From RA Virgins to MVNOs

Today’s guest post comes from Daniel Peter, who recently contributed to a spirited exchange of comments about unbiased reporting of revenue assurance news and views. I challenged Daniel, commenting that if he wants a good independent source of RA insights, he should “get off the sidelines and do something about it”. To Daniel’s credit, he has risen to the challenge! Daniel is a Senior Account Manager at Mara-Ison Connectiva, having remained with the software vendor and helped to manage its restructure and takeover. In parallel, Daniel is studying on the Executive Business Analytics program at the Indian Institute of Management Calcutta (IIM), and his dissertation on the Corporate Response to Recession (2008-09) was published LAP Lambert Academic Publishing. In today’s post, Daniel tells us why he admires Richard Branson, and raises questions about implementing revenue assurance in MVNOs.

Cover of Richard Branson's Losing My VirginityRichard Branson’s Losing My Virginity is an inspirational book. It’s the story of Branson’s life and I thoroughly admire his adventurous story of boldness and his skill in intelligent risk taking. At the age of only 16, he started a youth-culture magazine, followed by a record shop, then a record company, and all the way through to launching an airline and a space travel company. I came across the book during my college days; I read autobiographies of great leaders and Branson’s story continues to fascinate me.

It’s very interesting that Branson has also ventured into telecom, the industry that I’m part of. This made me curious to learn in what way Virgin Mobile is different from other telcos and also to find whether revenue assurance was an ingredient to his success. One of his successful ventures is Virgin Mobile. Started in 1999, Virgin Mobile was the first Mobile Virtual Network Operators (MVNO) to become a commercial success. It first launched in the United Kingdom and then around the world.

Now Virgin Mobile has evolved. For instance, the US unit has been folded into Sprint, the mobile network. And yet, Virgin Mobile’s name lives on in the US because Sprint continues to promote it. The Virgin business gets some powerful free branding from this deal. The US Virgin Mobile even carries the iPhone. Now, while a lot of MVNOs have struggled and failed, Virgin Mobile has largely succeeded and established a global presence. The crucial factor in Virgin’s success was the decision by top managers to maximize topline growth. In other words, Virgin insisted on using RA practices and processes from the beginning. Isn’t this his success formula?

And this is rather curious because here you have someone like Branson – a known risk taker who likes to fly in balloons across the Atlantic – yet with his MNVO, he was determined to implement revenue assurance. Doesn’t this show the importance of RA in MVNOs? This also made to curious to find more about MVNO from RA perspectives.

Now I checked mvnodirectory.com, and Wikipedia, and found there about 645 active MVNOs in the telecom world. And when taking a look at the agendas of a few MVNO-specific conferences such as the MVNO World Congress in Berlin, Germany, and MVNO Networking Congress in London, UK, I was shocked to see that Revenue Assurance was not on the agenda. What’s more, none of the major providers of revenue assurance and fraud management systems was sponsors for these conferences. So this made me curious about the RA practitioners: are they not focused on serving the MVNOs?

Now the MVNO Business model is different from MNOs. RA controls have to be different. Not all MVNOs have full access to the usage records; some deploy their own MSC, SCP and IN; operate on thin margins and their largest expense is the fee they pay to the MNO.

Dan Baker pointed me to a Black Swan interview he had with Mark Yelland, a UK based RA expert focusing on the tier 3/4 and MVNO space. Yelland talks about the major cash flows problems an MVNO faces, “if the MNO is holding a lot of records in suspense that are not being billed, it might be only 1 percent of the MNO’s total portfolio, but it could be 80 percent of the MVNO’s business…”. Yelland suggests operators try standard software tools like Excel and MS Access to get the RA process started. I agree, and I would further say that with new technologies available today, small operators can easily put together a cost effective tool with specialized RA functionality easily.

So to conclude, I have a couple of questions to ask the talkRA community. If Virgin Mobile finds RA essential, why shouldn’t MVNOs be a growth market for RA tools? Why are RA solution providers not pursuing the MVNO business? Many of the MNVOs are established brands and can afford to invest in RA.

Daniel Peter
Daniel Peter
Daniel Peter is Vice President of Analytics at Gamma Analytics. He heads Gamma’s Data Science group working with customers in advanced predictive model development, business data analytics, data science, and product strategy. He also has significant expertise working with Fortune 500 companies for Connectiva Systems and Hewlett Packard.

