We know legacy voice billing systems certainly had their limitations. One was static billing blocks, or the minimum period of time each call was broken down to and subsequently billed. Whilst the original three-second pulses may have been used to measure and bill fixed line voice calls, the minimum period billed for was between one and three minutes, depending which country you were in.
With the introduction of convergent billing systems in the nineties came the flexibility to bill in increments as low as one second, but fixed line operators were not falling over themselves to introduce such a revolutionary change, especially with little or no competition.
Enter deregulation and mobile network operators and everything changed. The most obvious way to tempt customers away from the incumbent operator was through price competition. Sure, they introduced fancy new product lines, or plain old voice in a different wrapper, but it was the offer of cheaper calls that was their main drawcard.
Of course, price erosion was not sustainable in the long term, and the smart guys with the new-fangled billing systems came up with some very creative ‘guerrilla’ tactics to woo customers.
MCI’s ‘Friends and Family Plan’ has gone down in the annals of billing history as the single biggest success story in terms of using billing as a ‘guerrilla’ marketing tool. The ability to offer low price calls between nominated family members and friends not only won the primary account business of the early adopters but soon attracted all the members of the nominated group to join in as well. AT&T was caught out and took over six months before it could develop the same flexible billing to combat the attack. By then the battle was well and truly won.
A favored ‘guerrilla billing’ method used was the ‘flag-fall’ tariff that operated something like its old-style taxi meter namesake. Clever analysts worked out that most mobiles calls were under two minutes in length so they offered calls that were loaded for the first two minutes then dropped dramatically for calls any longer. Customers thought they were on a winner because the ongoing rate was so low, not realising that they were being hammered for the bulk of their short calls.
But it was the ‘billing per second’ ploy that reaped the greatest early benefits in attracting mobile customers. As mentioned previously, billing in three or one minute blocks was the norm for fixed line. No matter how long a call was it was rounded UP to the next block. Financially astute tightwads went as far as timing their calls to maximize their call time and minimize their bills.
When billers announced that the minimum billing period would drop to 30 seconds, and even down to one second, the savings became immediately apparent to most consumers. ‘Why pay for time on a call you don’t use’ was the catch-cry. That was all well and good for the customer but to ensure that there was no loss of revenue for the operator, some clever billing people tweaked their rating engines to round up the value of call not from 0.5 cent but from 0.1 cent. Some very naughty characters went as far as rounding up to the nearest 5 or 10 cents, but that was quite risky. Nevertheless the rounding up ‘guerrilla’ billing method reaped millions when sheer call volumes were taken into account.
It is interesting to see that some CSPs, like Telstra in Australia, are changing back to ‘per minute billing’ from 30 second blocks on fixed line calls. One wonders about the logic of this apart from the fact that it will probably garner more revenue from the vestiges of a dying voice sector.
We are keen to hear of any other ’guerrilla billing’ techniques. Do you know of any?
Have seen the “rounding up to the next block” method used; calls were billed in 20 second charging steps. Also, have seen many cases of “setup fee” or “connection fee” for prepaid; i.e. once a call is connected you charge a set fee irrespective of the duration.
First 30 seconds charged at a fixed rate irrespective of duration for international call.
I guess all these line the pockets of the telco – but increase the complexity of tariffs (mentioned in one of Eric’s previous posts) which has other effects on communication with customers and retention etc…