Bell Canada: When RA Goes Bad

How much do you lose when you underbill a customer? The difference between what you should have billed and what you did bill. How much do you lose when you overbill a customer? That is harder to answer – it depends on how much the error upsets customers and authorities. You can be sure the costs will include handling Customer Service calls and staff time spent issuing credits. It may also involve the cost of writing and sending letters, goodwill credits to make amends, and staff time spent explaining and avoiding further embarrassment with the regulator and press. This can quickly add up. So how much do you lose when you underbill, your Revenue Assurance team corrects, but they over-correct and the customer is overbilled? And how often do RA’s slip-ups (which tend to generate costs for customer-facing functions and may lead to churn) get subtracted from the benefits they calculate for themselves to give a true picture of net benefit added to the business? I could go on… but I know the average RA person does not want to hear about RA making mistakes. RA people often start from a mindset that other people make mistakes, and it is RA’s job to correct them. That can lead to a dangerous inflexibility in thinking, with RA concluding it can never do wrong, and hence blinding itself to its potential to do more harm than good. Rather than argue the abstract, let me demonstrate by sharing a story about recent events in Canada…

For reasons best understood by Canadians and best ignored by the rest of us, Canadian domestic phone users have to pay an extra monthly fee for touch-tone phones. Old customers who still use a phone with a rotary dial are exempt from this fee. Along came Bell Canada’s RA team and they had a thought: they would check if customers provisioned to use touch-tone services were paying the extra fee. If not, the RA team would ensure the touch-tone fee was added. So far, so good. Bell Canada’s RA team found 20,000 customers provisioned for touch-tone and not paying the fee. With the fee worth CAD 2.80 per month, the leakage was… well, not all that much, but still worth about USD 0.6m per year. So they whacked on the extra charges.

Now, bear in mind what kind of customers were likely to get this unexpected extra charge: old people. Old people were likeliest to be a long-running customer who had a rotary handset. Anyone moving in the last 17 years would have been provisioned and charged for a touch-tone phone from the beginning, so only very long-standing customers at the same residence would be likely to still get a bill without the extra touch-tone fee. Here are a few stereotypes about old people: they are easily taken advantage of, they do not understand technology, they are vulnerable, they are poor, they trust big business… surely I do not need to go on.

What if Bell Canada provisioned a touch-tone service for a customer that used a rotary-dial phone? Presumably this possibility did not occur to their RA team. What then if Bell Canada had no record that the customer had ever asked to be provisioned for the touch-tone service? And what if the one customer was old? Well, you can tell what happened. Marrian Trafford, a 79-year old inhabitant of Toronto, Bell Canada customer and user of an old, old rotary-dial phone, asked her son for advice about the extra charge on her November 2009 bill. Her son is the kind of guy who knows who to complain to when telcos screw up, and now Bell Canada must answer a lot of uncomfortable questions about whether they try hard enough to avoid overbilling of customers.

So what is the harm done? Bell Canada can say sorry, credit one old lady and hope nobody else finds out. Right? The problem is, obviously others did find out – or else I would not be writing this. That means that even if Marrian Trafford was the only customer wrongly charged, Bell Canada now suffers reputation damage. Worse than that, any normal person will assume that if Bell Canada can make 20,000 goofs of failing to charge for a service that has been provisioned, they probably goofed more than once when it came to provisioning services that should not have been provisioned. In other words, if Marrian Trafford was overcharged, then the assumption will be that lots of other people were overcharged. Even though you cannot put a dollar value on reputation, it still needs to be thrown into the scales to balance the extra fees that RA have generated. Marrian’s son got in touch with Canadian consumer protection groups, and they got in touch with the Canadian regulator. Look here for what the consumer groups had to say. The main points of what the consumer groups want from Bell Canada are as follows:

… undergo independent audits, to file reports… to revise procedures, and to compensate affected customers…

… all monies collected from subscribers under this fee should be reimbursed or credited to affected customers, with interest…

…The compensation order should be without prejudice to the rights of subscribers to the exercise of any civil remedies that may be available to them…

…The Consumer Groups also submit that as a remedy, the Commission should require Bell to return all affected customers to rotary dial service, unless the customer (not Bell) requests, in writing, to stay on Touch-Tone service. If any customer does so choose to remain on Touch-Tone service, the Commission should order that the reimbursement for those months during which they had Touch-Tone service without requesting it nonetheless be credited, as for customers remaining on rotary dial service…

…The Consumer Groups further submit that as a remedy, the Commission should require Bell to notify all customers in writing who have been unjustly charged for Touch-Tone…

…The Commission should require Bell to file information on the services and customers affected by the “DMS Cleanup” and if any charges were added that were not explicitly requested by the customer, to disallow them, to require Bell to return the customer to the original service and to order credit or reimbursement for all stand alone or rate capped customers in the manner proposed above for added Touch-Tone charges…

…The Consumer Groups submit that Bell should be required to pay their reasonable costs of making this application…

It will be a while before this is concluded, but the Canadian regulator has taken the baton (see here) and run with it. Bell Canada has already responded (see here) saying they were already intending to do a lot of the things the consumer groups asked for. But that only begs a question of why they did not do those things before – and so avoided any damage to their reputation.

What is the outcome here? The main point, which is easy to lose in the sequence of events, is that Bell Canada are going to end up auditing their billing and their provisioning. If they had done the two audits together, then the risk of a public relations fiasco would have been much smaller. Because Bell Canada did the billing audit as a stand-alone exercise, overcharged one bill, and will now do a provisioning audit to sort out the mess, they saved no assurance-related costs whilst putting their reputation at risk. They will also suffer all the costs of dealing with the regulator and communicating with the relevant customers, and might even pay the costs of the consumer protection groups. Any money they took but should not have taken will get paid back, possibly with interest. Bell Canada will likely suffer higher compliance costs in future, because the regulator is likely to remember what happened and point to this incident to justify tougher rules and sanctions when the opportunity arises. And a heck of a lot more people will be checking their bills from Bell Canada and phoning up to complain – even if the bill is perfectly accurate. Answering those Customer Service calls will increase costs for Bell Canada too.

There are two ways to do revenue assurance. The wrong way is to hunt for opportunities to make more money. The right way is to search for things that have gone wrong – irrespective of which side benefits from the error. Look only for errors that reduce bills, and you risk missing the errors that increase them. As shown in this case with Bell Canada, a simplistic approach to RA – just reconcile the bills to a trusted source of data and add charges where the reconciliation suggests you can – is badly flawed if you are trusting unreliable data. When relying on data, and determining how quickly to act, thought must into the wider implications for customer relations if something goes wrong. The signs of poor risk management are painfully evident: Bell Canada’s RA team effectively targeted old people for extra charges and little was done to manage customer expectations. Old people are perceived to be vulnerable and will have the public sympathy. I am not going to blame the people working in RA in Bell Canada, as they probably have only a narrow remit. In other words, they are expected to do revenue assurance in a silo that is primitive and narrow. They did not even know if provisioning was reliable – evidently not, if rotary dial customers get provisioned for touch-tone services and if services are provisioned but no record of the customer’s order is kept. In Bell Canada, the RA team were not expected to consider wider repercussions of their actions, and in all likelihood nobody else in Bell Canada was expected to do so either.

Divorcing revenue assurance from the wider risk context can end up costing the business more money saved by reduced leakages. RA practitioners need to consider the risks as well as the rewards generated by their actions. The myth that revenue assurance can do no harm and only improves the bottom line is as outdated as a phone with a rotary dial.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.