As the summer holidays draw to a close, David Sharpley, Senior Vice President at Bridgewater Systems, offers a timely guide to the four negative consequences of mobile bill shock for operators, and considers how to prevent them

Were probably all familiar with at least a few high profile cases of bill shock – the phenomenon that describes how customers feel when theyre landed with a higher-than-expected bill. But beyond the eye-catching headlines, bill shock has profound effects on the mobile business. Smart operators have recognised the wide range of negative impacts bill shock can have on both the customer and commercial experience, which is why theyre taking steps to eliminate it today.

Bill shock is spreading
The proliferation of Smartphones, increasing mobility, and a wider range of mobile data services, means the mobile market is ripe for an increase in bill shock. This is largely being driven by the complexity of mobile tariffs, combined with a lack of customer understanding about the consequences of these tariffs. At the heart of the matter is the opaqueness of mobile tariffing: customers simply do not understand how much some data services – particularly when roaming – will cost. When theyre landed with a huge bill several weeks later, theyre shocked and angry in equal measure.
Nor is this phenomenon solely a feature of the postpaid market: the equivalent for prepaid customers is having their credit disappear far faster than anticipated. While prepaid customers may not suffer a huge bill at the end of the month, they may experience substantial inconvenience when they discover they have no credit left, and they may subsequently become wary of using data services.
Bill shock has four main negative consequences for operators, and represents a unique threat to both the customer relationship and the mobile operators business, at a time when operators need, more than ever, to retain subscribers and maintain revenues. Fortunately, there is a straightforward way of addressing these consequences and turning a negative into a positive.

Consequence No.1: shocking publicity
Many mobile markets are competitive, and mobile operators spend considerable sums trying to attract and retain customers. The last thing they need is negative headlines that associate their carefully crafted branding with extreme cases of bill shock.
Two examples of bill shock from the UK which are now internationally infamous concern British holiday-maker Iayn Dobsyn, and Ian Simpson from Darlington. Iayn Dobsyn went on holiday to Portugal and decided to download his favourite TV show. The consequence was a bill for 31,500. Ian Simpson, meanwhile, used his mobile as a modem for his laptop, thinking that his unlimited data plan would cover it. It didnt, and the result was a bill for 27,322.
The fall out of such cases is that the mobile operators involved have now become associated with outrageous charges and confusing processes. The question in most peoples minds is not How could he spend so much? but rather, Why didnt the mobile operator tell him what he was spending before it got this bad? The fact that in virtually all cases its the customers, rather than the operators fault, is irrelevant. In the eyes of the public, responsibility is placed firmly on the operator for not warning the customer about the charges, rather than on the customer for not understanding them.

Consequence No.2: increased costs
Bill shock inevitably leads to a practice that has been termed bill forgiveness. This is where the mobile operator reduces the subscribers bill to avoid further bad publicity and costly legal action, and also because the customer usually cant afford to pay. Iayn Dobsyn, for example, saw his bill reduced from 31,500 to just 229.
The consequences of reducing or cancelling charges retrospectively, however, are that costs rise for mobile operators themselves, who may be out of pocket due to interconnect and roaming charges they still have to pay to partners. Whats more, dealing with the customers complaint, and coming to a compromise with them, further drives up costs. From a revenue assurance perspective, as well as a customer care perspective, mobile forgiveness is a very poor substitute for getting it right first time.

Consequence No.3: increased regulation
Widespread customer dissatisfaction, added to a large number of high-profile cases of bill shock while roaming, has resulted in the EU legislating for limits on the charges mobile operators can make for roaming services. This same legislation also makes it a legal requirement for operators to enable customers to preset usage limits and be alerted when thresholds are reached. The deadline for compliance is March 2010, leaving very little time for operators to implement the technology and processes needed to comply. There is also a possibility that similar regulation will be applied in other parts of the world, if it is successful in Europe. 

Consequence No.4: inhibited demand
Possibly the worst consequence of bill shock is that it inhibits the take up of next-generation services – the very services that operators were hoping would compensate for falling voice revenues. Customers who are unclear about service charges, or worried about running up large bills, often control their expenditure by simply not using some services. The most valuable customers of all – enterprises with many thousands of lines –  control expenditure by imposing blanket bans on certain data services. This is far from ideal for both the mobile operator and the enterprise, as it may very well affect the enterprises productivity, as well as the mobile operators revenues. However, this is often the only means the enterprise has to ensure that they dont blow their budgets.
Once a customer starts to avoid using a service because its perceived as too expensive, this is a hard mindset to break, and it results in lower demand for more profitable data services. Revenues and profitability are both affected, resulting in negative commercial consequences, such as a depressed share price, or the undermining of the business case for investment in new technology.

The solution
Bill shock is very rarely a failure of the billing technology. Far more commonly, its the result of poor communication and understanding of tariffs and usage. Policy control technology directly addresses this problem by putting customers back in control of their spending and usage. Customers and operators can now set personalised controls. Customers can be alerted when key thresholds are reached, and can gain a far better understanding of their usage. Policy control technology not only enables mobile operators to comply with EU roaming legislation and avoid the dreaded mobile bill shock, it also goes beyond this to become a valuable service in itself.
Customers value the transparency and control provided by the technology, and are able to benefit from added features, such as proactive, personalised marketing and offers. Now, a customer roaming in Portugal can receive special offers such as day roaming passes or a personalised rate. They might receive useful information about their locality or recommended services (such as the top five restaurants to visit in the area, along with a discount voucher).
Policy control improves the relationship between valuable enterprise customer
s and their mobile operator. When policy control technology is deployed, businesses are more likely to trial and use a greater variety of services, as they understand the costs involved, and are in control of them. Now the IT department is able to set its own policies and monitor its own usage – enterprises no longer have to call their mobile operator. This creates a win-win situation, as it delivers greater control to the enterprise, but also reduces the cost of customer service for the mobile operator.
So if youd like to avoid the embarrassment and negative commercial effects of bill shock, comply with EU roaming legislation, explore new ways of differentiating your customer experience, or tap into valuable incremental revenue streams, then maybe you should find out more about how smart policy control can help you.