Telecom Rating Engines: The history and business
Telecommunications is considered all sorts of communication between users. Television, radios, phones , messages transferred from one point to another are examples of telecommunication services. The internet is the largest example of a telecommunications network. Some of these services may be provided with wires. Some with fiber optics or radio towers or satellites. A telecom operator manages the network and infrastructure and provide services to its subscribers to have the best experience connecting with the world.
But everything has a price, any telecom company nowadays offers subscribers different rates per minute , different plans and different tariffs according to the services that is provided to the subscribers. But what was the evolution of this rating criteria? Was it always the same ways of rating and charging?
Introducing the rating engine. The rating engine is the component of telecom charging and billing systems that calculates the price of any event occurring in the telecommunication network. Rates differ significantly whether it was an International phone call, National phone call, SMS or MMS, also fixed lines.
Rating engines faced 6 different eras that was challenging for a robust rating engine.
In the early days of telecommunications, rating systems were pretty much all handwork -manual- and it was EXPENSIVE. Calls were typically manually rated by operators based on factors such as:
AT&T had ads from the early 60's announcing direct long-distance dialing to several countries. Calls to the UK were around $3.00 per minute for the first three minutes. France and Germany were a bit more.
With the evolution of computers and networks , we entered the Computerization (1970s-1980s) era. Rating systems began to be automated. Early computerized rating engines were developed to calculate charges for telephone calls automatically. Engineers working on early computerized telecommunications systems, such as those at Bell Labs and IBM, contributed to the development of rating engines. Some basic rating algorithms were implemented based on call duration , distance and other factors such as Time-Based Rating,Time-of-Day Rating and Destination-Based Rating and others. Implementation and usage of these algorithms will be discussed in separate articles.
Sprint - which was a telecom giant (acquired now by T-mobile) - had day rates, evening rates (starting at 7 pm), and night rates (starting around 11 pm or 12 am). A typical evening rate was in the ballpark of 25 to 50 cents per minute.
Then the 1990s marked a period of significant transformation in the telecommunications industry, characterized by digitization and deregulation. Rating engines evolved to accommodate new services and business models. Key developments included the rise of mobile phones which led to the development of engines capable of handling mobile voices and messaging services. There were a lot of issues facing the telecom industry caused by strict governmental regulations for telecom industry following the second World war, In the 1990s there were some movement for deregulation in many countries - which is the process of reducing or removing government regulations and restrictions in a particular industry or sector of the economy - led to increased competition and the need for flexible rating systems to support new pricing models. Entrepreneurs and innovators in the telecom industry, such as Craig McCaw (founder of McCaw Cellular Communications) and Masayoshi Son (founder of SoftBank), played pivotal roles during this period.
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The telecommunication industry has been in the field for a while now. The 2000s saw the convergence of telecommunications with other industries, such as media and technology. Rating engines adapted to handle bundled services and complex billing and charging structures and introduced:
In prepaid billing systems, the subscriber buys a given amount of credit (Call duration, Internet data volume, number of events) and is then allowed to use the corresponding network resources as long as their account is in credit. Rating engine receives subscriber usage records from the network elements and adjusts the subscriber credits. When the credit is used up, network usage will be restricted. A real-time rating engine is necessary to check the allowance of the subscribers' transactions.
Then The transition to IP-based networks brought about new challenges and opportunities for rating engines, some developments have emerged such as VoIP and Data Services which the Rating engines had to adapt to handle Voice over IP (VoIP) calls, data traffic, and multimedia services.
In recent years, rating engines have embraced advanced analytics and artificial intelligence to optimize pricing strategies, detect fraud, and personalized offers. Telecommunication companies analyze subscriber behavior and usage patterns to anticipate future needs and to offer personalized plans and promotions, improving customer satisfaction and loyalty.
Throughout these stages, rating engines have played a crucial role in enabling telecom operators to monetize their services effectively.
Overall, In business point of view. Rating engines take into account a lot of parameters including:
Whats next?
I've separated the Rating engine: History and business point of view from the technical point of view to complete it in a later article which will talk about some rating algorithms and how millions of subscribers are rated in real-time procedures!