Yes 2 Prepay

Copyright  2000 - 2001 Gerry Christensen
Issue Date 1 August 2000, updated 1 March 2001
Published by
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Copyright Gerald T. Christensen www.mobileprepay.com Page 1

CONTENTS
“Yes 2 Prepay” is divided into the following sections:
Author 6
Publisher 6
Preface 7
Introduction 9
Part 1 – Technical Introduction 11
Background 11
Prepay Becomes a Mainstream Service 13
The Technology Behind Prepay 14
Functional Characteristics of a Mobile Prepay Application 19
Prepay Technology Solutions 20
SIM Based Solutions 21
Prepay Support and Business Processes 26
Prepay Issues 29
Prepay Product and Service Providers 31
Detailed Prepay Company Profiles 33
APPLIED GLOBAL TECHNOLOGIES (AGT) 34
BOSTON COMMUNICATIONS GROUP INC (BCGI) 35
COMVERSE 39
LOGICA 44
NATIONAL TELEMANAGEMENT CORPORATION (NTC) 50
PSINET TRANSACTION SOLUTIONS 55
QCOMM 59
SICAP 61
TELEMAC CORPORATION 63
Prepay Organization Profiles 70
International Telecard Association 70
Page 2 www.mobilelifestreams.com Copyright Gerald T. Christensen

The Global Billing Association 72
Part 2 – Advanced Concepts and Applications 74
Roaming with Mobile Prepay 75
Architectural Evolution 77
The Impact of Mobile IN on Prepay 80
Mobile IN Technologies 85
Mobile IN Capabilities 89
Mobile IN Support of GPRS 92
Hybrid Mobile IN and Smart Card Based Prepay 94
Target Markets Implications 94
Impact on Strategy 95
Limitations of Mobile IN and Potential Solutions 96
Other Advanced Technologies for Prepay 99
Future of Prepay with Advanced Capabilities 100
Summary 101
Part 3 – Marketing and Business Issues 102
Marketing 102
The Four P’s 102
Consumer Behaviors and Service Expectations 103
Prepay Target Markets 104
Market Segmentation Leads to Product Segmentation 105
Market Demographics and Regional Markets 106
Asia Pacific 107
Europe 107
United Kingdom 108
Middle East 108
Africa 109
Latin America 109
Canada 109

Mexico 110
United States 110
Marketing Strategies 111
Replenishment and Distribution Strategies 112
Recharge Methods 112
Payment Options 114
Strategies for the Prepay Program Implementation Business Issues 116
Technology Issues 119
Commercial Offerings 120
Calling Plans England 121
Calling Plans United States 123
Mobile Market Trends and the Future of Prepay 124
Business Issues 134
Business Case Issues for Prepay 135
Business Strategies for Profitable Business 140
Summary 143
Part 4 – Deployment and Operational Issues 145
Deployment Issues 145
Operational Issues 148
Doing Business on the Web 153
Cost Recovery Issues 154
Disclosure Issues 154
IPCA Phonecard Disclosure Guidelines Adopted by the Board of Directors –
155
June 5, 2000
Part 5 - Glossary 214

AUTHOR
Gerry Christensen has over twelve years experience in planning, engineering and
product management for signaling, intelligent networks and mobile communications. His
range of experience spans fixed and mobile network operators, service bureau and
value-added application provider companies. He is also co-author of the book, “Wireless
Intelligent Networking”, (see www.mobilein.com) that provides additional information
about mobile technology and applications pertinent to prepay and other services.
The author welcomes all comments, clarifications and discussions:

gerryc@mobilelifestreams.com.
PUBLISHER
This report has been edited and published by Mobile Lifestreams Limited
(www.mobilelifestreams.com), a Newbury based research company specializing in and
focusing on nonvoice mobile services such as the Short Message Service (SMS), Circuit
Switched Data, Unstructured Supplementary Services Data (USSD), Cell Broadcast and
Universal Mobile Telephone System (UMTS).
Other publications published by Mobile Lifestreams include “Success 4 SMS”, “Yes 2

GPRS”, “Success 4 WAP”, “Mobile Positioning” and “Yes 2 3G”.
Mobile Lifestreams maintains a related web site at www.mobileprepay.com to keep

readers up-to-date with the very latest developments in the world of mobile prepay
communications. This site is intended to supplement the information in this report with
updates including upcoming revisions of the report, news, and information.

PREFACE
Prepay or pay-in-advance services are a rapidly growing segment of the mobile
communications industry, yet not many people have a good understanding of the
underlying technology and/or business issues related to this service alternative.
The main purpose of this report is to provide a working knowledge of the technical and
business issues associated with formulating strategy, planning, deploying and operating
mobile prepay communications solutions.
The secondary goal of this report is to prepare the reader for further study. It is beyond
the scope of this report to cover every aspect of mobile prepay or to fully discuss the
supporting technologies and related business issues. As required, the reader is
encouraged to pursue supplemental knowledge and information through other reports,
consulting, and study of mobile communications standards.
The information in this report has been targeted specifically for technical and business
professionals in the field of mobile communications. However, this knowledge is
invaluable for anyone participating or considering involvement in prepay services. More
advanced readers will find the material useful as review. Less experienced readers will
find this report to be an instructional resource and basis for further study.
While there have been many industry reports regarding the business opportunities for
mobile prepay and evaluations of various technical deployments, I am not aware of any
resource that provides instruction as well as technical and business evaluation. This is
the first report of its type to provide all of the following:
§ Information about how mobile prepay communications works, including the

technologies behind the scenes, technology deployment options specific to mobile
prepay, and the basic business issues associated providing mobile prepay
communications
§ Information about more advanced technology issues associated with mobile

prepay deployment options
§ Evaluation of the technical and business aspects of various technologies used in

conjunction with operation and support of mobile prepay services
§ Discussion and evaluation of the marketing and business issues associated with
successfully deploying mobile prepay

§ Review of the major issues associated with deploying and operating mobile
prepay communications
Please let me know how well I have met these goals. My hope is that you will find this
report to be a valuable resource for your technical and business endeavors.
I appreciate and welcome your comments and feedback.
Gerry Christensen
gerryc@mobilelifestreams.com

INTRODUCTION
Mobile prepay communications is no longer an afterthought; it is a crucial component of
a mobile operator’s portfolio of services. It is important to recognize that there are
many choices for the prepay equipment/software and service providers in terms of
prepay system design, deployment, and operation. These choices are often difficult, as
prepay product and service providers must consider current needs while positioning for
long-term success.
This report was developed to convey information that would help mobile prepay product
and service providers, and those investing in systems/solutions make more informed
business decisions.
This report is divided into four sections as follows:
PART 1 - TECHNICAL INTRODUCTION

The purpose of this part of the report is to provide a working knowledge of the basic
technical and business issues associated with deploying and operating mobile prepay
communications solutions. More advanced technical and business issues are addressed
in subsequent parts of the report.
PART 2 - ADVANCED CONCEPTS AND APPLICATIONS

An architectural evolution is underway that, when finalized, will enable much more
robust prepay service offerings. Mobile intelligent network (IN) technologies are one of
the drivers for this evolution. Those prepay service providers that leverage advanced
capabilities such as those provided by mobile IN technologies will enjoy long-term cost
savings, greater customer loyalty, and increased profits. In this part of the report, we
discuss the technical aspects, differentiating capabilities, and business implications of
these advanced technologies.
PART 3 - MARKETING AND BUSINESS ISSUES

Withstanding patents and trade secrets, technology can ultimately be duplicated.
However, sound marketing and business strategy can create success and long standing
barriers to entry against competitors. In this part of the report, we discuss the
marketing and business issues that are key to the mobile prepay industry.
PART 4 - DEPLOYMENT AND OPERATIONAL ISSUES

This part of the report provides a review of the major deployment and operational issues
facing the mobile prepay service provider.

PART 1
TECHNICAL INTRODUCTION
The purpose of this part of the report is to provide a working knowledge of the basic
technical and business issues associated with deploying and operating mobile prepay
communications solutions.
BACKGROUND
Before we proceed with this part of the report, it is important for you to be aware of the
different radio frequency technologies and have at a basic understanding of the mobile
network elements and their functions.
RADIO FREQUENCY TECHNOLOGIES

Generally speaking, many people have heard of major global analog and digital radio
frequency technologies. You are probably aware of the following first generation
(analog) and second generation (digital) mobile communications technologies:
ANALOG
Advanced Mobile Phone Service (AMPS), Total Access Communication System (TACS), or
Nordic Mobile Telecommunications (NMT).
DIGITAL
Global System of Mobility (GSM), Time Division Multiple Access (TDMA) for IS-136
(sometimes referred to as D-AMPS), Code Division Multiple Access (CDMA) and Personal
Digital Cellular (PDC).
MOBILE NETWORKING
It is important to understand the concept of roaming and have a working knowledge of
the network elements and processes that enable it. You are said to be roaming when
you utilize your mobile phone in a different serving area than your home service area.
Your mobile service provider and your specific communications plan define your home
service area. Some mobile carriers provide a virtual region-wide, nationwide or global
virtual footprint. This generally means that, from a billing and/or feature perspective,
you will experience consistent service, whether in your hometown or across the country.
However, the mobile carrier must still support this roaming capability for purposes of
system and account management. This is accomplished through inter-system signaling.
There are two major types of inter-system signaling for mobile communications: GSM
Mobile Application Part (MAP) and ANSI-41. GSM MAP, as you would expect, is the

standard utilized for GSM networks and ANSI-41 is the inter-system standard for all
other networks including CDMA, TDMA (IS-136), and AMPS.
Although the two standards have their differences, both have certain key things in
common. They support three network elements that are required for mobile
communications: MSCs, HLRs, and VLRs.
MOBILE SWITCHING CENTER

A Mobile Switching Center (MSC) is a telecommunications switch deployed in mobile
communications networks, to provide call control, processing and access to the Public
Switched Telephone (fixed) Network.
HOME LOCATION REGISTER

The Home Location Register (HLR) is a database that is maintained by a user's home
carrier or the mobile operator from whom the user has initiated service. The HLR stores
information about the user, including the user profile (preferences), account status,
features and capabilities.
VISITING LOCATION REGISTER

