Frost&Sullivan Report: Business Analytics

25 January 2013

Mobile Customer On-Boarding: Telenet (Belgium)
Minimizes Risksize and position text box tothrough
Report Title – and Increases Opportunity center
Purpose-Built Analytics
Report Title in the blue bar
Stratecast Analysis by
Karl Whitelock

Stratecast Perspectives & Insight
for Executives (SPIE)
Volume 13, Number 03

Mobile Customer On-Boarding: Telenet (Belgium) Minimizes Risk
and Increases Opportunity through Purpose-Built Analytics

Introduction1
The communications service provider (CSP) landscape continues to incorporate new business
partners, new business models, and different ways to keep customers satisfied. Truly, the working
parts of customer service offerings are gaining complexity. For example, growth of the ‘smart
device’ market—smartphones, tablets, connected TVs, and machine-to-machine connections from
multiple industries—continues to expand at a double-digit compound annual growth rate
(CAGR)—and, in some cases, triple-digit. On one hand, complex services accessed by these smart
devices create substantial financial risk for the CSP community with regard to the end-to-end service
monetization and partner accountability functions; while, on the other hand, good customers using
these services is a basis for additional revenue opportunity.
Financial risk can come from operations issues such as traditional revenue leakage between internal
data process flows, or the lack of accountability from content delivery and usage for a growing
number of CSP partners. Financial risk can also come from the lack of properly qualifying new
customers during the acquisition process, or even from existing customers, as conditions change.
Financial opportunity comes from new customers with the point of sale as a key beginning point.
This allows CSPs to maximize customer value with a combination of information collected at the
point of sale, and then augmenting it with external demographic and usage data throughout the
customer’s lifecycle.
Applying analytics to the revenue management and cost tracking sides of any CSP business has
gained significant attention recently, even though CSPs have used analytics to fight certain customer-
related problems for more than 10 years. Most importantly, ‘purpose-built analytics’—automated
analytical solutions designed to address specific business problems—have shown CSPs that embrace
such tools that not only can revenue flows be traced and accounted for, but operations costs can be
controlled and managed effectively. This is especially important as the number of external partner
sources for content contribution increase, and as complex service usage offers expand.
This report will explain the issues and differences associated with customer level and business
operations risk analysis. It will show how purpose-built analytics, applied to the customer acquisition
processes, not only reduces the number of problem customers a CSP may inadvertently take on, but
explains how real-world customer acquisition savings can be realized. The report also explains how
Telenet (Belgium), working extensively with the NetMind® platform from Agilis International,
improved its customer validation process and, in so doing, increased customer value, beginning at
the point of sale (POS).

1 In preparing this report, Stratecast conducted interviews with representatives of the following companies:
 Telenet – Luc Verstraete, Director Billing, Payments and Credit Exposure
 Agilis International – Richard Miller, EVP Business Development and Marketing
 Agilis International – Judy Misbin, Director Marketing
Please note that the insights and opinions expressed in this assessment are those of Stratecast and have been developed
through the Stratecast research and analysis process. These expressed insights and opinions do not necessarily reflect the
views of the company executives interviewed.

SPIE #03, January 2013 © Stratecast | Frost & Sullivan, 2013 Page 2

What is CSP Financial Risk Analysis?
Shown in Figure 1, CSP financial risk management can be broadly categorized as customer activities
and interactions between internal and external business processes. Generally, the customer side is
associated with revenue generation while the partner interaction and business operations side is
associated with cost. Analytics can be applied to any portion of these business functions to deliver
predictive insight and to better understand current and past behavior. While not a new concept,
predictive insight today must now come at an increasingly
Real-time analysis of customer revenue faster pace and support larger data volumes. This means
functions such as on-boarding, usage real-time enough for CSP support personnel to have the
analysis, churn propensity, and bad information they need to make effective decisions, and for
debt analysis are now an essential new customers to know where they stand.
business requirement.
For many regions, where mobile saturation is high, CSPs
now take extra steps to retain customers, which can bring
on new problems if all parts involved are not properly managed. Real-time analysis of customer
revenue functions such as on-boarding, usage analysis, measurement of a customer’s propensity for
up-sell and cross-sell, churn, and bad debt, are now essential new business requirements.

