Billing For More

By Gerry Blackwell

January 13, 2003

According to a leading provider of billing and authentication software, WLAN service providers need to look ahead to a time when they will offer more than just access services.

It's doubtful if many start-up Wi-Fi hotspot service providers think of choosing a billing solution as one of the key strategic decisions they have to make. But they should, says Chris Grejtak, senior vice president of marketing at Cupertino, CA-based Portal Software.

No surprise, Portal Software makes billing software. Still, the company makes a compelling case for billing being a pivotal function for WLAN service providers -- perhaps not now in these early, anarchic phases of the market, but eventually.

Portal began in the early 1990s building software for the nascent ISP industry and gained a dominant market position. Today it supplies three of the world's top five ISPs and commands 47 percent of the market.

"We had a solution that in the early stages [of the Internet] was the only or at least the best mechanism to bill for real-time interactions between individuals and a Web site," Grejtak says.

In 1999, Portal turned its attention to the mobile carrier industry which then had a growing need to be able to rate and bill services besides circuit-switched voice -- services such as Internet access and content delivery that traditional telco billing systems couldn't easily handle. Portal's could.

Almost half the company's revenues today come from the mobile sector. It counts 35 of the world's top 50 wireless carriers among its customers.

Portal is now taking aim at the WLAN sector. Not the Mom-and-Pop hotspot provider -- this is a product that can cost hundreds of thousands to millions of dollars to implement. Its target market is the major WLAN players that are just now beginning to emerge.

"I think there are some interesting parallels with our early days, though," Grejtak says. "The Internet then was a hot space where people were not sure how to monitize the service they were offering. They weren't sure how to both deliver content and earn money by it."

"Today a lot of companies putting up WLAN infrastructure are in the same position. They're trying to figure out how to monitize the service they're offering."

Portal has already had some signal successes in the WLAN sector. One of its earliest WLAN customers was MobileStar. T-Mobile, which purchased MobileStar's assets last year and now has the most hotspots in the United States due to its deal with Starbucks, continues to use the Portal solution. Boingo uses it. So does British Telecom for its new OpenZone commercial WLAN offering in the UK.

The product, Infranet, requires no modifications for the WLAN industry. Portal sells only one version of Infranet, notes James Morehead, the company's senior director of solutions marketing.

"That's one reason why we've been able to capture so many significant WLAN players so quickly," Morehead says. "We were ready with our existing product to go to the WLAN market."

Infranet incorporates a rating engine that measures and costs online transactions and sessions, and a billing system that looks after billing/accounting functions. The product also includes authentication and authorization capabilities.

That's a key differentiator, explains Brian McCann, the company's senior manager of solutions marketing. The built-in authentication functions allow Portal service providers to support both prepaid and postpaid billing schemes -- at the same time if they want.

Portal's pitch to the WLAN industry is that Infranet offers unparalleled flexibility to support any kind of service, or combination of services -- ISP, mobile or wireline telephony, WLAN, content delivery.

Perhaps more important, it offers the flexibility to support any billing scheme or business model the customer wants to try. That's important right now for WLAN network operators because most are still feeling their way, trying out business models to see what works.

"Somebody has to figure out how to make money at this," Grejtak says of the WLAN space. "If they can't make money at it, ultimately it will fade away. That would be too bad because this technology offers tremendous value. But we've proved through our history that we're able to help companies find ways to make money."

Part of the reason Infranet is so flexible, Morehead says, is that it's very quick to deploy initially -- that allows new service providers to get to market quicker. It took British Telecom about four weeks to get the billing system for OpenZone up and running. It's even quicker to reconfigure and redeploy if a company wants to change its billing scheme or add new services.

Morehead cites the example of the Polish subsidiary of Vodafone, one of the largest mobile carriers in the world. The Polish company needed to accelerate the launch of its MMS (multimedia messaging service) offering -- audio, graphic, video message attachments -- to beat out a competitor.

For non-Portal companies, adding a new service is a major undertaking, Morehead says. Because it takes so long, service providers often launch the service once they have the rating part of the process in place but well before they have the billing piece done. The result is, they can't actually charge for it.

Vodafone in Poland was able to move up its MMS launch by almost six months and within two weeks of launch it was charging for the service. Its competitor came out with its MMS service a few weeks later, but is still not charging for it because it doesn't have the necessary modifications to its billing system done.

Morehead says the principal is the same for WLAN operators. In fact, the whole business of adding new services to the mix is something Portal believes will be even more important for WLAN operators in the future.

WLAN service providers will not be able to survive as just purveyors of network access, Morehead says. "If they only look at it as being an access provider, they're going to have to be a pretty lean ship." They will have to add value somehow, just as the most successful ISPs have done -- think AOL.

WLAN service providers are already having to compete against free or nearly free services, Morehead notes. War chalkers are marking buildings where they find poorly secured WLANs that provide free service to anyone with easily downloadable hacker tools. Free-net co-operatives in many cities are setting up networks of privately maintained hotspots. And some cities are establishing low- or no-cost Wi-Fi hot zones in their business cores.

Serious commercial service providers will be able to differentiate themselves by ensuring reliability of access and quality of service, and that will attract high-end business users. However, it may not be enough.

"At some point," says Morehead, "content and information will have to be a big component of this WLAN world. You don't want to provide everything for free. So there has to be a way to charge for it and then settle back to the content providers."

WLAN operators also need to differentiate themselves from mobile carriers. Wi-Fi gives them one clear advantage. They could provide multimedia content. A music shop, for example, may want to set up a system that lets customers download MP3s. A WLAN service provider could manage the service, including the billing.

This is why Portal believes it has such a commanding competitive advantage, especially over billing systems that work on network edge devices. Those systems will make it much more difficult or impossible for service providers to quickly add and subtract services.

It may not be an important consideration now, but it will be soon, Grejtak says. Which is why choosing the right billing system is such a key strategic decision.

It makes sense, but where does that leave service providers who can't afford a $250,000+ billing system?



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