The Visiting Location Register (VLR) is another database and is used by the serving
carrier system to manage service requests from mobile users who are away from their
home system.
The interaction between the MSC, HLR, and VLR is best understood by walking through
the registration process (see Figure 1 below)
RegNot (Invoke)
RegNot (Response with profile)
HLR
MSC/VLR SS7 Signaling Network MSC/VLR
System B System A
FIGURE 1:1:REGISTRATION
Figure PROCESS
Registration Process

In the Figure 1, the mobile user's home system is depicted as System A and the mobile
user is currently roaming in System B, the visited or serving system. Upon entering the
system and powering-on the mobile phone, the user is detected by the radio equipment
of the serving system. This information is then passed to the MSC/VLR, which
determines that the mobile unit belongs to another system. The VLR invokes a
Registration Notification (RegNot) request message that is sent to the HLR of the user
via the SS7 signaling network. Upon receiving the RegNot from the VLR, the HLR scans
its files to extract information about the user. The HLR then responds by sending a
RegNot return result message to the VLR via the SS7 network. Upon receiving the
return result from the HLR, the VLR will utilize the information to establish a roamer
profile for the user. This profile contains information such as allowed calling, capabilities
and features.
This registration process also serves to help validate the user for purposes of fraud
prevention and allows for a process called automatic call delivery (ACD). ACD enables
the user to automatically receive calls while roaming. A calling party does not need to
know the geographical location of a mobile user to place a call; they just call the
(regular) mobile phone number of the user to connect to the roamer in the serving
market.
It is not important to understand the details of these operations. However, it is

important to understand these concepts; the existence and purpose of the MSC, HLR,
and VLR, and how they relate to mobile prepay communications. This will become
evident as we proceed throughout this part of the report.
PREPAY BECOMES A MAINSTREAM SERVICE

Prepay began in the United States as an alternative service offering for the credit
challenged. Recognizing that up to 30% of all applicants could not meet their stringent
credit requirements, mobile operators began aggressive campaigns to deploy prepay
services around the 1996 timeframe. Today, wireless service providers are enjoying
tremendous growth due to prepay customers. The customer base of some United States
PCS operators is as much as 50% prepay. Larger, more established cellular operators
have a much smaller contribution (of prepay versus post-paid). The overall penetration
of prepay customers (as a % of total PCS and cellular customers) in the United States is
approximately 5% and growing. Some experts predict that prepay penetration will reach
20% by year-end 2002.
Mobile operators in the United States recognized (as their European counterparts did
years earlier) that there is a larger market segment for prepay services than merely the
credit challenged. Wireless service providers will need to find innovative methods to tap
into the other segments such as cost control. Technology enhancements, including the
introduction of mobile IN, will enable these improvements to happen. However,
technology is not the only answer. Improved business processes, enabled by

technology, will make prepay an even more mainstream service in the United States,
Europe and the rest of the world.
THE TECHNOLOGY BEHIND PREPAY

Before you can fully appreciate and understand prepay business issues within a coherent
context, it is important to first comprehend the rudiments of the technology behind
prepay. In this section we will discuss some of the major technologies that enable
prepay and then compare and contrast various prepay technology solutions. Prepay
support, business processes and issues will be discussed later in this part of the report.
As you read these sections, it is important for you to note that the particular enabling
technologies used and the specific prepay technology solution employed will largely
determine the nature and capabilities of the prepay support systems and business
processes.
ENABLING TECHNOLOGIES
Before we discuss the various prepay solution technology types, we must discuss the
technologies that enable an overall solution. Many functional elements are integrated to
form a mobile prepay communications system. These functions include signaling, data
communications, call control/processing, data administration, storing and retrieval.
These functional elements interlink to form an overall solution including business support
processes.
SIGNALING
Signaling is the ability to provide messaging between mobile switching systems and
prepay systems for purposes of call control and administration. In more advanced or
robust solutions, signaling consists of common channel signaling systems such as SS7 or
C7 that provides the inter-network element messaging necessary for intelligent network
call control. Less robust systems such as “point solutions” will often rely solely on in-
band, direct trunk implementations to facilitate call control.
DATA COMMUNICATIONS
The ability to transport data is crucial for prepay system operation and administration.
For example, common channel signaling can provide the data communications medium
for call control and/or administration of customer information via other technologies such
as Short Messaging Service (SMS). Another example is the automatic transportation of
data between customer provisioning interface points, customer data databases and call
processing systems.
CALL CONTROL AND PROCESSING

Prepay customer requests (attempting to place a call) for service must be processed in
order to provide prepay communications. Before these requests for service can be
processed, a request for prepay service must first be detected and control must be

handed over to the call processing function. In advanced systems, call control is based
on intelligent network software logic. This software logic typically resides in a Service
Control Point (SCP). The SCP is an IN node that is capable of storing IN control logic and
performing signaling operations (via SS7) with the rest of the network to accomplish
prepay call processing operations.
In less robust systems, call control is accomplished by virtue of dedicated resources

applied to a sub-group of mobile users designated as "prepay". These systems are often
referred to as “point solutions” and utilize resources such as dedicated voice facilities
(trunks) and/or prepay platforms that can only be utilized by one mobile switch or
perhaps one mobile system. Roaming is frequently problematic at best with these types
of arrangements.
Call processing is the function concerned with user authentication, account management,
call rating, and call management and administrative intervention. When a prepay user
initiates a prepay service, the call control function will hand the request over to the call
processing function*. At that point, the next step is to authenticate the user. The call
processing logic verifies the user as genuine based on the mobile terminal's mobile
directory (dialable) number (MDN) and other information uniquely identifying the mobile
equipment and other information assigned to the user for purposes of roaming
facilitation. The mobile system may also employ other forms of fraud control to
authenticate the user, in many cases prior to the user actually attempting to place a call.
In terms of account management, call rating, call management and administrative

intervention, the call processing function performs the following actions:
§ Tracks the amount of airtime available in the customer account
§ Determines the appropriate rating (charges) for a given call attempt
§ Manages the call in terms of decrementing the account balance based on the
current rating and usage during the call in progress
§ Provides appropriate termination treatment when either party ends the call or the
prepay customer account balance has been fully depleted by the prepay user
§ Requests call control treatment when appropriate to inform the prepay user
concerning the occurrence of a low account balance threshold.
Note: In many systems, call control and processing occur in the same physical database
of SCP, but they do not need to. In some scenarios it may be advantageous to distribute
these functions as facilitated by mobile IN and SS7.

DATA ADMINISTRATION, STORING AND RETRIEVAL
Prepay customer data administration, storing and retrieval represent additional critical
components of an overall prepay system. In many cases, the customer data resides in a
database that is co-resident with the call processing function. In other cases, a "client-
server" approach is taken whereby the call processing function acts as the "server"
caching data from a subtending "client" database containing the customer data. In
either case, data administration is accomplished through accessing databases via remote
provisioning interfaces. These interfaces are used to activate accounts, replenish
account balances, change customer parameters and preferences as necessary. This
requirement for communications between remote interfaces and in some cases between
client-server operations, again underscores the importance of data communications in
prepay systems.
SS7/C7
Although there are other variants throughout the world, Signaling System number Seven
(SS7) and C7 are the two predominant telecommunications signaling protocols utilized
primarily in United States and Europe respectively. Telcordia (then Bellcore) and the
International Telecommunications Union (then CCITT) standardized SS7 and C7
respectively.
Architecturally speaking, these forms of signaling constitute an overlay data network,

utilizing what is referred to as “common channel” or “out-of-band” signaling (see Figure
2 below).
PSTN
Mobile Network Switch

Fixed Network Switch
SS7 Signaling Network
FIGURE 2: COMMON CHANNEL SIGNALING

Figure 2: Common Channel Signaling
As you can see in the simple illustration above, the signaling links (represented as
dashed lines) are separated from the voice bearer channels (solid lines) that connect to

the public switched telecommunications network (PSTN). Whereas with “in-band”
signaling methods, signaling messages traverse the same path as the voice bearer
channel, common channel signaling instead utilizes an overlay data network for
signaling, providing a much more efficient method of signaling for the traditional low-
bandwidth PSTN.
These technologies foster inter-system signaling between network elements, enabling

roaming and service control. In reference to our earlier point regarding roaming, SS7
and C7 form the underlying bearer protocol for transport of ANSI-41 and GSM MAP
messages between network elements. In other words, ANSI-41 and GSM MAP are the
“payload” that rides on top of an SS7 signaling message for communication between
HLRs and VLRs. However, these technologies also have some other very important uses
in intelligent mobile networks that we shall introduce shortly.
When we mention signaling throughout this part of the report, remember that it is SS7,
C7 and related technologies that provide the vital inter-system message communication
function between network elements. The Transaction Capabilities Application Part
(TCAP) portion of the SS7/C7 protocol is used for database and other connectionless
communications such as the HLR/VLR interaction discussed above. This is in contrast to
the ISDN User Part (ISUP) portion of the SS7 protocol that is connection oriented. ISUP
is utilized for out-of-band signaling between switches for voice circuit set-up and
teardown.
SHORT MESSAGING AND OVER-THE-AIR ACTIVATION/REPLENISHMENT

Short Message Service (SMS) is a capability whereby small amounts of text data are
delivered to a mobile terminal by way of the SS7/C7 signaling network. SMS may be
used to perform over-the-air activation and/or replenishment. A consumer may
purchase a mobile phone without activating it at the point-of-sale, only to have the
mobile unit activated for service automatically via SMS. All of the programming
information necessary to prepare the unit for service is encapsulated in the SMS
messaging and accepted by the mobile unit over the air. This same process may be
employed with handset-based prepay solutions to replenish a prepay account,
eliminating the need for the mobile user to replenish only at specific retail locations.
For more information about SMS and its applications, we recommend that you read the
Mobile Lifestreams report: Success 4 SMS (www.mobilesms.com)
SUBSCRIBER IDENTITY MODULE

The Subscriber Identity Module (SIM) is an example of a smart card, whose role will be
discussed more later in the Advanced Concepts and Applications part of this report.
For now, it is important to note that the SIM is an integral part of certain mobile prepay
systems, providing storage of user data used in conjunction with mobile prepay servers
to provide the overall service.