Figure 1 – Customer and Operational Risk Analysis Using Real-Time Analytics

Source: Agilis International


Customer-related financial risk and opportunity analysis, as shown by the top half of Figure 1, is tied
to three functional areas associated with mitigating risk and maximizing opportunity including:
 Pre-Acquisition Risk/Opportunity – Evaluation of potential customers applying for
service.
 Existing Customer Risk/Opportunity – Determination of a customer’s propensity to
buy, propensity to pay, propensity to churn, and level of risk by way of subscriber or
network fraud.
 Bad Debt Risk – Customers that carry bad debt. What is their current propensity to pay?
What is the overall risk analysis of the customer; e.g., do the financial positives outweigh the
negatives, and therefore these customers are worth keeping even though they may carry
some bad debt?
Operational risk, exemplified by the lower half of Figure 1, includes many traditional functions such
as revenue leakage analysis from internal data streams, and the
inconsistencies that potentially could come from external In its simplest form, CSP financial
partner or supplier relationships. While operational risk assurance (FA) is traditional
analysis, along with customer risk analysis, is essential to any revenue assurance (RA), including
CSP, a detailed discussion of operational risk is beyond the revenue leakage analysis, and
scope of this report. It was the subject of a recent in-depth financial fraud management.
Stratecast market share analysis report titled: Global These functions are enhanced
Communications Service Provider (CSP) Financial Assurance (Revenue with today’s computing and
Assurance, Fraud Management, and Cost/Margin Analysis) Market analytical tools, to yield near real-
Forecast & Supplier Assessment; OSSCS 13-07 (October 2012).2 time analysis of business and
operations data whenever needed.
The nature of telecommunications fraud is transforming as
Financial assurance also involves
CSPs now look at the entire customer lifecycle. By correlating
cost and margin analysis to
data from multiple internal and external data sources,
improve revenue accountability as
analytical tools such as the Agilis International NetMind
partner and supplier relationships
solution can define a comprehensive risk index.3 This index
expand, as business models
allows CSPs to assess and evaluate both risk and opportunity
evolve, and as customer revenue
at any stage of the CSP and customer relationship. It has
functions grow more complex.
proven to be invaluable to Telenet as it initially launched its
new mobile service offers, and as it continues to bring on new
customers today.

2 This Stratecast market share analysis and forecast report defines why the operations-based financial assurance functions
of revenue leakage analysis, cost assurance, margin optimization, and fraud management are critically important today. It
also profiles approximately 30 companies that provide some level of solution capability within this growing focus area,
and projects a robust 12.8% CAGR for the global financial assurance market over the next five years. For more
information on how to obtain this Stratecast report or any other Stratecast or Frost & Sullivan report, contact your
account executive or email to inquiries@stratecast.com.
3 Agilis International is a privately held company headquartered near Washington D.C., with global offices in South

Africa, Malaysia and Belgium. It has more than 300 employees focused on developing and delivering telecom business
analytics solutions specific to: cost and revenue assurance; customer risk and opportunity management; subscriber
lifecycle management; traffic optimization, data warehousing and reporting; and dashboard solutions for the
communications industry. It has a customer base of many CSPs headquartered throughout North America, Europe and
Asia Pacific.


The Business Challenge Telenet Faced at Point of Sale
Preventel, the Belgian organization that helped identify bad payment behavior, ceased operations as
Telenet was initiating the release of new service offerings that were going to increase the company’s
exposure to potential bad debt and fraud.4 At this point, Telenet needed a means to help mitigate the
risk of bringing on non-paying customers while conforming to all customer privacy legislation and
the company’s general terms and conditions.5
Linking into internal and external customer-centric databases, as shown in Figure 2, the risk
management solution Telenet initiated with Agilis International monitors, in real time, all new sales
requests. This approach provides an immediate assessment for customer acceptance or refusal of
service. In addition, based on in-depth analysis of a customer’s propensity scores, it allows Telenet
to make modified service offers tailored to customers. One of the key drivers for this solution is
Telenet’s on-going offer of a highly-subsidized mobile device for each subscribing customer.

