Telcom operators lead in utility pricing

It was said that Moscow during the Soviet era had a highly efficient telephone system. For the small number of elite nomenclatura that had access to a telephone, they enjoyed a high standard of service. It only emerged after the Soviet system collapsed that it struggled to handle any type of usage based subscriber billing. In the early 1990s, many Muscovites were able to make all their calls for free.

Unlike other utility businesses such as gas or electricity which charge their customers by the amount consumed, e.g. cubic metres or kilowatt hours, telephone operators have set up hugely complex tarrifs. Apart from a standing charge, calls can be charged for by: 1, duration (down to the second); 2, distance or destination; 3, type of network or by individual network operator; 4, time of day; and 5, need to take account of different tariff calling plans.

This expertise in micro billing systems positions telecom operators in a strong position to compete for managing other usage based businesses as they emerge. One area will be road pricing that is likely to be based on distances travelled at certain times of day and on different types of road, probably linked back to the type and CO2 emissions of the vehicle. Vehicle location readings can be tracked either via GPS satellite or within WiMax cells linked to ground stations. This would be much like the TomTom® in car navigation system that uses bluetooth to link via a mobile phone on the ground for data on congestion and traffic flow.

Several insurance companies in the UK have announced that they are looking into usage based premiums for motoring policies rather than the current underwriting of annual mileage bands. Dependent on the spectrum allocated to road pricing, as Wi-Max technology develops the mobile operators should be in a very strong position with their existing base station infrastructure.

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