SIM TOOLKIT
The SIM Tookit (STK) is an API that allows for secure communication between the SIM
and network-based servers for various applications such as prepay. (See
mobileSIMtoolkit.com)
FRAME RELAY OR IP
Frame relay and Internet Protocol (IP) represent a data transport mechanism and
communications protocol (respectively), commonly used for data communications in
prepay systems. IP is typically used to communicate between remote
provisioning/replenishment sites and prepay customer databases. For instance, a mobile
carrier customer care representative may provision requests for establishment of prepay
service via a terminal connected to a database via IP. In addition, a prepay customer
may use an IP connection via the Internet to replenish his account. This is in contrast to
some of the point-of-sale configurations at merchant locations that may, based on
volume and cost effectiveness, alternatively use a dial-up-connection to replenish a
customer account. IP may also be employed over frame relay for intra-system
communications between prepay customer databases in a client-server type
architecture.
DATABASE
At the heart of any prepay system is a database used to store, administer, process and
retrieve customer information. As discussed earlier, this database may simply act as a
repository for customer data in a client-server type arrangement, or fully integrate with
the actual call processing functions such as rating and call intervention.
MOBILE IN
Mobile intelligent network (IN) pertains to the concept of network intelligence. While the
notion of network intelligence is evolving beyond the traditional model of centralized
control and processing, and expanding to network edge devices such as mobile terminals
and servers, the use of the term mobile IN will be used throughout this report to refer to
more traditional centralized network intelligence.
The two recognized global standards for mobile IN are Wireless Intelligent Network
(WIN) and Customized Applications for Mobile Enhanced Logic (CAMEL). WIN and
CAMEL are the standards used to provide network intelligence in ANSI-41 and GSM
networks respectively. As WIN standards are introduced, accepted and evolve, they will
become part of the core ANSI-41 standards. In contrast, the GSM CAMEL Application
Part (CAP) represents that portion of the GSM standard that uses CAMEL, and will remain
a separate yet associated standard to the core GSM networking standard, GSM MAP.
However, WIN and CAMEL are both derived from the same intelligent network conceptual
model (INCM), a framework from which the Intelligent Network Application Part (INAP)
was spawned. INAP represents the IN architectural model conceived by the European
Telecommunications Standards Institute (ETSI) for use in fixed networks. Evolutionary

stages of INAP are defined by capability sets (CS) that represent continual improvements
in IN functionality. WIN and CAMEL architectures are based on the INCM framework,
utilizing many aspects of the INAP capability sets as that standard evolves, but also
include capabilities to address mobility management issues.
WIN and CAMEL also utilize SS7/C7 for intersystem data communications. This includes
signaling between and among MSCs, HLRs, VLRs, SCPs, Intelligent Peripherals (IP),
Interactive Voice Response Units (IVRU) and other intelligent network nodes.
The term Mobile IN is sometimes associated with some better known centralized,
intelligent network type technologies such as SMS and the lesser known technologies
such as ISUP loop-back, which will be discussed in the section reviewing network based
prepay technology solutions. It is important to note, however, that when most people
involved in mobile network standards mention mobile IN, they are generally referring to
WIN, CAMEL, or perhaps proprietary vendor extensions of INAP.
FUNCTIONAL CHARACTERISTICS OF A MOBILE PREPAY

APPLICATION
A mobile prepay application typically resides in either a service node or service control
point. While the overall functions and systems-level interactions will vary according to
which type of node and architecture is deployed, all prepay applications have the same
things in common in terms of functionality:
§ A database used to determine if a customer is a valid user and how much credit
(typically measured in currency value, but may also be in airtime, number of
bytes for prepay mobile data, and/or number of messages for SMS) they have on
their account
§ A rating engine used to determine the rating of a call based on a combination of

various factors such as incoming or outgoing call, destination number, destination
location, calling party location, time of day, day of week, customer’s prepay plan,
promotions, whether the call/session is voice or data oriented, and other factors
§ A mechanism for decrementing the customer’s prepay account based on the

rating of the call
§ An event alerting mechanism for signaling to the mobile network that a pre-
determined account threshold has been reached (note: this is problematic in CDR
based systems – thus the problems with fraud/uncollectable revenue). This
would allow the user to be alerted during a call (to avoid an unexpected
disconnection) and to alert the customer regarding the need to recharge prior to
making a call (so as to avoid the first situation).

§ A mechanism for terminating the call/session if/when necessary
Other functions and system differences will be a factor of which type of mobile prepay is
deployed, network characteristics, vendor and operator deployment, and the type and
extent to which value-added services are deployed in conjunction with and/or for prepay
customers.
PREPAY TECHNOLOGY SOLUTIONS

While the technologies used in the deployment of prepay are many and varied, one
critical component shared by all prepay solutions is call control and processing. As we
discuss each of the forgoing solutions, we will focus specifically on the manner in which
each solution deals with call control and processing.
POINT SOLUTIONS
Point solutions involve an adjunct piece of equipment that is used to provide call control,
database functions, administrative functions and call processing. These are called
"point" solutions as all calls must traverse a single network element or "point" (see
Figure 3 below).
PSTN
2
Mobile Switch
Prepay Point Solution
FIGURE 3: POINT SOLUTION

Figure 3: Point Solution
In the above diagram, a voice connection is established from the mobile switch through
a voice facility to the prepay platform (step 1). The platform processes the call and
reroutes the call through another voice circuit on the same facility (trunk group) that the
call originated from (step 2), meaning that a total of two DS-0 channels are required for
every call. Once the mobile-switch receives this incoming voice channel, it routes the
call to the PSTN as normal (step 3).

The advantage of a point solution is that they are typically less expensive to set up for
an initial or limited deployment. However, they do not necessarily scale as well as other
solutions when large numbers of prepay customers are added to the system. As the
number of prepay customers reaches a certain capacity limit, additional point solution
platforms are needed, requiring additional capital investment and perpetuating the
inefficient use of voice facilities.
A significant disadvantage of point solutions is that they typically require dedicated line
ranges for prepay customers. This means that the prepay customer cannot choose their
phone number; it must be part of a predetermined line range for call routing purposes.
Furthermore, it is problematic to convert prepay customers to post-paid and vice versa,
without changing their phone number.
However, the most significant disadvantage is the loss of call control. Call routing
through the point solution relegates call control to the point solution. There is less of an
issue if the point solution is a robust platform capable of providing value-added services.
However, the fact remains that the mobile carrier will only be able to offer services
accessible via or through the point solution.
HANDSET SOLUTIONS
These methods involve the placement of intelligence in a mobile terminal to determine
the capabilities and account status of the prepay subscriber. Handset solutions fall into
two broad categories based largely on mobile network standards: Subscriber Identity
1
Module (SIM) solutions based on GSM and proprietary handset based solutions.
SIM BASED SOLUTIONS

SIM based solutions utilize logic programmed into the SIM to determine prepay
subscriber capabilities and account status. The benefit of a SIM based solution is that it
may be used wherever the GSM customer may otherwise roam. However, when
roaming outsides one’s own country, the customer is typically required to dial a short
code (string of predetermined digits) prior to every call for security and authentication
purposes.
There are three different types of SIM-based prepay solutions:
NETWORK-BASED SIM SOLUTION

In this solution, the SIM stores all customer data, but centralized computer processes
call data records.
1
A SIM is the smart card you plug into a GSM telephone that stores the personal subscription data, telephone
numbers and the like.

CALL FORWARDING SOLUTIONS
This solution uses a SIM and a personal identification number (PIN). The PIN is stored in
the SIM and is associated with a certain amount of airtime. Calls are routed to a call-
forwarding platform in which the SIM is analyzed for the account determination and the
PIN for airtime.
SIM CARD ONLY SOLUTIONS

In this solution, the rating engine is in the SIM card itself. This solution requires the SIM
to recognize the amount of airtime credit itself and is updated/recharged via SMS.
One disadvantage of the SIM based solution is that it has limited differentiation potential.
Without IN capabilities, there is only limited capability to provide value-added services
such as location sensitive billing (based on predefined rate zones) which we shall discuss
in the Advanced Concepts and Applications part of this report.
However, being a smart card, the SIM offers the advantage of lending itself well towards
mobile commerce applications, which we shall discuss in the third part of this report -
Marketing and Business issues. SIM based solutions also have the additional advantage
of distributed processing.
Additional efforts are underway to provide smart cards for other technologies (other than
GSM) such as CDMA, which will have a Universal Identity Module (UIM), and Wireless
Application Protocol (WAP), which will use a WAP Identity Module (WIM) for storage of
user data on the mobile unit. Each of these smart cards will likely allow prepay service
on their respective technologies once the technology is finalized.
PROPRIETARY BASED HANDSET SOLUTIONS

Proprietary based mobile phones are employed as a handset-based solution for ANSI-41
networks. These solutions maintain the same overall advantages and disadvantages of
the SIM based solution. From the perspective of the ANSI-41 network, the proprietary
prepay user is just another (post-paid) customer. No amendments to existing inter-
carrier roaming agreements are necessary. Proprietary handset based prepay users are
allowed to register while roaming and make calls at will. The proprietary based logic in
the phone limits calling based on the customer account status.
However, the proprietary based solution typically requires a different means of

replenishment. Rather than utilizing SMS, the proprietary solutions typically utilize a
combination of programming codes (input by the customer from a prepay card or
voucher) and a circuit switch connection to a computer to complete processing. The
computer updates the proprietary logic in the mobile terminal to allow it to continue to
make calls.