Figure 2 – Telenet Pre-Acquisition Aliasing Process

NetMind®
A
Existing
1.Identification l customer External data
database source(s)
Point of i
Sales/E-Sales
a 3.Scoring

2.Good customer? s
i
Bad Payer n
g
Fraud
4.Activation

1. Identification with customer data (name, address, DOB, ID number,…) to check if an existing customer. Uses the
Aliasing function to recognize disguised customers (bad debt, fraud)
2. If applicant is recognized as an extising customer, the solution checks in other databases to see if they are a bad
payer, fraudster,….
3. If applicant is not recognized as an existing customer, they are scored through an external database
4. Upon completion of identification and scoring processes, if credit worthy, applicant’s Telenet products are activated

Source: Telenet
Slide 2 Proprietary and Confidential

4 Preventel ceased operations in April 2010. It managed an external database of customers that failed to pay CSP bills. At
closing, some of its customers included Base, Telenet, Proximus, KPN Belgium and Clearwire.
5 Founded in 1996, Telenet is a major provider of broadband cable systems in Belgium. Telenet provides cable

television, high speed internet and telecom services, primarily to residential customers, with coverage to approximately
60% of the national population of Belgium. Under the brand name Telenet for Business, the company also provides
services for companies in both Belgium and Luxembourg. Telenet has been listed on the Euronext Brussels stock
exchange since October 2005, under the symbol TNET. It is now a quadruple-play provider with the addition of Telenet
Mobile as a full mobile virtual network operator (MVNO). It serves approximately 2.2 million subs and 4.6 million
RGUs, with a monthly ARPU of approximately €41.5.


A number of factors contribute to the acceptance of an applicant, including the ability to determine,
based on previous history, if the customer is attempting to commit fraud via a number of means.
Examples include:
 Subscription Fraud – Fraud by bypassing offer conditions.
 Handset Acquisition Fraud – Determining if the applicant is an organized fraudster
attempting to acquire a subsidized high-end handset.
 Dealer Fraud – Monitoring of sales numbers for accurate reporting is essential due to
commissions paid to dealers for handset sales and data plan offers.
 Identity Fraud – Using a secure order entry tool to catch any false identity tries for both
business and residential applicants.
 Customer Identification – Recognizing customers through various data inputs including
name, address, and personal credit-important details.
 Bad Debt Recognition – Identifying customers with existing bad debt, and making
determinations based on a variety of financial factors. This category was most concerning to
Telenet, as its service offers include an advanced mobile device for €1, with a long-term
service commitment.
 Multiple Activation Fraud – Recognizing individuals or companies that may attempt
multiple service activations within a brief period.
Shown in the center of Figure 2 above, the Aliasing engine is one of the pre-activation detection
engines of the Agilis International NetMindPOS point of sale solution. The NetMindPOS Aliasing
engine utilizes business analytics to review new service orders, comparing them against a Positive
Aliasing Database (PAD) to prevent fraudulent subscribers and previous bad debt customers from
signing up for a new service undetected. The Aliasing engine performs an alias match of applicant
information against the PAD by using algorithms such as fuzzy logic, Soundex and percent word
match to detect returning bad debt and fraudulent customers.6
The PAD is created using data provided by Telenet and external data sources. It includes
information on past fraudulent subscribers, bad debt customers, stolen devices, vouchers, and
previous good customers. Service orders are run through the PAD on a continual basis or as a batch
operation. When service applicants are identified as potential fraudulent subscribers or returning bad
debt customers, the system can issue an alert and or activate an internal trigger, such as an
immediate analyst review or point of sale order hold. Good customers trigger an equally immediate
response with the CRM system, and agents are notified that a new or returning good customer
should receive special treatment and be shown an offer that recognizes his/her value.
Telenet further extended the use of the solution by using the analytics in the NetMind platform to
target offers to preferable customers in its outbound marketing campaigns.

