Web Informant #279, 1 February 2002:
Billing your customers


Over the past year we have seen some spectacular failures when it comes to broadband network providers. After moving my office into my home this past week, I got more familiar with the process of moving my Internet access. I have come to the conclusion that the simple process of billing systems was and continue to be the major weakness for these companies. Let me explain.

When I get my phone, cable, and electric/gas bills from these respective monopolies, I get them on the same day of every month, plus or minus one or two days at the most. This is because these regulated utilities have put a tremendous amount of work into their billing systems. For cash management and other reasons, they can't possibly bill every one of their customers at the same time. So they segregate the entire set into what is called a billing cycle: for example, the phone company bills me on the 12th of the month, the cable company on the 25th, and so forth. Which cycle you get your bill isn't really important: the key to all of this is that you get your bill on the EXACTLY same time of the month, every month.

This inspires confidence in these utilities for me. Sure, they have lots of other problems, and sometimes they don't post your payment as promptly as you would like. But overall, the billing cycle works and works well.

There is a second component to the billing cycle, and that is what I call the mean time elapsed to your first bill. When you order a new service from these monopolies, you usually get your first bill within a month's time. This isn't always true: I recall when I ordered an additional phone line during the Verizon labor slowdowns several years ago, and it took about five months before the first bill shows up. And my cable company, Cablevision, isn't too good about this either and makes many mistakes on its first bill. But for the most part, the monopolies have this under control.

Now take a look at the world of broadband ISPs. Their billing systems are atrocious. They don't bill you for the first several months of service, until they can post your account into their systems. (What are they doing during this time? Sitting on your paperwork, to be sure.) Then you get a whopping bill for two or three months' of service. And even after you are in their system, you aren't on any predictable billing cycle and bills arrive willy-nilly during the month. Some months you get no bills at all, and some months you get two. This is no way to run a railroad.

Compounding this is that ISPs have been acquired, gone out of business, or changed names to stay one step ahead of their creditors. Such was the situation with my DSL provider, CAIS.net. It took forever to get that first bill, I think it was five or six months' worth of service before they got around to trying to collect money from me. And of course, the first bill was wrong and I had to invoke the Journalist Option (calling the director of marketing) before it was fixed. And that was just the beginning of my billing issues with CAIS. A while later they were bought by Ardent Communications, who was bought shortly thereafter by Network Access Solutions. And I might have missed one or two companies in between; it is hard to track them down. Now I have a new variable, in addition to paying bills at different times of the month: I have to write my check to different people. I can guarantee you that at least one of these corporate entities still thinks that I owe them money for my former DSL service. What a mess.

This is the ultimate failure of broadband, and why eventually the regulated incumbent phone companies and (some of the) cable providers will ultimately win over the ISPs and CLECs: they know how to bill their customers on a regular basis. It is a simple thing, really. All it takes is a good IT department who can implement the right systems. This isn't about line provisioning, or being able to reduce truck rolls (customer visits) or understanding about which DSLAMs to install in which central offices or any other technical mumbo-jumbo. Just get those bills out the same day month by month, and you will succeed.

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David Strom
+1 (516) 944-3407
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entire contents copyright 2002 by David Strom, Inc.
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