Implementation of Convergent Billing Solution by Mobile Operator MegaFon

September 27, 2006

Igor Pepelyaev, MegaFonMaxim Samsonov, Peter-Service

Russia and CISMoscowPopulation: 17.0 mln.MoscowPopulation: 17.0 mln.Central

Population: 21.0 mln.

CentralPopulation: 21.0 mln.

SouthPopulation: 22.9 mln.

SouthPopulation: 22.9 mln.

VolgaPopulation: 25.3 mln.

VolgaPopulation: 25.3 mln.

SiberiaPopulation: 15.3 mln.SiberiaPopulation: 15.3 mln.

Far EastPopulation: 11.4 mln.

Far EastPopulation: 11.4 mln.

UralsPopulation: 18.3 mln.UralsPopulation: 18.3 mln.

NorthwestPopulation: 14.0 mln.NorthwestPopulation: 14.0 mln.

TajikistanPopulation: 6.8 mln.TajikistanPopulation: 6.8 mln.

Mobile Russian market growth forecast till 2010:

Market growth is slower accordingly to market saturation, which is obvious from the end of year 2004.

Forecasts tell that nominal number of mobile subscribers will not succeed 174 million SIMs.

MegaFon has to ensure 20% absolute market share which is equal to 34,8-35 million subscribers in 3-4 years period.

Moile nominal subscribers growth forecast for Russia market

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Penetration Subscribers, thsd

Russian Mobile Market Breakdown July 2006

Total Subscribers Russian Market

BeeLine; 47; 33%

MegaFon; 27; 19%

Other; 20; 14%

MTS; 49; 34%

MTS BeeLine MegaFon Other

«Big-III» is a group of three leading Russian mobile operators (MTS,Vimpelcom, MegaFon)

as of July, 2006as of July, 2006

Russia SIM Penetration

98,5%

We Serve Over 26 Million Subscribers Nationwide

Data as of 02.07.2006

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We serve over 26M We serve over 26M subscribers in 79 regions subscribers in 79 regions

(94% of Russian (94% of Russian population) population)

We serve over 26M We serve over 26M subscribers in 79 regions subscribers in 79 regions

(94% of Russian (94% of Russian population) population)

Implementation of Convergent Billing Main goals of project

• Improve efficiency of unified marketing policy in subsidiaries

• Unify financial documents and reporting in all regions

• Introduce new services for prepaid subscribers

• Reduce costs for system operation

• Improve system reliability through minimizing risks of financial losses

Choice of Solution Provider

MegaFon’s requirements to convergent system:

1. Maintaining all the existing services and conditions offered to prepaid subscribers.

2. Fast implementation

– 8 companies. 8 billing systems.

– Geography of business (10 time zones!!!)

3. Compatibility with the existing external systems of Value Added Services, Customer Care (Loyalty program, OLAP, CRM), reporting and analysis.

4. System scalability and prompt expansion.

Why Peter-Service?

1. The only Russian vendor providing the unique real time solution which meets all the operator’s requirements (including unexampled scale of the system)

2. Real time – extending of the existing system instead of its substitution

3. Customer-oriented policy and outstanding follow-up customer service

4. Wide migration experience of the solution provider

Integration of Convergent BIS

Creating pilot zone for trial commercial operation

The company with smallest subscriber base, Mobicom-Center, was chosen as a pilot zone.

In 2004 the existing billing system was upgraded with BISrt, and subscription of customers was started for tariff plans with

real-time control.

Creating task force in MegaFon’s HQ

Analysis of used switches

Analysis of used CAMEL phases

Selecting provider of CAMEL Gateway

– Testing with CAMEL Gateway and used switches

Developing project strategy

– Planning sequence and time-line for implementation

– Preparing uniform requirements for billing equipment.

– Planning projects on integration of necessary software (ТАР3, HRS etc.)

