Billing for the unknown service : Usage-based IP billing without a strong business model puts service providers on the edge.(Internet/Web/Online Service Information)

A few years ago, building out a broadband network was all the rage. Today, now that most everything is built and ready to go, there is a more complicated challenge: making money.

Reaching profitability is the No. 1 goal of most service providers -- at least those that remain after the recent stock market roller coaster ride. At the root of this seemingly elusive business model is the ability to effectively collect payment from customers for their use of IP services -- usage-based billing.

In the past, the market rewarded first movers, with service providers gathering kudos for the number of eyeballs, Web hits or market share, says Scott Swartz, president and CEO of MetraTech, a Web services billing provider. "Now it is the 'first prover' that impresses -- putting a business model together that shows the revenue line and the cost line at some point merging."

In addition to this struggle, there is pressure building from an economy on the brink of recession, says Swartz, warning that "everyone is going to have to clean up their act."

John Konczal, vice president of business development for Telution, a billing and customer care software provider, agrees. "I personally think the way the industry is shaking out right now is really scary," he says. "Service providers are in for a rude awakening."

As service providers move away from flat-rate, unlimited-usage platforms, the search is on for the killer application to make their IP businesses profitable.

Since the costs involved in building an IP-based network are in the million- to billion-dollar range, and the service and management of the system is more complex than traditional voice-switched networks, focusing on distinctive billing methods will be important in obtaining maximum return on investment. Also, in marketing services based on their individual value to the user, service providers will need to be able to bill for all types of transactions smoothly and simultaneously, while maintaining a high quality of service. A solid billing …