NETWORK BASED SOLUTIONS
Network based prepay solutions leverage the use of signaling networks for data capture,
transmission and processing. Network based solutions can be broken up into three
categories: ISUP based non-standard, TCAP based non-standard, and TCAP based
standard.
ISUP BASED NON-STANDARD

ISUP based non-standard prepay solutions typically utilize an innovative network kluge
known as ISUP-loop back (see Figure 4 below).
Loop-back Trunk
PSTN
3
Mobile Switch
SCP
2
1
FIGURE 4: ISUP LOOP-BACK

Figure 4: ISUP Loop-back
In the above diagram, intelligence is centralized in a Service Control Point (SCP), with
ISUP signaling used to evoke call control. With ISUP loop-back signaling, the SCP
contains software logic to “spoof” the mobile switch. The SCP tricks the mobile switch,
making it appear to be signaling with another switch for call set-up via ISUP (as normal),
when in fact it is performing database operations necessary to process prepay calls.
After receiving the Initial Address Message (IAM) in the ISUP message stream from the
mobile switch (step 1), the SCP begins prepay call processing including account
verification, dialed digit analysis, and call rating (step 2). Once this process is complete,
the SCP returns SS7 signaling information to the mobile switch to indicate a call
connection is complete (step 3), when in fact only signaling has actually occurred at this
point. The call originating mobile switch receives this signal from the SCP and redirects
the call to the PSTN as normal (step 4).

One limitation of this arrangement is that the mobile switch must utilize a loop-back
voice trunk for all prepay calls (see diagram). All prepay calls must first route through
the loop-back voice circuit prior to normal call routing to the PSTN. This method is
employed so that the SCP can "tear-down" the call (via an ISUP call release message)
if/when the caller’s account balance reaches zero*. This is an effective albeit crude
method of limiting unauthorized network use. TCAP based IN solutions improve on this
issue.
ISUP loop-back requires that the mobile switch contain pre-established translations that
force all prepay customer calls to route (and signal accordingly) over the loop-back voice
trunk. Similar to the point solution this limits customer management and the ability to
offer value added services. Once again, TCAP based IN solutions improve on this issue.
Note: The MSC can also teardown the call (via an ISUP release message) if/when the
prepay customer terminates the call.
TCAP BASED NON-STANDARD

The diagram below (Figure 5) depicts the TCAP based non-standard solution.
PSTN
3
Mobile Switch
SCP
2
1
FIGURE 5: TCAP BASED NON-STANDARD

Figure 5: TCAP based Non-Standard
In the above, the mobile switch contains information in its HLR about all prepay
customers. When a prepay customer attempts to use the service, proprietary vendor
software recognizes the condition as a triggering event and suspends call processing
while an SCP is queried (via a TCAP message) to gain further instructions (step 1). The
SCP performs call-processing functions (step 2) analogous to the ISUP loop-back
example, (in this case) returning a TCAP response message to the mobile switch (step

3). The mobile switch resumes normal call processing at that point, setting the call up to
the PSTN in the normal way (step 4).
Unlike the ISUP loop-back or the point solution, there are no dedicated resource
requirements. Additionally, the SCP may contain intermediate or “end-of-call” triggers
that indicate the event in which a prepay customer has reached a pre-determined
account threshold or account exhaust. This mechanism can facilitate a more graceful
and customer friendly operation e.g. the prepay user can be bridged (while the original
call remains intact) to a control circuit for purposes of playing a warning (account low)
message (via “whisper tones”). At this point, the prepay customer may be offered the
opportunity to recharge (rather than merely being disconnected).
The only major limitation of the TCAP based non-standard method is that, due to its
proprietary (vendor specific) nature, roaming is problematic. Roaming can only occur
between like switch types that have the same software logic and triggers armed. This
includes implementations that utilize proprietary extensions of the INAP standard.
Roaming agreements also have to be in place between carriers to support the messaging
interactions between serving and home systems. In the above diagram, the serving
system must recognize the service profile returned by the home system (during the
registration process) and be able to act on that profile information (via armed switch
triggers) when the prepay user initiates a call attempt.
TCAP BASED STANDARD

WIN and CAMEL provide capabilities for TCAP based standard prepay deployment. They
provide a major improvement over proprietary TCAP solutions by allowing roaming to
take place wherever serving carriers support the necessary triggers and software logic.
This means that, in order to provide service to prepay callers, the serving system must
support WIN/CAMEL standards, even if the serving market does not support WIN/CAMEL
based prepay for its own (home) customers.
HYBRID SOLUTIONS
A hybrid solution example would be exemplified by a SIM based solution for basic prepay
call processing with a TCAP based IN complement for value-added services such as
location sensitive billing. It is likely that many GSM operators will adopt this approach as
they migrate to a full CAMEL based IN architecture over time.
CALL DETAIL RECORD (CDR) BASED SOLUTIONS

CDR based solutions utilize a near real-time based process to track mobile usage by
prepay customers.

1
PSTN
Mobile
Switch
HLR
2 3
Prepay DB
FIGURE 6: CDR BASED SOLUTIONS

Figure 6: CDR based Solutions
The CDR is created in the MSC and includes pertinent information such as type of
service, user identification, date/time of usage, call destination (if outbound) or calling
party number (if inbound), and location of the prepay customer. The CDR is generated
upon call completion (step 1) and is sent (via an IP connection) to an adjunct prepay
database for processing (step 2). When the account reaches zero, the prepay database
sends a message back to the HLR (step 3) to bar the customer from further calling until
recharge occurs.
This solution has the advantage of low cost compared to other solutions. As CDRs are
monitored after a call is placed, this solution can sometimes allow unbillable usage on
the last call (prior to the system detecting a zero account balance and initiating a
disconnection).
PREPAY SUPPORT AND BUSINESS PROCESSES

Thus far, we have spent considerable effort discussing some of the technological aspects
of prepay. However, in comparison to the business issues, the underlying technology is
of minimal importance, and in fact, should be totally transparent to the user. While
understanding the underlying technology enabling overall system capabilities is
important, the business issues are arguably the most important aspects of a prepay
operation and support.
Apart from patents and trade secrets, technology is ultimately duplicable. Therefore, in
order to focus on product differentiation, there should be a strong focus on business
issues and continuous improvement in the areas of market positioning, product support

and business processes. The next section discusses prepay support and business
processes while prepay offering strategies will be discussed in a later section.
DISTRIBUTION
The establishment and support of effective sales channels and points of distribution is
very important to success in the prepay business. This relates to both initial sales for
new prepay customers as well as ongoing customer support including support for
customer account replenishment.
The foundation of a successful prepay program is built with the establishment of many
and varied merchant locations, supported by effective marketing focused toward each of
the four respective major target markets: credit challenged, temporary use market,
anonymity market and cost control market.
Distribution concerns include both the mobile equipment (phones and accessories) as
well as prepay cards. A successful prepay distribution system includes an expansive and
effective network of both equipment sales channels as well as points-of-sale for card
purchase and/or prepay account replenishment.
If less traditional means of distribution are employed, such as marketing and sales via a
"virtual storefront" on the Internet or direct marketing, fulfillment must be addressed as
a separate issue. Arrangements must be made with mobile equipment suppliers and/or
distributors to ensure that equipment and/or prepay cards can be distributed to
customers as they make purchases. With utilization of the Internet for commerce
increasing rapidly, the need to secure an independent means of fulfillment will increase.
POINT-OF-SALE SUPPORT
Merchant point-of-sale locations require support in terms of advertising, communications
terminals (for activation and replenishment), equipment returns, and technical
assistance. One of the most important items is the point-of-sale activation and
replenishment device. Depending on the type of prepay system these devices will
consist of either a simple electronic keyboard or modem (in the case of a debit card
based system), or also include a magnetic strip reader (if the system is account based).
These devices, ranging in price from a few hundred dollars up to one thousand dollars,
must be judiciously located in merchant locations where it is expected that users will
replenish often.
POS activation (POSA) is the operation of activating cards at the point of sale, or in the
case of an account card (permanent card type) system, recharging the card at the point
of sale. POSA is an important issue as it has many benefits. We will discuss POS-based
recharge and other replenishment issues in Part Three of this report in the
Replenishment and Distribution Strategy section.

CUSTOMER CARE
While mobile prepay service providers continuously strive to automate their operations
to the extent possible, it is likely that there will always be a need for customer care
personnel. Many operators employ automated equipment such as an interactive voice
response unit (IVRU) to handle many routine announcements and customer interactions.
In some cases IVRUs are used for the acceptance of payment for replenishment, or at
least account replenishment based on user input of information from a previously
purchased prepay card or voucher.
REPLENISHMENT
We have previously defined replenishment as the act of updating a mobile prepay
communications account to include more airtime. Prepay systems are typically
configured (based on operator concerns and user desires) to alert a user when his
account reaches a certain threshold. When this threshold is reached, the user will be
alerted of the condition and is often offered options for replenishment.
There are many physical means of accomplishing replenishment, but not all of them are
available to each user. A user who has good credit (perhaps whose motivation for use is
cost control) may desire an option to replenish via credit card, either via a customer care
representative or an IVRU. Someone in this market segment may even desire automatic
replenishment up to a certain limit.
On the other hand, the credit challenged and the anonymous users are in some cases
unable to meet operator criteria for these options and/or prefer to do business with cash.
For these users, cash payment at a point-of-sale is the only realistic option. However,
some operators, depending on the arrangement with the merchant, will allow credit sales
at the point-of-sale.
In debit card systems, a disposable prepay card (or voucher) is purchased at the point-
of-sale. In this case, the user's prepay account may be replenished immediately after
the sale via a point-of-sale terminal device, or the user may subsequently call an IVRU
or customer care representative to provide card information for replenishment.
In account-based systems, the user has a non-disposable card that is used to

electronically identify the user's account so that the account may be appropriately
credited when airtime is purchased at the point-of-sale. In this system, a magnetic strip
on the account card is "swiped" at the point of sale device. The device then
communicates with the prepay customer database to provide the appropriate amount of
credit purchased.
In handset based prepay systems, either electronic payment is accepted "over the air"
through a secured connection, or information is programmed into the phone.

