How Telecom Billing Systems Work

Many people assume that a telecommunication service invoice should tell them how much they’re spending, what they’re paying for, and what services they currently have. The reality is that telecom invoices are designed to tell you the amount you owe, not why you owe that amount, making it all the more important to understand how telecom billing systems work.

A Quick Introduction to Telecom Billing

Even the phrase “telecom billing” means a lot of different things to different people. It isn’t easy to nail down, and it only gets trickier the deeper down the rabbit hole you go. To the IT team, telecom billing drives many of the decisions behind the technology they support. To the finance team, telecom billing is an overhead expense that needs to be closely monitored (but many lack the visibility to do so). To the executive, telecom billing means the cost of keeping the company connected. To the provider, it means how much you owe them.

See how each party brings a slightly different perspective to the table? That’s probably why it makes more sense to start with what telecom billing isn’t. Telecom billing isn’t your invoice. If you’ve ever tried translating your invoice into understandable language, you know that’s almost impossible. They don’t tell you why you’re being billed that amount, and no two ever look the same.

That’s why when you’re trying to make sense of telecom billing systems work, the last place to start is by sitting down and reading through pages of invoices. (Hint: you don’t have time for that, and automated systems can read them faster to identify errors than you can).

Instead, the best place to start is by understanding how the costs are calculated and what you’re paying for.

What Is a Telecom Billing System?

In the simplest terms, a telecom billing system includes all the policies, processes, and data a service provider relies on to calculate how much you owe them.

Each provider has a different way of calculating rates, billing, labeling rates, and naming fees. Even if you manage to make sense of one provider’s billing system, that rarely translates to clarity with other providers.

However, one thing all billing systems have in common is that they consist of many moving parts, including:

• Billing and rating: A process managed by a billing engine called an Online Charging System (OCS) to calculate what you owe by converting call or usage data into a monetary equivalent.
• Tariffs and fees: Each time you use a provider’s service, that service is subject to a predetermined surcharge, taxes, and additional service fees.
• Disputes and adjustments: When discrepancies arise between what you paid and what you should have paid, any compensation is credited or debited to your account.
• Discounts and prorating: Did the sales team promise you an incredible introductory rate? Maybe you opted out of a service that you already prepaid for. Those adjustments are reflected in your account balance.
• Service changes: When you start, end, or switch services, the billing system factors in for those changes.
• Payment processing: The system a carrier or provider uses to process and track your payments.

Starting to understand why telecom invoices aren’t as simple as a single number at the bottom of the page? There’s a lot behind that number, but telecom invoices aren’t designed to explain or even outline those determining factors.

Common Bill Cycles in Telecom

Along with the handful of factors dictating the final number that appears on your invoice, there are a number of different billing cycle options that affect your invoice, including

• Prepaid Billing: With prepaid billing, you generally pay upfront to start using a service. In place of invoices, your account is charged in real time based on usage, and you get a statement of charges on an ongoing basis.
• Postpaid Billing: Postpaid billing describes your conventional telecom billing option. You use services and are charged based on usage over a given billing cycle. At the end of the billing cycle, the provider’s telecom billing system generates your invoice and sends it to you. The most common bill cycles are 30, 45, 60, or 90 days.
• Convergent Billing: Instead of separating each invoice by service, convergent billing consolidates some or all service charges into a single invoice, intended to provide companies with a unified view of billing over a given cycle. The reality of the situation is that convergent billing can further complicate an already confusing invoice.

Need to make sense of telecom billing? Our Technology Assessments make it easy. Discover how here.

How Telecom Billing Software Works

Telecom billing software works by connecting to a charging platform called an Online Charging System (OCS) that charges every transaction in real time. Whenever a device on your network interacts with the telecom system, the OCS tracks and records that interaction based on usage and interaction type (e.g., data usage, call minutes) as a Call Data Record (CDR).

Because data is recorded in real time, the chance of billing errors is reduced, but those numbers still need to be reconciled with the other billing factors outlined above in order to accurately determine what you owe.

With prepaid billing, the OCS charges your account in real time, and if you have a credit limit, you are notified when you’ve exceeded that limit as soon as it happens. You can then decide to add credit to your account or change services.

With postpaid billing, the OCS tracks your account balance, compiling an invoice over a given billing cycle while deducting or adding any discounts, taxes, and fees. You then receive that invoice at the end of the billing cycle, but just looking at the invoice, you may still not understand what you’re paying for, or more importantly, why you’re paying for it.

What Happens When You Don’t Know What You’re Paying For?

If telecom billing systems were easy enough to understand after reading a single blog, Bluewave wouldn’t exist. With the above information, you may be able to understand how your telecom invoices are calculated, but you probably still aren’t equipped to identify billing errors, eliminate redundant services, or even know what you’re paying for. When that happens, we can almost always guarantee you’re overpaying on underperforming technology.

Bluewave eliminates that problem with a technology assessment, and we promise you’ll learn a thing or two about telecom billing along the way. Send us a message when you’re ready to start saving and reinvesting those savings in higher priority technology initiatives.

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