of an IoT device is on the rise. The IAAS (Infrastructure as a Service) or Infrastructure Clouds are also very popular promoters of ‘pay per use’ pricing strategies. On clouds, you essentially pay for the amount of time you have the VMs, networks, storages and other infra components in active use.

Listed below are some industries/domains that use Consumption Billing (or mediation/usage rating) for charging their users:

Telecommunication PaaS
Electricity/Power Digital TV Service Providers
Network service providers Web Services
Digital content providers SaaS
Virtual/Cloud services IaaS

 

How does a Billing Mediation System or Telecommunications Mediation work?

Let us understand how a Billing Mediation System works in more detail with focus on Telecom Billing

With reference to a Telecom Billing system, the Billing Mediation System receives the Call Data Records (CDRs) into a set of batches like files shared on a billing server SFTP drive. Such Billing Mediation Software is programmed to read these batch files and consume the information about each CDR. Each CDR is then rated as per the business rules configured on the Product Catalog. Finally the rating engine applies the net resultant charge as a billable amount into the billing system for the subscriber and the associated service.

It is called as ‘Billing Mediation’ or ‘Telecommunications Mediation’ or ‘Mediation in Telecom’ because the rating engine is essentially understanding a very raw information coming from a telecom switch (or other network components), and then translating it into a billable record (resolved with a subscriber, the service number and the billable amount) which is well understood by the invoicing system to generate the customer bill.

Billing Mediation Software is a very crucial software in the Telecom Billing world. It processes millions of CDRs on a daily basis, to ensure that the Telecom Company charges the consumption usage accurately to its consumers. It allows the Telcos to generate a good deal of revenue based on the usage consumption of their services, and charge the consumers based on complex pricing models or rate cards that are fast evolving with time. The flexibility to charge the usage consumption based on bundles and complex rate cards allow the Telcos to attract more and more consumers to use their services.

Postpaid Charging Vs Real Time Mediation

It is important to understand the terms like Postpaid Charging and Real Time Mediation in the context of Billing Mediation. These pertain to the type of service being consumed and rated by the billing mediation system. The postpaid charging or postpaid rating is applicable for a postpaid service where charges are accrued over a billing period and then applied on an invoice to be paid at the end of the period. Whereas the real time mediation applies to the prepaid services where a prepaid payment or top up is done to start using the service. The service can be used as long as there is a prepaid balance maintained in the account.

What is Postpaid Charging?

The postpaid charging refers to rating and charging of consumption usage related to the postpaid services or plans. When a subscriber buys a postpaid plan with a telecom service provider for example, they are making a commitment to use the services from the telecom provider for a month and then pay the bill at the end of the month.

Therefore such subscribers are essentially using the services first and then paying their bill for the utilization of the services. The telecom provider on their part keeps track of the various charges such as the monthly plan fees, any other monthly charges such as the equipment rental and consumption usage charges as per the agreed plan prices. 

Some telecom service providers charge the monthly plan fees in prepaid manner and charge the consumption charges in arrears (or postpaid manner). This way they cover their risks by charging for the plan fees in advance. If the subscriber does not pay the bill amount, then they do not lose the entire amount but recover the plan fee by charging the same in advance.

The usage charges are always charged in arrears in such systems as the usage charges arrive in form of CDRs (Call Data Records) from switches or other network components and are not processed in real time, but after the actual usage has taken place.

What is Prepaid Charging or Real Time Billing Mediation?

The truly prepaid services are those where the subscriber buys a prepaid plan, and is required to make an advance payment for using the services. Once the payment is made, it acts like a top up to use the service as the payment increases the prepaid account balance. The consumption usage is mediated in real time to look at the available balance. If the balance is sufficient, the call and other usage can continue whereas if the balance is not sufficient, then it leads to halting of the services from the provider, till the balance is increased again by making a recharge payment.

The Prepaid Charging or Real Time Billing Mediation is handled by the Online Charging System (OCS) which works with the Radius or Diameter protocol, in conjunction with the Triple A system (AAA) to allow real time traffic to be mediated and check sufficiency of funds for carrying out the usage.