ADMINISTRATION
All prepay systems require a certain level of administration including provisioning
customer data, handling replenishment requests or system maintenance. Some prepay
platforms may only be accessed via proprietary interfaces for administration. Other
systems employ open interfaces that allow legacy wireless operator customer care
systems to interface with prepay databases. Regardless of the system deployed,
improved administrative efficiency should be the goal as this is an area where the
wireless operator can reduce operating costs through effective automation.
PREPAY ISSUES
COST OF ACQUISITION
The cost of acquiring a prepay customer is generally much lower than acquiring a post-
paid customer. A large portion of the acquisition cost for post-pay is sales, dealer, and
agent commissions. On the other hand, prepay is typically distributed in a more cost-
effective manner. Sales assistance is minimal or non-existent as there is little or no
customer information required including no credit check. Prepay phones and cards can
be found in low overhead retail locations such as department and convenience stores.
Another cost of customer acquisition is the phone itself. Prepay customers often receive
refurbished or early model phones rather than top-of-the line phones. In contrast, the
cost of a more high-end phone for a post-paid customer is subsidized, meaning that the
customer pays less than the actual retail cost of the phone. The mobile operator usually
pays the difference to the manufacturer. However, as prepay service becomes a more
widely accepted service alternative in the United States, we will likely see more high-end
phones used by prepay customers.
Generally speaking, the cost of acquisition for prepay customers is lower, however,
churn and/or the lack of replenishment are issues that can drive up the overall cost of
customer ownership (acquisition and retention).
ROAMING
The ability to roam with prepay service is problematic. As we have discussed earlier,
handset based solutions allow roaming, but they are besieged with other problems such
as difficult replenishment and little differentiation capability. Point solutions can enable
roaming by looping calls from the serving switch back to the home system prepay
platform and then back out to the called area (perhaps the serving area), causing
network inefficiencies and higher costs. Proprietary IN solutions do not allow roaming
except between like switches that have the same software logic. Even standards based
IN solutions are not the answer, as it is likely to be four to five years before there is
ubiquitous deployment of WIN and CAMEL based triggers. When ubiquitously deployed,
however, mobile IN capabilities will offer the best long-term roaming solution.

RATES
As we discussed earlier, rates for prepay service are much higher in the United States
than in Europe, however, the trend is leading toward increasingly competitive rates. As
expectations about prepay service continue to change and network capabilities are put
into place to support those changes, the cost for prepay service will continue to decrease
rapidly. Many prepay users really want cost control, but are not willing to pay a large
premium to get it. The deployment of mobile IN will allow better customer
segmentation, allowing post-paid users to have cost control at a lower rate than a
prepay customer.
CHURN AND REPLENISHMENT

Customer turnover is referred to as churn. In prepay, a customer who has not
replenished (re-charged their account) within a certain period of time is considered to
have churned. The problem with prepay churn (as with post-paid churn) is trying to
understand why customers churn. This situation is even worse with prepay than with
post-paid. With post-paid, there are at least some statistics that can be gathered about
the customer at the point-of-sale. Due to the anonymous nature of prepay (no credit
checks and little or no personal information required), gathering information about the
customer base is very difficult if not impossible.
Replenishment is an issue in itself. Wireless operators constantly strive to make prepay

replenishment as easy as possible for the customer base. However, many prepay
platform replenishment systems do not provide detailed reports about replenishment.
CDRs are always tracked to determine actual usage, but little is done by way of Service
Detail Records (SDR) which track things such as how often a customer replenishes.
Furthermore, even if tracking occurs there are no real-time feedback processes to allow
discounts at the point of sale. If these systems and processes were in place,
loyal/frequent users could be given incentives for replenishment and usage.
SERVICES AND DIFFERENTIATION

As discussed earlier, non-IN based solutions provide little in the way of differentiation.
With prepay penetration growing, and consumer expectations changing, prepay is
becoming increasingly mainstream. As prepay becomes more mainstream, churn will
become more of a factor if wireless operators are forced to compete on the basis of price
alone. The good news, however, is that they do not have to compete based only on
price.
Mobile IN will allow the deployment of feature enhancements and value-added services.
For instance, IN based location technology offers two examples. IN enabled location
querying can enable a voice response system to direct the prepay user to the closest
point-of-sale for replenishment when a pre-determined threshold is reached. Another
example involves Location Sensitive Billing (LSB). Establishing lower priced usage

“zones” through LSB technology can allow a mobile operator to provide incentives for
additional prepay usage.
PREPAY PRODUCT AND SERVICE PROVIDERS

TYPES OF PRODUCTS AND SERVICES
We have already discussed the various types of technology solutions; handset based,
point solutions, various network-based solutions, and CDR based solutions.
Another way to characterize products and services is by the extent of outsourcing

employed by the wireless carrier. With prepay service being an immature service in the
United States, many mobile service providers look to service bureau options for all or
part of the requirements for prepay. You will recall that, in addition to a technology
platform, an overall prepay solution also requires distribution, point-of-sale support,
customer care, replenishment and administration. A service bureau solution can provide
any one or all of these business processes and support systems as well as the platform
for processing calls, storing customer data and generating reports.
With the introduction of mobile IN for prepay, we are likely to see an even greater
dependence on service bureaus. However, as prepay becomes a more mainstream
service in the United States, we will see a migration away from service bureaus. Unless
the service bureau can provide operating efficiencies based on economies of scale, or
provide unique value-added services, the mobile service provider will want to take on
more responsibility and control with a goal towards lower long-term costs and
differentiation.
PRODUCT AND SERVICE PROVIDER PROFILES

Next, we introduce some of the major players in the prepay product/service industry,
indicate their role (such as infrastructure provider, service bureau, software developer,
etc.), and characterize their platform technology type.
INFRASTRUCTURE PROVIDERS AND SERVICE BUREAUS

§ Alcatel - an infrastructure provider that has devised a pre-standard network
based solution with a migration path to WIN and CAMEL when those standards
are available/deployed by the operator
§ Boston Communications Group Inc. (BCGI) - a service bureau provider,

currently employing a point type solution wherein mobile operators must directly
trunk all prepay calls through BCGI’s operations center. As mentioned earlier,
BCGI has partnered with AGCS to offer WIN based prepay. BCGI currently has
the largest prepay market share in the United States, offering a full array of
prepay services and support for the wireless operator. (detailed profile below)

§ Brite - offer service bureau services but also have an integrated platform that
supports additional features such as single number service and voice activated
dialing
§ Compaq - an infrastructure provider that offers a TCAP based network solution

for proprietary, WIN, or CAMEL interfaces
§ Comverse - an infrastructure provider offering a point solution
§ Cosair - have partnered with Ericsson to offer a solution based on Ericsson’s IN

capabilities and interaction with SS7 signaling for real-time routing of calls
without the need for a point solution device
§ Glenarye - an infrastructure provider that promises support for both WIN and
CAMEL on the same platform. Glenayre is partnering with AGCS for WIN.
§ GTE Telecommunications Services Inc. - offers a service bureau based IN

solution that utilizes ANSI-41 messaging to support prepay in home and visited
(roaming) markets
§ HNC Software - provides application fraud management, churn prediction and

prepaid services platform
§ Homisco/Voicenet, Inc. - offers an IN based platform utilizing core INAP

capabilities
§ LHS/Priority Call Management - offers a point solution
§ Logica - an infrastructure provider of pre-standard solutions that include a

combination of a point solution and an IN solution (detailed profile of Logica
below)
§ Lucent Technologies develops software for prepay and they have an ISUP-
loopback solution. They have also announced that they will offer a WIN based
solution and are forming partnerships with Boston Communications and Glenayre
to bring the WIN based solution to the market. They have also partnered with
TeleCommunication Systems (TCS) to incorporate TCS’s prepay software
solution into Lucent’s bundled capabilities for multiple services on the same
platform. The solution supports network based GSM and will support WIN as
well. TCS is also an SMS Center vendor, profiled in "Success 4
SMS.

§ National Telemanagement Corporation (NTC) - provides a service bureau
solution wherein NTC owned call-processing equipment is located at the wireless
operator’s location (detailed profile below)
§ Nortel - offers a platform based on WIN triggers
§ Opus Telecom - offers a real-time post-paid service for budget and spending
control
§ SEMA Group - has 200 installations of its prepay solutions with 60 million
customers. The largest is Telecom Italia Mobile with 15 million customers. Sema's
acquistion of LHS in 2000 bougt with it Priority Call, an IN based product. Sema
now offers IN, service nodes and hot billing solutions in its prepay portfolio
§ Systems Link - offers a service bureau solution based on near real-time CDR
analysis
§ SLP InfoWare - offers a churn manager solution to help predict when prepay
subscribers may be incline to try another service provider or simply not recharge
§ Tecore - offers a point solution
§ VoiceCue Technologies - offers a service bureau point solution that consists of

an integrated system. This system supports additional services such as directory
assistance call completion and voice-activated dialing.
HANDSET BASED
§ JRC International, Telemac, Topp Telecom and US/Intellicom - all offer
proprietary based handset solutions for prepay (detailed profile on Telemac
below)
§ AU-System Mobile, Orga Kartensysteme GmbH, Siemens Wireless

Terminals and SwissCom/Gemplus - all offer SIM card based handset
solutions
DETAILED PREPAY COMPANY PROFILES

In this section we provide a detailed profiles of companies, representing a cross section
of the types of businesses involved in mobile prepay. In addition to information about
their technology approach, this section contains valuable market viewpoints of each of
these respective companies.

APPLIED GLOBAL TECHNOLOGIES (AGT)
www.appliedglobal.com
Applied Global Technologies has been writing software for the Prepay Industry for the
since 1996. AGT worked diligently with AG Communications in the early stages on the
development of its Intelligent Network Solution for prepay cellular. AGT has gone the
full gamut in the prepay cellular industry; from research and development for software
to implementation, support and consulting.
As the trend for Prepay Cellular continues to grow in the US and around the world, it is
of absolute importance that improved accessibility to real-time records and activities of
the prepay cellular customer, making it easier and more efficient for customer care
representatives. There can also be some relief to the customer service representatives
by using a browser based interface that will allow the customer to access their own
account, look at their call records and balance information. While this is not a widely
used application at this time, it is expected that prepay applications will go that direction
in the future.
One of the other applications being used is the Point of Sale (POS) application that
allows customers to walk into a convenience store, gas station or even a pharmacy or
food market and purchase airtime for their telephone. Several large chain stores are
already beginning to make this available to their customers. Using the POS terminal
allows the customer to walk into these locations and purchase time on their phones.
Instead of a prepay card, the customer receives a receipt with a pin number. In reality,
the receipt is just that, a receipt. The purchased airtime amount and the cellular phone
number has been transmitted to the carrier and added to the customers account via the
POS application. This is a great convenience for the customer, and it allows the cellular
carrier and reseller to be in the prepay business without the liability of have cards that
are equivalent to cash on their shelves.
AGT strives to develop provisioning software with versatility in its’ reporting functions
allowing for customization to the needs of the individual carrier. Having found that every
cellular company has their own specific need for certain type customer information; AGT
has worked diligently to develop products that can tailor to the carriers need for real-
time information. AGT offers training and support on all software.
Applied Global Technologies had provided provisioning software for carriers using point
based solutions and those using ISUP loop-back with SS7. The provisioning software is
compatible with any North American standard operating system.

