NEW YORK, Feb. 4, 2009 (GLOBE NEWSWIRE) -- Declining capital expenditure investments, resulting from the economic downturn, combined with new revenue streams and the roll-out of next generation platforms are accelerating the risk of revenue leakage for wireless carriers, according to a new PricewaterhouseCoopers report: Beyond the Horizon: 2008 Global Wireless Industry Survey. The report is based on analysis of a survey of 18 large wireless carriers in the U.S., Canada, Europe, Asia-Pacific, and South America. According to PwC, large carriers' revenue management spending is mainly dedicated to minimizing leakage within core billing of primary service networks. The report highlights the urgency for carriers to re-examine existing revenue management strategies across all customer and content partner touch-points.
"The economic crisis is driving carriers to reduce workforces and capital expenditure. At the same time, consumer price sensitivity is rising, increasing the likelihood of subscribers turning off landlines, and switching to larger 'bundled' savings and even prepaid service plans," said Pierre-Alain Sur, partner, PricewaterhouseCoopers. "In this new environment, companies must recognize that the opportunities and risks go far beyond billing and servicing of voice and data access and they need to prevent and capture revenue loss across the entire revenue cycle, including R&D, sales and customer care."
Loosely defined, revenue leakage occurs whenever carriers fail to capture all the revenue they have earned in a manner that is timely, accurate and complete. Carriers are recognizing that revenue management plays an important role in ensuring adequate internal controls on financial reporting and in minimizing leakage. All 18 carriers that took part in the survey reported that they have a dedicated revenue management function. Moreover, 65 percent of the respondents view revenue management as "very important" while 35 percent view it as "important" to the business.
The survey finds that 56 percent of the respondents reported that more than 90 percent of their company's annualized revenue stream is subject to review by their revenue management program. However, two-thirds have 10 or fewer resources dedicated per $1 billion of revenue, and these resources are primarily focused on billing and servicing of network activities. At a time when carriers are actively looking to scale back on staffing and capital expenditure, they need to be vigilant to not only protect their revenue management functions, but also to expand the scope and scale of revenue management across the entire revenue cycle to include the research and development (R&D), sales and marketing functions.
Carriers are benefiting from new revenue streams and are ramping up wireless content partnerships and collaborations, as consumers are increasingly accessing a wider range of content, viewing ads and even conducting purchases via their mobile devices. On average, data revenue increased by more than 50 percent for all responding companies on a year over year basis.
These new types of revenue streams and business models with content partners are increasing billing complexities and triggering greater risks of revenue loss. In fact, respondents to the survey viewed "Unbilled access charges for content" (e.g. games, advertising, TV) as the leading opportunity for revenue management projects.
"In this multi-service era, characterized by a maze of different pricing plans, rapid introduction of next generation services and content, tighter regulations and zero customer tolerance for billing errors, carriers need to re-evaluate their revenue management strategies across their own enterprise and with their content partners," said Paul Rees, Global Communications Industry Leader, PricewaterhouseCoopers. "Carriers need to ensure that they have the strategies and tools in place to capture all mobile transactions, accurately reimburse third-party partners and properly bill the consumer."
Large carriers are rolling out next generation platforms amidst organizational structures and cultures that have yet to completely maximize a multitude of consolidation and deal integration projects. According to the survey, 63 percent of the respondents indicated that they have completed a business combination in the past three years. Companies still have plenty to do to fully integrate these entities across billing, service delivery, finance and customer care. Many continue to operate acquired businesses separately for the sake of easing customer care management. However, this approach comes at the expense of cost savings, customer service and of course revenue leakage.
The PricewaterhouseCoopers Wireless Industry Survey is an annual publication that covers the financial and operational reporting policies and practices of wireless telecommunications service providers. The 2008 survey includes companies in the U.S., Canada, Europe, Asia-Pacific, and South America. The survey is conducted by PwC's Communications Industry Group, which prepares the survey questions, solicits company participation and compiles and analyzes the survey results. Companies participate voluntarily and the individual survey results are kept confidential by PwC.
The full report is available at www.pwc.com/horizon.
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