Performance of hot billing mobile prepaid service

Abstract

Prepaid service has become an important mobile application with rapid growth for subscription rate in the recent years. Implementation of prepaid service may generate large network traffic that significantly affects the performance of a mobile network. This paper studies the hot billing solution for prepaid service. We investigate how the amount of prepaid credit and the frequency of call detail record (CDR) transmissions affect network signaling and potential bad debt that a service provider may bear. Our study suggests that a prepaid service provider should encourage customers to buy large prepaid credits by giving them discounts. Furthermore, based on call traffic, an optimal CDR transmission frequency can be found by using our modeling technique.

Introduction

Prepaid telecommunication services were offered in Europe and Asia in 1982 and became popular in the US in 1992 [1]. During the past few years, the mobile prepaid service has been growing exponentially all over the world. In the US, more than thirty prepaid solution vendors, such as Corsair Communications, Boston Communications Group and Vicorp, are competing for carrier business [13]. Today, more than 100 million prepaid cards have been issued [2], and revenues of more than US $650 million had been generated from the prepaid service in the US by the year 2000. In 1997, there were about 60 million GSM subscribers across the world and 8% of them subscribed to prepaid service. It is predicted that in 2001, the number of GSM subscribers will increase to 140 million and 25% of the customers will subscribe to the prepaid service [15]. Asian countries such as Philippine, Australia, Hong Kong, Singapore and Taiwan have already shown successful examples for prepaid services. For example, Islacom in Philippine launched prepaid service in November 1997 and has a comparable number of prepaid and postpaid customers now [14]. In Australia, Telstra started prepaid service with an initial capacity of 100,000 customers and has exceeded the capacity in early 1999. In Taiwan, FarEastone reported that more than 47% of the customers subscribed to prepaid service in March 1999.

Several factors have contributed to the rapid growth of mobile prepaid service [2]. Firstly, the growth rate of cellular subscribers appears to decrease while the competition among carriers keeps inflaming. The service providers are searching for new ways of increasing revenues, reducing expenses and improving the customer satisfaction. Secondly, as the customer base grows to cover customers with poor credit, providing new services that can minimize or avoid fraud usage is becoming more and more critical today. Mobile prepaid service offers a desirable solution that satisfies the aforementioned requirements.

In the GSM prepaid service, a customer subscribes to the GSM service with a prepaid credit. This credit is either coded into the subscriber identity module (SIM) card or kept in the network [1]. In many areas, the initialization of prepaid services must be completed within a certain number of days after subscription. In Taiwan, prepaid service is available immediately after purchasing the service. Whenever the customer originates a prepaid call, the corresponding payment is decremented from the prepaid credit. Status report of the credit balance can be obtained from the SIM card or the network.

If the balance is depleted, the customer cannot originate calls, but may be allowed to receive phone calls for a period (e.g., 6 months). To recover the prepaid service, the balance needs to be recharged by purchasing a top-up card. The top-up card is like a lottery scratch card. When the seal is scratched off, a secret code appears. The customer dials a toll-free number and follows the instructions of an interactive voice response (IVR) to input the Mobile Station ISDN Number (MSISDN, i.e., the GSM phone number) and the secret code. The system will verify and refresh the account if it is a valid code. On the other hand, if the prepaid balance is not depleted at the end of a valid period, the balance is automatically reset to zero. After a certain amount of time, the unused prepaid credit may be considered abandoned and becomes the government's property.

Four solutions have been proposed to implement the prepaid services: hot billing approach, service node approach, intelligent network approach and handset-based approach [4]. The hot billing and the handset-based approaches provide solutions without major changes to the network infrastructure. Intelligent network solution offers real-time rating and real-time call control, but is not widely deployed today. The service node approach, which utilizes extra voice circuits and switching resources for prepaid calls, provides a variant to the intelligent network solution.

This paper studies the hot billing approach. The other three approaches are out of the scope of this paper. Details of these approaches can be found in [13]. We first describe the hot billing approach. Then, we investigate the performance of this approach by both analytical and simulation models. We assume that the reader is familiar with the GSM terms such as SIM, mobile switching center (MSC), home location register (HLR), authentication center (AuC), MSISDN and international mobile subscriber identity (IMSI). Details of these terms can be found in [6], [9], [11]. For the reader's benefit, Appendix A lists the notations used in this paper.