The Online Charging System (OCS) acts as a coordinator between the billing system and the network provisioning system. The OCS checks for the available balance in the billing system in real time, and communicates with the network provisioning system to either continue with the usage or halt the service if the balance is not sufficient.

EarnBill provides a robust, scalable and technologically advanced solution of the Online Charging System (OCS) for use by the telecommunication providers.

The terminology used in Telecom Billing world with respect to usage rating and charging is not uniform throughout the industry. However, as a general rule of thumb, the post paid rating and charging is termed as Billing Mediation, whereas the prepaid rating and charging falls under the umbrella of Online Charging System (OCS) solution.

How is the choice between prepaid charging and postpaid charging made?

The telecom service providers typically offer both options to its subscribers, however in the most advanced markets, the postpaid charging gets used more often than the prepaid charging one. In the emerging markets where mobile services have not matured so much, prepaid charging is more prevalent. In some developed markets, prepaid charging still exists as an alternative.

What is postpaid charging with near real time mediation?

In some cases, the underlying network components that track and report usage CDRs, are able to provide a near real time feed of the usage taking place. This is not exactly a real time feed so it cannot be used for prepaid charging. However, because it is so close to real time, it can be used to send usage alerts for postpaid charging scenarios. 

Such CDR feed not only allows to rate and charge the CDRs, but also send SMS alerts or emails regarding usage of various thresholds from the given quota. For example, the mobile data usage CDRs could be received every 10 to 15 mins by the billing system. 

These could be used to send SMS alerts to mobile users letting them know about how much data they have utilized. It doesn’t give them an exact live quota update but a close to real time update. This helps the data users to know how close they are to exhausting their quota and accordingly can plan their rest of the data usage for the day.

Rate Card Based Rating & Charging

The key aspect of this billing mediation process is rating the charges for various national and international calls, sms and other types of usage and applying these charges accurately. The complexity is handled through the rate cards. In jBilling, there are 3 types of rate cards: simple rate cards, route based rate cards and graduated rate cards. 

What are Rate Cards?

Rate Cards are Data Tables configured to work with the Rate Card pricing model. That model applies prices to orders created by the mediation process, where the price depends on information about the mediated event. For example, a call to Switzerland may be charged at a different rate than a call to Dubai. Calls made to another state or province may have a different rate than local calls.

Rate Card must be selected as the product pricing model, to connect the rate with the product. To configure the pricing model, you must select the rate card, enter the name of the column (Lookup Field) in the CDR, to compare against the match_column in the Rate Card, the match type, and the drop charge (if applicable).

When mediation runs, the data in the CDR Lookup Field is matched with the appropriate row in the Rate Card, using the match_column. Then the system creates or updates an order, using the product details from the product entry, and the rate from the same row of the Rate Card.

What are Route Based Rate Cards?

The Route Based Rate Cards in jBilling are similar to the Simple Rate Cards described above, however they have some advanced features. They allow selecting the rating unit, rating schemes and route tables. 

A rating unit for example can be ‘time’ and you can define the conversion from seconds to minutes. Therefore the CDRs can provide the duration in seconds and it will be converted into minutes before charging onto orders. 

A rating scheme allows you to define duration increments, for example you could define that a duration below 30 seconds always increments up to 30 seconds and a duration in excess of 30 seconds should increment by 6 seconds. 

A route table allows you to define various routes in a separate root route table. The CDR rate resolution would go to the root table first to find out the matching route. Once the route is matched, then it would go to the specific route based rate card and resolve the rate.

Conclusion

With an elaborate case study of MVNO billing, it can be seen how billing mediation can be applied effectively to meet various requirements for call rating and charging. It can be also seen how the usage rating core function can be extended to provide various additional features such as free usage pools, call credits, data boosts and usage notifications.

With usage based pricing, your company can move beyond simple subscriptions and charge customers for how much of the service is used. These creative pricing approaches widen your customer base. Also, usage based pricing provides a business the agility to anticipate the needs of customers. By metering usage, a business can track and analyse product or service usage data and send promotions in real-time to respond to the immediate needs of the customer.

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