Daniel has a Business Analytics degree from IIM Calcutta, Masters in International Business from Kedge Business School, France, and MBA from Loyola Institute of Business Administration, India. He is the author of: “Corporate Response to Recession (2008-09)”. He speaks and writes on telecom topics and can be reached at daniel@gammanalytics.com
  • Hi Guys,

    It is an interesting situation, MVNOs are just as susceptible to leakage and errors as an MNO, but has less visibility – so you would expect controls to be tighter.

    There are probably a number of reasons why Virgin Mobile implemented RA, some down to its evolution from the cable companies that formed Virgin Media, some down to its ongoing approval to the Ofcom Metering and Billing Scheme. Hence it started from a different point than most MVNOs.

    If we look at Systems Providers, because MVNOs cannot join the GSMA, the opportunity for system providers to talk with and influence MVNOs is restricted. And without access to the problems, it becomes difficult to design a cost-effective solution.

    If you read much of the RA literature, it tends to not discuss MVNO’s (with one notable exception), although there was a presentation given at the UK RAG meeting in February on RA in an MVNO.

    Although the big consultancies do offer support to MVNOs, they tend to operate as cut-down versions of the MNO service, instead of looking at the different risks involved. The consulting solutions provided being over-priced for and over complicated for the MVNOs (just take an MNO and remove the network elements), not performing a true enterprise risk management assessment to derive the requirements.

    So the problem is a chicken and egg –
    – Consultancies are not leaning on CFOs about revenue leakage in MVNOs in the same way that they are for MNOs because there is no publicity about the potential scale of the problems,
    – the CFO is not looking for a solution to a problem because it is not as important as others flagged by the Consultant, he probably expects the Internal Audit function to be adequate.
    – the RA Team (which probably exists) does not have the necessary budget to purchase a RA System Supplier tool and so develops an in-house one (or commissions a bespoke development from a software house)
    – the system suppliers are not involved in the design of these solutions, so have not developed the pricing models and advertising literature to quantify the expected leakage and spend the development effort on enhancing their existing products.
    – the Consultancies are not made ware of the potential leakage in an MVNO so do not press CFOs.
    – and so on

    So how to break the cycle and destroy the myth that MVNOs do not require RA?

    Perhaps a friendly CFO / CTO at one of the conferences talking about potential leakages and RA issues would be a start.

    There is one simple tool that all MVNOs should be using – it does exist, it is relatively cheap, and can help to identify a number of customer impacting issues – from incorrect rating and billing, to connectivity problems, to availability problems. A well designed test event generator solution can provide a very good starting point – if it is used to its full potential and an expert is used to extract all the relevant information.

  • Mark mentions that the UK RAG recently had a presentation on revenue assurance in an MVNO. I understand that the recording of that talk will be exclusively shared with RAG members via the secure section of RAG’s website. So some readers may want to consider joining the RAG (it’s free!) in order to listen to this content. The RAG’s contact details are here: http://www.revenueassurancegroup.net/about-us/contact-us/ Ignore what the website says about eligibility for membership, because I heard that those rules are out of date and that they’ll accept membership from anyone with a genuine interest in telecoms revenue assurance, fraud management, risk management etc.

  • Daniel Peter

    Mark, Eric,
    Thanks for your comments
    I have contacted RAG to become a member, hope they’ll provide access to the resources. I have an understanding of the MVNO network but it’ll be very helpful to learn from the presentation that was shared to RAG members.

    Mark,
    I strongly believe RA Providers should look at the different risks involved with MVNO instead of providing a cut-down version as you have commented. Do you know the typical revenue leakage scenario in MVNO from your past interactions with the CFO/RA teams in MVNOs?

  • Mike Willett

    Hi Daniel,

    Good article. I’ve a few theories/comments to throw in.

    When RA “began” in the US, prior to MVNOs, it was focussed on the provisioning process and a key issue was data extraction from the HLR, and synching the timing of that extract with one from billing and OSS to manage the risk of false positives. The value from third party suppliers (at least to me at that time) was to de-risk that data extraction process. Similarly in Europe, but where the focus was on CDR processing. Timing was not so critical (forget prepaid for now) but being able to read SS7 messages to build “CDRs”, capture and translate binary MSC files, handle proprietary mediation files and then billing files at a reasonable volume was the challenge suppliers helped address.