BOSTON COMMUNICATIONS GROUP, INC. (BCGI)
www.bcgi.net
Boston Communications Group, Inc. (BCGI) is the leading provider of prepay services to
wireless carriers in America. Founded in 1988, BCGI provides telecommunications
carriers with a range of resources, support services, and cutting-edge technology
targeted to address the unique needs of the growing prepay, electronic, and mobile
commerce industries. BCGI provides one or more of its services to the top five wireless
carriers in the United States, plus more than 80 additional carriers worldwide.
THE BCGI C 2C SOLUTION

BCGI’s C2 C Prepay Wireless Service Bureau has been in operation in North America
since 1996 and currently handles over 2.3 million prepay subscribers. BCGI’s System
C2 C Prepay Service operates as a standalone system for many Latin and South
American carriers, as well as many other carriers around the world, with over 2.5 million
subscribers. BCGI launched its Prepay Connection in late 1999 as a hybrid of the C2 C
service bureau and the System C2 C platform to allow small to medium carriers in North
America to connect to BCGI’s national footprint with a very small capital outlay and
minimal recurring costs. These prepay services support AMPS, TDMA, CDMA, and GSM
carriers, interfacing with all major switch types using both SS7/ISUP and MF Modified
Feature Group D signaling.
The BCGI platforms allow wireless carriers to provide prepay service to subscribers using
their existing wireless network. Designed to offer maximum service to both the
subscriber and the carrier to closely mirror all post paid services, the BCGI platform is
customizable, easy to implement, and fully scalable to meet carrier and reseller needs to
implement a prepay offering.
KEY ADVANTAGES OF BCGI’S PREPAY WIRELESS SOLUTION ARE:

§ BCGI's ability to utilize the more than 60 voice nodes to process prepay wireless
roaming calls locally, without having to route these calls back to a central location
via an 800 number.
§ BCGI’s real-time rating engine debits the user’s account as the calls are made.
§ The C2 C network provides economies of scale by combining many carriers’

subscribers onto one comprehensive network and database.
§ In addition, BCGI’s extensive experience in prepay allows the company to not

only offer rich and robust features and functionality, but also to provide
knowledgeable guidance to carriers to facilitate profitable prepay programs.

A subscriber establishes a prepay account with the wireless carrier by prepaying any
dollar amount that is credited toward future service. The C2 C network permits a wireless
carrier to automatically route a prepay subscriber's call to the C2 C network where
information regarding the status of that subscriber's prepay account is maintained. Each
call initiated or received by the subscriber rated in real time based on the telephone
number called, carrier usage charges, taxes, and applicable surcharges. The subscriber
may replenish the prepay account by purchasing additional prepay service from the
carrier by credit card through C2 C’s automated replenishment feature or by purchasing
additional prepay service at any of the carrier’s affiliated retail outlets. The C2 C network
can complete a call and debit the account automatically without requiring the subscriber
to enter a debit card number or other information. As a result, a prepay subscriber
receives service similar to a subscriber using traditional post paid billing arrangements,
including the ability to make outgoing calls, receive incoming calls, and roam into other
markets.
The BCGI network utilizes the SS7 signaling protocol from carriers’ mobile switching
centers for faster and more reliable call set-up and to enhance digital services such as
Caller ID and Voice Mail. BCGI also provides enhanced services like international dialing
capabilities to permit prepay subscribers to make calls from within the United States and
Canada to countries around the world. BCGI’s Passport feature allows subscribers to use
prepay account balances to make calls from any prepay or traditional post paid mobile
phone on a per-call basis. Additional features include prepay roaming, automated
replenishment options, and credit card address verification.
PRODUCT FLEXIBILITY
BCGI understands the prepay market and carriers needs to tailor their prepay programs
to meet market demands. BCGI’s solutions offer carriers total flexibility in the design of
their prepay program. All call rating and debiting, account provisioning, and subscriber
messaging features are totally flexible to meet carrier needs.
REVENUE-GENERATING FEATURES
BCGI continues to lead the prepay industry by providing additional revenue generating
features; for example Passport customers have pre-call access to prepay accounts.
Individual Special Numbers allow subscriber-based private number calling plans.
RESELLER SUPPORT
The BCGI C2 C solution fully supports the implementation of resellers on the North
American network, providing resellers with all of the flexibility and features of the C2 C
solution. Currently, resellers are using the C2 C network all across North America
reselling prepay for a number of wireless carriers.

BUSINESS SUPPORT SERVICES
Carriers who offer prepay to their subscribers can leverage BCGI’s nationwide real-time
rating network, our complete range of services and our knowledge of end-user needs.
Some of the business support services, offered by BCGI include client and vendor
account management, 24 x 7 Network Operations Center support, distribution channel
initiatives, churn management programs, and network engineering.
A GROWING FAMILY OF PREPAY WIRELESS SOLUTIONS

PREPAY CONNECTION
BCGI continues to expand the features of its prepay wireless services to offer additional
functionality to its carriers and their prepay subscribers. Formerly, only the largest
wireless carriers could afford to offer prepay services due to the high cost of connectivity
or capital investment. BCGI changed all that by introducing Prepay Connection, a new
architecture that democratizes prepay wireless by making it affordable to even the
smallest carrier. Prepay Connection allows wireless carriers in small to mid size markets
the benefits of BCGI’s national C2 C prepay wireless network without the cost of voice
trunks and large capital investments.
CONVERGED PREPAY
Recently, BCGI introduced Converged Prepay, a feature that allows subscribers to make
prepay calls from any wireless or landline phone. BCGI works closely with the carriers
on an ongoing basis to develop additional features and functionality to expand the
capabilities and value of prepay wireless services.
DISTRIBUTION TECHNOLOGY PARTNER PROGRAM

BCGI created its Distribution Technology Partner program in 1999 to offer expanded
prepay distribution to its North American carrier customers. This program enables
subscribers to replenish their prepay service at many more retail locations beyond the
carrier’s retail outlets. Western Union, Radio Shack, Datascape, UPP, and PreNet signed
agreements for the program, providing over 75,000 potential points of distribution to
BCGI customers. The Company is aggressively pursuing additional partners and
arrangements for distribution including online activation and replenishment
opportunities.
WIN-BASED PREPAY SERVICES

BCGI signed an agreement with AG Communication Systems (AGCS, a wholly owned
subsidiary of Lucent Technologies) to jointly develop a Wireless Intelligent Network
(WIN) based solution for prepay wireless service, including prepay roaming. This WIN
system will take advantage of the call processing efficiency and enhanced feature
capabilities of WIN Phase II standards, while building on BCGI's existing strengths in all
areas of prepay service delivery and back office operation.

While WIN call processing will be the standard used by many prepay providers, BCGI
customers will benefit greatly by continuing to receive industry-leading services in the
areas of rating, reporting, distribution support, customer care, and replenishment.
These services will enable BCGI to provide a state-of-the-art, full-featured platform to
new customers while allowing a smooth migration for current customers, including
roaming capability between WIN and non-WIN systems. Carriers will also have the
opportunity to upgrade to WIN in certain markets and remain on the current C2 C
platform in other markets. The WIN service logic that BCGI and AGCS are developing is
intended to operate on many Service Control Point (SCP) platforms, providing carriers
the flexibility to run WIN service logic on their own SCP platform if they choose.
E-COMMERCE AND M-COMMERCE APPLICATIONS

BCGI is currently developing applications to utilize its extensive prepay network and
real-time rating engine for mobile and other electronic commerce opportunities.
Because of the scale of its network and access to the largest wireless carriers in North
America, BCGI will be able to provide many companies the ability to bill users for
products and services on a real-time, prepay basis, using any method of Web access.
BCGI’s expertise in processing micro-payment transactions, currently handling over 50
million transactions per month, provides potential customers an extremely cost effective
transaction model. BCGI also believes that the market for prepay Internet purchases
will be very attractive to the youth market. BCGI intends to leverage the financial
investment in its existing technological infrastructure to facilitate mobile commerce
solutions for wireless carriers, other telecommunications companies, and online
merchants.
BCGI AND THE FUTURE OF PREPAY WIRELESS

Boston Communications Group, Inc. has been a leading provider of prepay wireless
applications since 1995 and understands the case for making prepay wireless a success.
A broad mix of consumers is finding prepay cards the simple, convenient way to make
wireless calls. According to the Yankee Group, prepay callers will represent about 8% of
wireless users in the United States by the end of 2000.

