With growth rate for voice revenues on a decline and the situation expected to be more grave in coming days due to per second pricing, it has become very important for operators to not only manage savings on the cost front but also to ensure there is no slippage of earned income. Avi Basu, President and CEO of US-based Connectiva which specializes in offering revenue leakage prevention solutions provides more insight into the issue in an interaction with TelecomTiger. 

Q1)  How big is the magnitude of revenue leakage in telecom industry both at the global level as well as in India?

Ans: Research from various sources indicate that on an average telcos around the world lose between 7% to 15% of their revenue through leakage alone. This volume ranges between 3% and 5% in North America and Europe to more-than-25% in Africa. In a research conducted by Connectiva in 2008, it was estimated that Indian telcos lose more than $900 million every year.

Q2) What are the possible areas to address to keep a check on such revenue leakages?

Ans: The primary causes of revenue leakage in telcos is related to inefficiency in systems and processes combined with fraudulent activities. Uncharged traffic, inconsistent rating and erroneous billing all contribute to leakage. The biggest problem areas are in data collection and errors in records – disparate network elements generate records and data in various formats and types and mediation systems may not process them accurately. On the other hand, errors in order management and provisioning systems allow subscribers to use services without being charged for or even throw up inconsistent customer records. An efficient revenue assurance program is therefore required to keep a check on the entire revenue stream – network through billing as well as collections. Revenue assurance must continually audit the network elements to ensure that records are generated and captured, collected and processed by mediation, rated accurately and free from invoicing errors.

Q3) Indian mobile service landscape is dominated by the prepaid segment. In this case it is widely believed that it is not operators who may suffer from revenue leakage but it may rather be the end-consumer. Your view points.

Ans: It is a myth that prepaid revenue value chains are significantly more efficient than post-paid. The type and nature of problems vary significantly but the magnitude of the problem nevertheless is still in the same ball park. The revenue value chain in all cases extends typically from the content or VAS partner to the operator and eventually to the consumer. Leakage may occur at different parts of the value chain and whether consumers are being over-billed (or) under-billed, it eventually results in a lose-lose situation for both the provider and the consumer (as an over-billed and unhappy customer is very likely to churn). 

Q4) Connectiva till now has been able to notch up leading incumbents as its clients in India. But new operators are yet to adopt such solutions, Do you feel there is lack of awareness about the issue within the industry?

Ans: On the contrary, we feel, there is significant awareness in the industry at this point of time especially among the newer operators. Increased competition, huge growth, new technology and diminishing call charges mean that an operator must do everything they can to remain profitable and operate at an acceptable ARPU level. Telcos know that they cannot afford to lose their revenue through leakage, fraud or bad debt and the only way to tackle those challenges is by implementing a sound revenue management program. And in our experience we have seen that Greenfield operators are inclined to implement revenue management solutions sooner than later. The challenge for the new players is however prioritizing what they need - investment in such systems and people may seem to be redundant till they have started operations and reached a certain target. A new licensee may also have limited experience in predicting possible losses through leakages and fraud. Our job is to make sure these new operators understand the gravity of the problem and do what they need to combat those challenges.

Q5) For solution like yours, the BSS/OSS vendor can offer a end-to-end proposition which may be tempting for an operator to opt for. Do you feel threatened by such players.

Ans: Telecom revenue management is a specialized business. It is a discipline that is technology-centric yet its success remains dependent on the processes adopted and the people who are charged with the function. Connectiva does not simply offer the technology – we are the pioneers in offering an end-to-end solution including best practices and proven techniques in revenue management. Our consulting team gauges the extent of the problem and customizes our solution for the customer, based on their specific needs, unlike off-the-shelf tools. There are instances where large OSS/BSS solution vendors have tried to foray into this space and have failed. So we are not threatened, but we feel that the technology and the expertise we offer are complementary to the OSS/BSS systems. Several of them are our partners and we believe that there is a strong combined value proposition.

Q6) There are very few companies headed by Indians in the telecom technology space. How do you view this considering that the Connectiva has a strong presence of PoIs on its board.

Ans: Connectiva had humble beginnings but has proven itself to be a world class company through nearly 8 years of consecutive growth and organic expansion. Several members on our board and mana