Rating & Discounting: A granular way of re-defining settlement
CSP’s are regularly seeking new ways to drive user acquisition and revenue growth. As the ecosystem is moving towards partnership-based models for launching new services, communication service providers are partnering with new age digital natives to bundle their services along with theirs and create a holistic value for the end consumers. But the real question is – is it enough to bring in new partners without improvising their subscription and settlement models? This article tries to provide the answer to this question.
Let’s, take a step back and see where the actual problem with current settlement models is. The first problem lies with – clashing of Partner’s digital offering with CSPs’ traditional way of settlement. Even though partners come with their subscription or modular services, CSPs’ still rely either on percentage-based revenue settlement or fixed revenue kind of settlement. Let’s take an example to get more clarity, AWS lambda services are charged with functions run time or resource utilization. If AWS and CSP decide to partner together in a B2B2X scenario to offer cloud service in a region, where CSP’s will have multiple direct partners or resellers in the market to sell the service, the only way CSP’s can do a settlement with a channel partner in the market is either by revenue sharing or fixed charges.
The second problem is with CSP’s legacy system, which has not evolved to meet the requirements of new B2B settlement models. CSP’s still rely on their billing system, designed based on their end customers’ needs. However, they wholly ignore the fact that they need to build similar models for their partners. End customer models have evolved so much that operators can bundle their offering as per the customer’s taste, the penetration rate in a region, customer loyalty, and more. Whereas for a partner who provides these services, there is a flat revenue share model that exists, irrespective of whether one partner might perform better than the other partner.
The solution lies in changing the perspective of CSP’s look at Partner’s or B2B2X settlement modeling. Let’s look at the picture below of the reseller model to overview the B2B Settlement model.
Figure 1: B2B2X Settlement Sample Scenario
In the above scenario, the Content partner provides various content services to end customers via the CSP platform. While Content partner offering is modular, there is no way that CSP can also do a modular settlement with their partners but to rely purely on revenue-based models without looking at market dynamics such as a penetration rate for a service in a region.
This is where CSPs need to Build Their Models (BYI), which can help them define the economic models for settlement, not just based on the flat revenue. A settlement model, designed based on market dynamics such as subscriber penetration rate in the region, time of the day, the volume of the traffic, penalties, tier-based models, etc.
In conclusion, Let’s take a re-look at the B2B2X settlement scenario with these economic models in place.
Figure 2: Economic Modes in B2B2X Scenario
These economic models give the CSPs and their marketing team the freedom to granularize their settlement models at different value chain layers. For instance, CSPs can choose different economic settlement models for their content partners, whereas a different model for their DCB partners is stated in the above diagram. This will ensure that Operators have multiple models to play with to maximize their revenue and provide a different settlement model for different partners using the same system.
To summarize, with the growing need and demand of the bundle offer, CSP mustn’t be just looking into bringing new partners in their ecosystem and making sure that the right partners are rewarded, while also keeping their focus on revenue maximization.
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Adesh Balyan is a business consultant responsible for driving strategic and business development activities for Subex, focusing on B2B partner management, partner ecosystem, and Digital Billing & Settlement while engaging in digital transformation consulting for telecom and other B2B enterprise commercial organization.