COMVERSE
www.icomverse.com
OVERVIEW
Comverse, a unit of Comverse Technology Inc., is a leading provider of software and
systems enabling network-based multimedia enhanced communications services to
telephone operators around the world. The company provides a wide range of solutions
including 3G-ready multimedia messaging, multi-protocol mobile Internet platforms,
wireless data and short messaging services, speech-controlled portal, interactive voice
response and other personal communications services.
Comverse has supplied enhanced service solutions to 350 customers in more than 110
countries, including many of the world’s largest operators: British Telecom, Cable &
Wireless, China Telecom, Deutsche Telekom, MCI WorldCom, NTT, SingTel, Sprint PCS,
Telecom Italia and Verizon. The Comverse system is operating in a wide variety of
different network topologies, including several mixed-vendor environments, and in
several sites is supporting over a million active mobile prepay users.
PRODUCTS AND SERVICES

MOBILE PREPAY SERVICES
Mobile prepay service from Comverse offers a range of features and options, and can be
tailored to the specific needs of a particular country, region or community. The service
monitors telephone usage in real-time to ensure that subscribers are never indebted to
the telephone operator. If all available prepaid credit is spent, any active calls are
disconnected. Further calls are barred until additional prepaid credit is purchased and
applied to the account. This principle of “no credit, no service” is applied not only to
telephone calls, but to other chargeable services also, such as short message and
wireless data activity.
Comverse offers a secure prepay service. Prepay credit and tariff details, recharge
voucher data, and other sensitive information are all stored in a centrally managed
database. Access to the system database is strictly controlled. Different types of service
administrator can be offered different levels of access, and different security levels can
be defined at each terminal location. All administrative activity is noted by the system
and logged to a secure file. An extensive set of reports and complete set of Call Detail
Records enable accurate accounting and reconciliation practices to be followed.
The Comverse prepay solution is flexible, and can be integrated with a wide variety of
network and operations support environments. The system can inter-work with all major
switching products, supports administrative interfaces to a variety of HLR products, and
can be managed from existing support systems using a published message-based
interface. The system is scaleable and the same fundamental architecture can meet

diverse traffic requirements, from thousands to millions of active prepaid users.
Redundancy is built into every system component, and no single point of failure will
affect service availability.
The more popular and widely used features of Comverse’ prepay service product include:
§ The construction of tailored tariff plans (from the very simple to the highly
complex) from a large inventory of individual tariffs
§ Billing based on the location of both the caller and the called party, and hence
support for distance-based billing
§ Billing based on day and time, including the use of regional or culture-specific
calendars
§ Support for concurrent tariffs, such as independent charging for airtime and long-
distance usage
§ Periodic charges posted to a prepaid account
§ Automated support services, such as IVR-based recharging and balance query
§ Notification services, including various mechanisms to alert subscribers to low

balance and pending account expiration
§ Multiple Classes of Service, allowing prepaid service features to be packaged

differently to different market sectors
Prepay Service can be combined with other multimedia services offered by Comverse,
including voicemail, Internet-based messaging and mobile originated short message
service, to provide an unrivaled degree of service and cost effectiveness.
PREPAID DATA SERVICES

Comverse has extended the prepaid concept to wireless data services (including GPRS).
Comverse’ own data server technology is fully integrated with Comverse’ prepaid system
to allow subscribers to charge calling services, wireless data usage, SMS messages and
other telephony services to their prepaid account and hence to just one balance. Once
again, the underlying principle is “no credit, no service.” Wireless data usage is
monitored and charged in real-time to ensure that subscribers do not become indebted,
even temporarily, to the service provider. A sophisticated array of charging options is
available, including volume-based or content-based billing. Many of the features of
regular prepaid service have been applied to prepaid data services, providing a feature-

rich, flexible and scaleable solution that can be deployed to a variety of different network
environments.
TECHNOLOGY
The Comverse prepaid solution is based on the same technology as its successful
messaging platform. This design choice leverages the flexibility and proven performance
of the Comverse messaging platform, which has been deployed to a large number of
carriers around the globe. The distributed internal architecture allows additional platform
components to be added incrementally as service usage grows. Multiple platforms can be
combined together into a single distributed arrangement, offering support for many
millions of prepay subscribers. Since the same underlying technology is used to deliver
other enhanced services, it’s possible to deploy several different services at the same
platform. The platform and services can be managed centrally through the use of
Windows NT-based administrative workstations. Data replication technology is used to
ensure data integrity and synchronization in a distributed platform configuration.
Of the various prepay system architectures that exist in the market today, Comverse is
committed to a platform approach where all credit-related information (tariff plans,
subscriber balance data, recharge information, etc.) is stored in a central, secure
database. This approach delivers the level of security required by a system that controls
large amounts of credit. It also allows the prepaid balance to be used for several types of
service (prepaid SMS, prepaid data services, m-commerce activity, etc.) and not just
voice calls. This approach offers maximum flexibility and places no restriction on the
choice of handset that can be used by prepaid subscribers. Database information is
always current and information presented to subscribers and administrators is accurate
and consistent.
The Comverse system can be configured to inter-work with the telephone network in
several different ways. A traditional Service Node controls all aspects of a call, and offers
the widest set of features. An IN approach allows application logic to be injected into the
call at discrete points. The Comverse prepay platform can also be configured in pre-IN
mode, whereby IN features can be delivered using standard ISUP signalling. The
Comverse prepaid platform can operate in more than one mode at a time, allowing
carriers to take advantage of the best of each interface or migrate between different
configurations with minimal impact on service availability. For example, prepaid services
can be deployed using a pre-IN configuration with the platform migrating to an IN mode
of operation once network switches have been upgraded to support IN triggers. This is a
unique benefit of the Comverse prepaid solution, and can be used to mitigate the risks
associated with deploying IN-based services in the network. However, the same prepaid
application and database are used in each platform configuration, and guarantee a
consistent interface to the prepaid user.

Comverse supports over 30 local variations of the ISUP standard, has adapted IN
standards to be compatible with proprietary vendor implementations, has developed an
administrative interface to several HLR products, and offers IVR capabilities in most of
the world’s major languages. It’s possible to deploy the platform in a mixed vendor
environment, and even support multiple network technologies using the same platform.
COMVERSE APPROACH TO MOBILE PREPAY

Intense competition resulting from a deregulated telecommunications industry has
consumers shopping around to lower their telephone costs. This means that network
operators must compete ever more intensely to attract and retain customers. Comverse’
prepay solution extends the availability of phone service to new markets, enabling
greater access to communication and information via the Internet, e-mail, corporate
Intranets and more. Now, location-dependent information services and mobile
commerce are within everyone’s reach. Comverse’ prepay solution helps network
operators create unique service offerings while giving subscribers the freedom to control
their voice and mobile data expenses.
Comverse believes that the long-term success of prepay programs depends less on the
specifics of a particular technology and more on the development of a strong partnering
relationship. To this end, Comverse provides localized product, marketing and service
support to its customers. Prepay services can be deployed and implemented via several
technologies and architectures. One solution may meet some service needs but not
others. Choosing the right solution requires an examination of technical, provisioning and
market conditions. Comverse understands the importance of integrating prepaid services
with the local network, adapting prepay services to blend with existing support
procedures, matching service features with changing subscriber expectations, addressing
the needs of multiple market segments, reacting to rapid prepay take-up rates, and
leaving room for operator and subscriber creativity.
Comverse further supports its customers through its strong commitment to the prepaid
market. New features are driven largely by existing customer requests, and Comverse is
continually investing in new technologies and new services to further enhance its prepaid
offering. Comverse has taken a lead in applying prepay service principles to other areas,
such as SMS and wireless data services, and closely monitors the progress of these and
other emerging technologies. A Medalist marketing program allows Comverse customers
to learn about, and benefit from, successful marketing campaigns from around the
world. These programs help to promote greater success in the deployment and growth of
a new or re-launched prepaid program.
COMVERSE'S VISION FOR PREPAY

There is no doubt that Prepaid Service has been a remarkable success across most of the
world. As service take-up begins to approach saturation levels in the more successful
markets, emphasis is shifting to the introduction of more advanced wireless

technologies, and in particular to wireless data services. It is imperative that prepaid
service users continue to be viewed as valuable, ‘main-stream’ customers, and that
advanced services be offered to them regardless of their method of payment. Prepaid
Service must be adapted to meet the needs of these new technologies, without
undermining the basic tenets of the service:
§ Real-time control of service usage

§ ‘No credit, no service’
§ Accurate and immediate charging for service use
§ No indebtedness to the service provider
§ Total security of prepaid credit and tariff information.
This is the challenge to the prepaid service industry. Wireless data services require a
creative charging approach, one based on the extent of service usage, the content of
data, the quality of service, and more. Supporting these services in a way that does not
compromise prepaid principles is a challenge that Comverse has already accepted.
Prepaid wireless data services are an example of the company’s commitment in this
area, and prepaid support for other enhanced services will emerge over time.
Comverse has become a leader in the delivery of prepay service around the world, and
maintains a commitment to its strong position in this arena.
For more information:
Comverse
100 Quannapowitt Parkway
Wakefield, MA 01880
Phone: +1 781 246 9000
Fax: +! 781 224 8143

LOGICA
www.logica.com/telecoms/products/networking.html
mnmarketing@logica.com
Logica have established a leading position in the provision of prepay infrastructure and
have been supplying telecommunications operators around the world with prepay
services since 1996.
Logica provide a comprehensive range of pre-paid solutions through its series of Aethos
Intelligent Network Platforms (INP). The Aethos family will operate in a Service Node
configuration or in an Intelligent Network (IN) configuration or as a hybrid of the two
approaches. In any of these configurations, the Aethos system provides prepay calling
support for voice, SMS messaging, GPRS and m-commerce transactions. Also provided
is a comprehensive System Management, Administration and Customer Care capability
via the optional Aethos Intelligent Network Support System (INSS).
Initial marketing of prepay services was heavily focused on potential users who were
considered to have a poor credit history. This was a niche market and resulted in a
number of niche solutions characterized by limited functionality (usually only basic voice
services) and low subscriber and traffic capacity.
In Europe, Asia Pacific, South Africa and the Australian sub continent, the prepay market
has evolved beyond the early “limited credit” users to become a mainstream service
offering targeting the mass market of potential mobile phone users. Marketing tactics
such as “user control” and “life style” marketing has resulted in explosive take up of
services. Today, many operators are reporting that prepay sales are outstripping
traditional sales by a factor of more than two to one.
This change in emphasis puts increased demands on the platforms used to support
prepay services. Users now expect to be offered a full range of service options such as
Voice Messaging, Call Diversion, SMS Messaging (both terminating and originating
services), Data and Fax services – in fact anything that the network operator can supply.
Prepay is now considered to be simply a method of payment, not a service
differentiation. Additionally, systems must now be able to scale upwards in order to
handle the increases in subscriber base and traffic that result from prepay’s marketing
success story. Logica report that their systems are supporting increases in capacity of
over 100 times the initial forecast requirement.
NUMBER OF DEPLOYMENTS
Logica state that they have systems deployed in more than 30 networks in all parts of
the world supporting systems ranging in size from l0,000 subscribers to many millions of
subscribers and based on Service Node and IN system designs.