6 Soundex is a phonetic algorithm for indexing names by sound as pronounced in English.


Results from Telenet’s Business Trial and Beyond
Telenet worked with Agilis International to establish a proof of concept tied to the business
objectives it had stated for identifying and mitigating financial risk from various forms of potential
customer on-boarding fraud. The solution was deployed in two months, and operated as a proof of
concept (POC) for approximately three months thereafter. It remained operational for several
additional months while process issues with the permanent solution were resolved.
The permanent solution has been in operation for more than three years. Shown in Figure 3 are the
key business results after the first eight months of operation. They include:
 Recognition that approximately three percent of all prospects posed a high financial risk,
with 76 percent of them identified as bad payers, 21 percent of them identified as having
existing bad debt, and less than one percent of them identified as previous fraud customers.
 In certain situations, based on in-depth analysis of a customer’s payment profile, modified
service offers were given.
 The cost savings that came from identifying the high financial risk prospects resulted in
approximately €600 per customer, based on the internal cost to provision a customer in and
out of the network, the cost to chase bad debt, the cost due to lost handsets, and the cost for
credit scoring fees.

Figure 3 – Telenet Business Results through 8 Months of Operation

Production system identified 3% Results of Implementation
of Prospects who posed High Risk  Immediate Savings
 Agilis business model flexibility
The 3% represented 4 specific risk types
 Agilis provided an extended POC
 Utilized basic Aliasing capability
 Extended the POC during
deployment of full solution
 Identified 1.5% of applicants as
returning bad customers
 Prevented ~ €600 loss for each
 Lost Handsets
 Credit scoring fees
 Provisioning costs

 Reduced Usage Fraud from same
 Production system increased the
yield to 3.0%
 Total NetMind®POS savings in first
6 months was € 6.5 million

Source: Telenet


Telenet explained to Stratecast that the total savings during the first six months of operation was in
excess of €6.5 million. Continued savings have resulted since the solution was implemented, and the
solution continues to be a significant part of the Telenet customer on-boarding process.

Agilis International NetMind Solution
Agilis International explained to Stratecast that its NetMind platform is a revenue assurance and
fraud management system capable of managing the risk and opportunity points in the entire
customer life cycle for landline, fixed, mobile, IPTV, DTH, GSM/CDMA/LTE, broadband, and
next generation networks. It can handle all types of technology, and adapts rapidly to evolving CSP
business models. Shown in Figure 4, the NetMind customer analytics coverage addresses all business
needs relating to customer identification, propensity scoring, and usage.

Figure 4 – Agilis International NetMind Customer Analytics Coverage

With Advanced Analytics & Work Flow Management Case Management

Operational Financial
Dashboard Reporting

During Each Stage of the Subscriber Lifecycle

For All Services Offered on the Network SMS IPTV

Voice E-Wallet

Multimedia Data
Downloads Services

Across Multiple Network Types

GSM/CDMA/LTE Broadband
Wire-line

Source: Agilis International

Agilis International further explained that NetMind eliminates the risk and maximizes the
opportunity inherent in each phase of the subscriber management process:
 During the pre-acquisition process, before incurring the cost of installation.
 Through the acquisition process, including strong validation of customer identification.
 During the early subscription period, where the vulnerability to fraud is highest.


 Continuing into the long-term relationship, with vigilant attention to changes that indicate
opportunities for up-sell/cross-sell, churn, or potential abuse of network services.

