Types of Charges in Telcos - A Complete Beginner's Guide

Types of Charges in Telcos - A Complete Beginner's Guide

Revenue Capture & Processing are the key elements for the survival of any Service Provider. And it is common for both Telcos and Non-Telco Service Providers.

Typically Telcos Capture Revenue via Service Kiosks/Outlets, Online Sales Channels, Partner Channels, Subscription-based models, Networks (via Mediation & Real-time Usage Processings), Installation & Service Setups, Early Termination Charges, Value Added & Premium Services, Interconnect & Roaming Agreements, Selling Devices & Bundles, Leasing Infrastructure/Platform/Network sites, MVNO/MVNE Models, etc.

Telco Revenues are predominantly Processed by Rating and Billing modules of a Convergent Billing System. After processing, Revenues are realized into the Books (or Ledger Accounts)

In my previous articles, I have covered Telecom Rating in depth. You can refer them if you wish.

Telecom Billing is a complex topic and I will write multiple articles on this topic.

Coming back to the main topic of this article - Types of Charges in Telcos

There are mainly three types of Charges:-

• Usage Charges
• Subscription Charges
• One Time Charges

Types of Charges in Telcos

Let's cover them one by one.

1. Usage Charges

Usages Charges can be calculated anytime, based on the actual Service consumption by the Subscribers. Usage charges can be applied in real time or non-realtime.

There are two types of Usage Charges:-

i) Online or Real-time Charges - Please read my previous article Basics of Telecom Online Charging to know more about it.

ii) Offline or Batch Charges - Please read my previous article Basics of Telecom Offline Charging to know more about it.

(Click to enlarge) Offline Charging, Mediation, Rating, and Billing in a nutshell

How Usage Charges are recorded & processed:

Rating Engine plays an important role in processing the Usage Records for both Online & Offline Service usage. 

Real-time Events are captured by Online Charging Server (OCS) by handling Online requests/responses from Network Elements. These Usage records are then processed by Rating Engine for the actual balance impact to the Customer Account.

Example - Data browsing

Batch Events are captured & processed by the Mediation module. Mediation records are further rated by Rating Engine.

Example - Postpaid Mobile, Roaming TAP Records, Interconnect Records

The Events are rated and stored into the Customer account balance in the form of Usage charges. Charges applied are as per the configured Price Plans.

During Bill Run, Billing Engine processes all the Usage records (stored in Usage Bill Item) and adds the total charges into the Bill amount. 

2. Subscription Charges

Subscription-based Charges are applied at a pre-defined interval on a recurring basis based on the Commitment.

Example - Monthly Postpaid Charges, Quarterly Broadband Charges, etc.

Before providing Subscription-based Services to the Customers, Service Providers check their Credit history and may request Deposits so that they can reduce any exposure of Credit risk.

There are mainly the following types of Subscription Charges:-

i) Cycle Forward Charges - Here the Charges are applied in advance. 

Example - for Monthly Cycle Forward Cycle, the Charges are applied on the 1st day of the bill cycle or the 1st day of the Service activation.

ii) Cycle Arrears Charges - Here the Charges are applied at the end of the Bill Cycle. 

Example - for Monthly Cycle Arrear Cycle, the current month Subscription Charges are applied on the 1st day of the next month Bill Cycle.

Above Recurring Charges can be prorated, depends on the Bill Cycle or BDOM (Billing Day of the Month) and day of Activation or Termination.

How Subscription-based Recurring Charges are recorded & processed:

Subscription-based charges get recorded as recurring rated events (e.g. Monthly Cycle Forward event) in the Billing database. Charges applied are as per the configured Price Plans.

During Bill Run, Billing Engine processes all the Subscription records that are stored under a relevant Bill Item (e.g. Cycle Forward Bill Item) and adds the recurring charges into the Bill amount. The Subscription Charges depend upon the Billing Frequency.

3. One Time Charges

These are a form of Subscription-based Charges where the Charges are applied only one time at the time of Service Purchase or Consumption.

Example - Paying fees for Fiber Connection Setup, Purchasing Device from the Sales Portal, etc. 

One-time Charges are mainly non-prorated. So, Subscribers have to pay them fully irrespective of the Bill Cycle or BDOM.

How One Time Charges are recorded & processed:

One-Time Charges are applied at the time of actual Purchase/Activation. Charges applied are as per the configured Price Plans.

During Bill Run, Billing Engine processes all the One Time Charges records that are stored under a relevant Bill Item (e.g. Purchase Bill Item) and adds the total charges into the Bill amount.

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In one of the upcoming articles, I will detail out how these different charges can be applied for 5G Services. 

Kindly share this article with your friends and colleagues. Feel free to like and comment. Happy learning.

Glossary: BSS (Business Support System), BDOM (Billing Day of the Month), MVNO (Mobile Virtual Network Operator), MVNE (Mobile Virtual Network Enabler), AAA (Authentication, Authorization, Accounting), TAP (Transferred Account Procedure), OCS (Online Charging Server)