    When I think of an MVNO, these risks do exist in a varied form but with the complexity of the network largely removed, the proposition of suppliers to help address “source of truth” data was not so valuable. MNOs and MVNOs agree the standard in which and when data will be exchanged and, in my experience, this is much more manageable than what the network can provide (no binary conversion, no need to worry about match/merge of single calls across multiple switches, no need to determine duration and account for propagation delays etc). I am not suggesting RA i.e. easier in an MVNO but the need that drove the RA vendors in MNOs is reduced in MVNOs. As others have commented, there are different challenges to address as well.

    A quick comment on Virgin being focussed on top line growth leading to an insistence on RA controls. This may have been the case here, I can’t comment, but I would argue that a focus on revenue growth does not always equate to an equal commitment to RA. History suggests that with pressures of speed to market and desire to launch new products and pricing, that RA was often sacrificed – this is one factor that drove the need for RA. It takes a level of maturity to do as Virgin did.

    And a last slightly to the side comment, when I was drafting Australia’s code for self regulation on bill compliance (back in 2005 but still current), there was a deliberate inclusion of MVNOs (and their PSTN equivalents) to be accommodated within the rules of the code. This enabled them to be able to demonstrate “billing accuracy” to the same set of standards as MNOs. The code recognised the criticality of MNOs to an MVNOs billing accuracy but also their independence and ability to also create their errors that compliance testing should check for.

  • Aditya

    Hi,

    Great Article.If somebody can sums up a few Control points that can be used for RA in MVNO..Keeping in mind the network data not too useful to reconcile if we are to find out revenue leakages..
    What could be the high level controls for reconciliation as an MVNO.

    Thanks

  • Daniel Peter

    Hi Aditya
    I’m trying to hear from someone who is associated with MVNO to provide the most important control points; this would also help me validate the controls I have developed so far based on my understanding of the MVNO network. Mark Yelland’s suggestions are also helpful but I feel there are a lot more to cover.

  • Rob Chapman

    Hi Daniel,

    I haven’t seen the RAG request come through – can you try submitting again please and I’ll keep a watchful out for it?

    Also, good article!

    Cheers,
    Rob

  • Daniel Peter

    Thanks Rob
    I submitted for a membership request once again through http://www.revenueassurancegroup.net/about-us/contact-us/
    Regards
    Daniel

  • Indeed an interesting topic and as vendor we are trying to find a way to adapt our offer to the MVNO structure. That is where the issue starts since each one of them is more or less mature and dedicates more or less resources and attention to implement its business assurance policies. We do have contact with MVNO’s and try to find solutions that fit them. By the talks we have had, we identified several risks indeed and believe there is a quite substantial potential unexplored. There is many MNVO’s and we try to meet them all…

    We have launched our RAID SaaS offer and the Managed Services offer that solve one issue that many MVNO’s brought up, being resources (actually an issue that even MNO’s bring up) not available. There is still a lot of mistrust though to SaaS based implementations and I think it will take time before those disappear. For us it is the same work, we reduce costs though by economies of scale and “optimized applying of knowledge”.

    Especially since margins are generally speaking low and volume needs to do the trick, BA can make the difference between a positive or negative bottom line. Investment in this function though is, as I see it, not always priority for the board members and shareholders. I understand this from talks we have had. If I were a board member of a company that is depending on several integrated platforms and millions of customers and multiple service or product offers that have to be launched faster and faster, I certainly would want this function to work in my organization.

    We are truly interested in helping MNVO’s developing their BA maturity and will do all we can to do so.

  • Daniel Peter

    Pieter
    Glad to know you are reaching out to the MVNOs for BA and have offered Saas/MS to solve the resource issue. I do agree about the mistrust operators have on SaaS model and hosting on cloud; this is a problem that has to be addressed as an industry. What I learned from my acquaintances in Americas region is that operators these days have given acceptance to send their data to cloud and are open for SaaS model; I hope other regions will also open up for these models soon, however as vendors we have to constantly pursue and educate the operators that SaaS model can be trusted.
    Thanks
    Daniel