Agilis also noted that the industry cost savings from all customers that use its pre-authorization
Aliasing engine exceed $1000 (€770) per customer. Agilis further stated that there are significant
business imperatives for engaging in a financial risk analysis process for the developed world, where
subscriber growth is relatively stable. This means aggressively managing the new customer on-
boarding process to retain good customers and to grow revenue.
Within emerging markets, Agilis believes that billions of customers with little or no credit
information require a new approach to the on-boarding process. What was typically done for
postpaid customers in the developed world, and what is now done (virtually nothing) for prepaid
customers of traditional voice and data access services, won’t suffice. Growing market complexity
from more transactions and more complex service offers, often accessed through smart devices,
implies more opportunities, more risk, and a more complex infrastructure.


Stratecast
The Last Word
Several months ago, Stratecast stated that reducing the level of revenue “leakage” from the flow of
data between a CSP’s systems and through its business processes (traditional revenue assurance),
along with stopping the intentional exploitation of these weaknesses by certain individuals
(operations fraud), were operations functions that would grow in significance over the coming
months. While still true, there is much more to keep in mind from a customer-level perspective.
As smart devices proliferate with customers in both developed and growing markets, complex
service offers grow and partner relationships expand to meet the needs of these services. In this
environment it is now imperative that CSPs minimize their risk from new service applicants and
from the potential financial risk caused by existing customers. In addition, it is critical for them to
recognize opportunities to better meet customer expectations as a means for growing revenue. Enter
the world of real-time purpose-built analytics—automated analytical solutions designed to address
specific business problems. Customer analytics solutions are geared to deliver predictive insight to
CSP customer support teams in order to make effective decisions. This is especially important when
working with new service applicants, gauging the financial risk that can come at any time from
existing customers, and in providing service offers that are more closely aligned with customer needs
when they arise—the business opportunity side that is now emerging.
While the role of financial risk management has many facets, keeping financial risk in check for any
CSP is critical for long-term business success. Customer-associated fraud is on the rise because the
ways in which to commit fraud are increasing, as the number of partners, authorized dealers and
suppliers a CSP must engage with increases. Real-time analysis of customer revenue functions,
including on-boarding, usage analysis, churn propensity and bad debt analysis, is critical for long-
term viability of service offers that involve partner participation. Opportunities to capture customer
attention, through new revenue-bearing service offers, are increasing for the same reasons.
Stratecast believes that real-time purpose-built analytics will make a difference with CSPs that must
now keep track, from every business angle, of not just customer usage transactions but data
interaction with a rapidly growing list of partners, authorized dealers, and suppliers. Financial risk
management is an essential business function that will grow as complex service offers continue to
expand. Real-time analytical solutions, provided by companies such as Agilis International, will play
an increasingly important role for CSPs in the months ahead, in dealing with financial risk analysis
and capturing new business opportunity.

Karl M. Whitelock
Director Global OSS BSS Strategy
Stratecast | Frost & Sullivan
kwhitelock@stratecast.com


About Stratecast
Stratecast collaborates with our clients to reach smart business decisions in the rapidly evolving and hyper-
competitive Information and Communications Technology markets. Leveraging a mix of action-oriented
subscription research and customized consulting engagements, Stratecast delivers knowledge and perspective
that is only attainable through years of real-world experience in an industry where customers are
collaborators; today’s partners are tomorrow’s competitors; and agility and innovation are essential elements
for success. Contact your Stratecast Account Executive to engage our experience to assist you in attaining
your growth objectives.

About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The
company's TEAM Research, Growth Consulting, and Growth Team Membership™ empower clients to
create a growth-focused culture that generates, evaluates, and implements effective growth strategies. Frost &
Sullivan employs over 50 years of experience in partnering with Global 1000 companies, emerging businesses,
and the investment community from more than 40 offices on six continents. For more information about
Frost & Sullivan’s Growth Partnership Services, visit http://www.frost.com.

SPIE #03, January 2013
CONTACT US
© Stratecast | Frost & Sullivan, 2013 Page 11
For more information, visit www.stratecast.com, dial 877-463-7678, or e-mail inquiries@stratecast.com.

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