– Developing uniform business-processes for rendering service to prepaid subscribers

– Preparing migration strategies for the companies using prepaid solutions

– Coordinating implementation dates

Integration of Convergent BIS: Developing implementation concept for convergent solution

Implementation sequence of Convergent BIS was defined by the following factors:

• Availability of prepaid solution and the need to migrate subscribers to CBIS

• Switching equipment in use

• Size of subscriber database

Integration of Convergent BIS: Selecting sequence of implementation in regional companies

All MegaFon’s regional companies were divided in 2 categories:

– Those that have prepaid solution and need migration

• Moscow (about 2М prepaid subscribers),

• Caucasus (about 4М prepaid subscribers),

• Nord-West (about 2М prepaid subscribers)

– Those that do not have prepaid solution and do not need migration

• Siberia

• Far East

• Volga

• Ural

Integration of CIBS: Selecting implementation sequence in regional companies

Specifics of Prepaid Regions

• Adapting current Rate Plans of prepaid customers to CBIS

• Developing mechanisms for subscribers migration from existing prepaid platforms

• Preparing requirements and algorithms for real-time integration of part of the solution into existing infrastructure

• Developing new requirements to billing equipment that include multiple increase in load

For other companies the first priority was to get new means of credit control.

Actual Implementation Sequence

• Caucasus (migration of 3.8М subscribers from 2 existing platforms)

• Moscow (migration of 1.8М subscribers from existing pre-paid solution)

• Volga

• Ural

• Far East

• Siberia

• Nord West (migration of 1.8М subscribers from existing pre-paid solution)

Summary of Analytical Phase of Project

• Common plan of implementation in OJSC “MegaFon” regional companies

• Individual implementation plans for each company, taking into account

characteristics of the operator (business plan, equipment, infrastructure)

• Migration strategies – phased and one-time

• Uniform business plans of prepaid subscribers service

• Uniform requirements to billing system hardware

• Uniform requirements to classification of the required software

Migration Strategies Phased Migration

Advantages

• Gradual growth of system load

• Monitoring possibility

• Possibility of “rollback” (return to previous scheme)

Disadvantages

• Development of a substantial volume of integration software to support data streams routing between several systems

• Necessity to change subscriber profile in HLR

• Different subscriber service conditions due to differences in rounding schemes etc.

• Project cost increase due to its deadline extension

Migration of subscriber base by given parts

Migration Strategies One-time Migration

Advantages•No necessity to conduct staged integration of several systems serving pre-paid subscribers

•No difference in conditions of service for the customers

•Short timeline of the project

Disadvantages

•Practically, “rollback” is impossible (return to previous scheme) •As compared to staged migration, major risks related to failures in services.

Migration of all subscriber base within the given period

without disruption in services

Project Implementation Problems

Problems which we faced during project implementation

• No opportunity to get parameters of the operator’s real network in laboratory conditions – problems related to the reaction of system under load were solved “in the field”.

• Non-optimal planning of network architecture and , as a result, increasing load on billing solution.

• Large scope of integration works at the junction of Camel-Gateway-MSC - nuances of implementation of CAMEL on the switches of various vendors

Project Results

• The project is implemented within fixed deadlines.

• Peter-Service Convergent billing solution covers with service over 27М MegaFon’ subscribers across the whole Russia.

• Unification tariff plans schemes for subscribers of the whole country

• Lowering FRAUD from Value Added services for ALL types of subscribers

Charging Convergence

• Convergence in one billing system of all existing methods of service and charging subscribers

• No market segmentation (between prepaid and postpaid, among accessible services etc., among servicing models) :

– Common subscriber database – Unified product catalog– Common reporting, analyzing etc.– Common marketing tools– Flexible fraud control tools

• Cutting OPEX through uniform billing system management

• Provides ACCESS/MOBILITY convergence for subscribers.• Not only voice, but packet data access convergence.• Ability to implement Quad-Play scenario (FMC + Triple-Play).• Access convergence

Fixed-Mobile Convergence (FMC)

o Optimizing call cost using different access types (WiFi/VoIP, GSM)

o Offload GSM base stations for Mobile office and Mobile VPN

o Combining strong points of both fixed and mobile communication

o New business scenarios:• Seamless

WiFi/GSM/Fixed Call transfer

Converging things together : 1+1 > 2

• Huge potential for new services

• Reducing churn

• More attractive to customers

• Кey business case for IMS deployment

• Makes possible service convergence

Requirements to Convergent Billing Domain

•Support for online/offline Balance manager– Reserve Units/currency– Debit Units/currency– Balance inquire– Wallet support.

•Support for convergent charging subsystem– Session based with unit reservation– Immediate event charging– Event charging with unit reservation.

•Ability to interact with platforms such as CPA etc.

•Support for both online and offline charging protocols:– Diameter core protocol and Diameter Credit Control Application– Radius protocol for legacy equipment– GTP/GTP’ for 2.5G packet data (GGSN)– OSA/PARLAY