Known deployments of Logica systems include:
§ E-Plus in Germany
§ Libertel in the Netherlands
§ Telstra in Australia
§ Vodafone in New Zealand
§ Panafon in Greece
§ KG Telecom in Taiwan
SYSTEM ARCHITECTURES AND DESIGN BENEFITS

Logica’s Aethos INP (Intelligent Network Platform) system comprises a number of
functional elements that can be configured to support either a Service Node or an
Intelligent Network (IN) system design.
Service Node implementations have a number of benefits that are important to network
operators including:
§ Little impact on existing infrastructure
§ Usually faster implementation
§ Often more flexible service design is possible since fewer interactions with other
network elements are needed
§ Often lower cost (particularly for networks with less than 500,000 subscribers).
The main disadvantage to a Service Node implementation is the cost associated with
routing calls from the point of call origin within the network, to the Service Node and
back again. The Aethos system has a distributed switching architecture that minimizes
these costs for network operators, however once subscriber numbers reach between
500,000 and 1 million, an IN based solution is often the better choice. The Aethos
system design provides a seamless transition between these network architectures.
The Aethos INP consists of a number of software and hardware components, each of
which can be sized appropriately to meet specific functional and performance
requirements. In addition, system designs can be deployed which consist of different
combinations of the available components.
THE SIGNALING AND IP SUB-SYSTEM

The signaling and IP sub-system is based on the world's leading programmable
telecommunications switch. Each signaling and IP sub-system is capable of expansion to
a maximum capacity of 64 E1/T1 links, 64 C7/SS7 signaling links and, for practical
purposes, an almost unlimited quantity of voice announcement (IVR) and DSP resources.

Multiple sub-systems can be added to provide higher signaling ad trunk capacity as
required. This sub-system is also used to implement communications protocol layers and
therefore, most of the time-critical protocol functions do not impose any loading on the
controlling computer systems.
THE SERVER COMPUTERS

The server computers are high availability business servers from Hewlett Packard.
Logica’s Aethos software is supported on the full range of HP servers thereby providing
scaleable solutions to meet the needs of the most demanding of applications. The
servers can be deployed in a clustered configuration with the software components
operating in a load-sharing mode across the computer cluster. This arrangement allows
for processing capacity to be added in line with subscriber growth resulting in a cost-
effective initial installation and secure expansion.
INP SOFTWARE ARCHITECTURE

In addition to switched call Service Node functionality, the Aethos INP offers the
following functions:
Service Control (SCF) - This function is used to control the progress of the call and
therefore the “look and feel” experienced by the prepay caller. The same Service Control
Function is used with Service Node and with IN implementations so that any existing
switched call based services (SN) can be easily migrated to full IN services.
Service Resource (SRF) - The service resource functions are supported by the
switching sub-system and are accessed via a software layer by the service control
2
functions. Service Control requests the SSP to route calls to the SRF using the
appropriate IN procedures.
Service Management (SMF) & Service Management Access (SMAF) - The Aethos
INP provides a range of integrated service management functions and flexible external
interfaces designed to allow secure access for Network Operator's computer systems and
end-users.
STANDARDS COMPLIANCE
Logica supplies systems that are standards compliant. Wherever applicable, they follow
the standards laid down by ANSI, ITU-T and ETSI. However, they also recognize that
protocol implementations are sometimes non-standard so the system design ensures
that manufacturer or country specific variants can be implemented with ease.
INP CAPABILITIES
§ Implementations using Service Node (switched call) of Intelligent Networking
(IN) call control
2
SSP stands for Service Switching Point

§ INAP protocol and Service Control Functions
§ Integrated Service Resource Functions for in-call announcements, DTMF digit

input etc
§ Service Management capability via optional Aethos INSS or Aethos provisioning

protocol
§ Service Management Access via IVR or WWW
§ Can utilize the services of the SSP
§ Multiple protocol variants in parallel -ISUP, ETSI INAP, WIN
§ Expandable thanks to a distributed system architecture
§ Support for external Intelligent Peripherals (IP)
§ INP will fully support IP functions for external SCPs
§ Configurable Service Management Access Point capabilities
§ Tariffing of voice, data, fax, SMS, GPRS and m-commerce services
§ GSM MAP including USSD
§ Evolution with IN standards (GSM CAMEL Phase 2 and WIN Phase 2)
INTELLIGENT NETWORK SUPPORT SYSTEM (INSS)

Logica assert that a prepay service requires more than real time call control and tariffing
capabilities. To address the administration, management and customer care functions
they offer an optional support system, the INSS.
INSS SYSTEM HARDWARE

The physical configuration of the system consists of HP UNIX servers. The client
component of the support system uses industry standard PCs running Windows® or NT.
INSS APPLICATION SOFTWARE

The Aethos INSS consists of two sub-systems. The Customer Care and Management
System and Recharge Card Management System. Both operate as Client/Server
Applications.

The Recharge Card Management System - is an integrated client/server application
that provides extensive capabilities to manage the logistics and inventory control
involved in moving recharge cards through a wide distribution network. It enables:
§ Secure generation of recharge card identity numbers

§ Encryption of card data files for transmission to manufacturers
§ Loading of card data into operational databases
§ Tracking of cards in the distribution channels, throughout the card life cycle
§ Secure activation/de-activation of recharge cards or vouchers
The Customer Care and Management System - offers the operator full
administration and customer care facilities. Logica claim that these capabilities are
needed to implement an operational pre-payment service in the shortest possible
timeframe. It enables:
§ Customer maintenance
§ Provisioning of subscribers in the Intelligent Network Platform
§ Account enquiry and history
§ Processing of balance adjustments (charges & credits) and call refund
3
§ CDR/EDR processing
§ Security/audit
§ Optional Management Information System (MIS)
§ Optional recharge transactions (for loyalty bonus etc.)
§ Optional general charging (for processing and charging of external CDRs).
BENEFITS OF LOGICA’S PREPAID OFFERINGS

The Aethos Intelligent Network Platform is a multi-service platform (it will support
additional applications such as Call Screening or VPN services as well as prepay). The
core capabilities include:
§ Flexible service design

§ Real-time rating and call control
§ Number translation
§ DTMF generation / recognition
§ Routing based on multiple criteria
§ Time of day / date based routing
§ Pre/post and in-call announcements and tones
§ Multiple services operating concurrently
§ Telco standard manageability and reliability
3
CDR stands for Call Detail Record; EDR stands for Event Detail Record

Logica claim that the Aethos Intelligent Network Platform was developed with the
understanding that Operator’s service requirements evolve with changing market
conditions. The following key advantages are stated:
§ Scalability
§ Value for money
§ Rapid deployment

NATIONAL TELEMANAGEMENT CORPORATION (NTC)
www.ntcworld.com
OVERVIEW
NTC develops call processing and billing systems for the communications marketplace.
Services include prepay wireless under the brand name SmartPay Wireless, nationwide
prepay roaming under the brand name iRoam , and unregistered or default roaming
under the brand name American Roaming Network.
NTC provides services to 13 of the top 20 cellular carriers. NTC has been the first to:
§ Automate credit card roaming and collect calling services

§ Develop on-site processing for default roaming
§ Implement account based prepay service
§ Provide real time, third party nationwide replenishment
§ Automatic prepay roaming across carrier networks
§ Web reporting
NTC was acquired by Illuminet (www.illuminet.com) in the summer of 2000. NTC will
function as a wholly owned subsidiary of Illuminet, a provider of SS7 and intelligent
network based services in the United States and parts of Asia.
PRODUCTS AND SERVICES

SmartPay Wireless was introduced to the industry in February 1996. SmartPay was
developed to meet the needs of NTC’s wireless carrier customers as they addressed the
credit denied market. NTC’s approach to the prepay market however was different from
other existing prepay models. Existing prepay systems treated prepay as a product
rather than a means to mitigate the carrier’s exposure.
Existing prepay systems incorporated the use of debit cards or vouchers as

replenishment mechanisms. Debit cards and vouchers were treated as a product in that
they had SKU codes, required inventory, card maintenance and PIN administration.
Commissions ranging from a low of 15% to a high of 35% of the card value were paid to
locations selling the cards/vouchers.
The experience of the prepay customer was totally different than that of postpaid. Rate
plans were considerably higher, features were not offered and roaming was either
limited, or when provided, very expensive. It was truly third class service at a first class
price.
SmartPay was developed to be an alternative, real time billing system that mirrors
postpaid rate plans. Replenishments are treated as financial transactions rather than
retail transactions. The system is account based allowing money in the account to be
used for long distance, features, roaming and airtime. Taxes are charged on usage,

rather than up front in the form of a sales tax. Account activity access and reports are
real time and available over the Internet.
American Roaming Network - provides unregistered or default roaming services to

carriers. Carriers route calls that come to their switch as unidentified or denied roamer to
ARN’s on site processor where the call is processed as either a collect or credit card call.
NTC has automated the process by the use of on site processing equipment that
shortens the call processing time resulting in a larger percentage of completed calls. NTC
has also automated the billing process that makes calling simpler and faster for the end
user.
IRoam - NTC’s nationwide roaming system, is a joint development effort between NTC
and Lucent Technologies to provide real time, nationwide roaming. The cross
functionality of iRoam will allow service providers the ability to offer prepay wireless
customers national, seamless roaming mirroring that of post pay roaming plans
regardless if the call is from outside or inside the home network.
TECHNOLOGIES
The current NTC call processing system is based on a loop-around (trombone) and
proprietary ISUP RLT technology. The call rating and billing system is based on a
leading-edge proprietary database design, which allows for very discreet carrier market
segregation and extremely fast, real-time call rating. The billing system is a web-based
user interface that allows for quick and easy access to near-real time billing information.
The nascent prepay industry is and just beginning to accept prepay systems, which are
not mainstream (read non-telco originated).
Challenges: Real-time call rating is very processor intensive and requires 100%
availability of all data processing systems. To meet this challenge, NTC uses the most
current client-server load-balancing, programming and hardware system designs.
Roaming is not ubiquitous due to multiple vendor non-standard prepay solutions. No IS-
41 standards exist for prepay or prepay roaming.
The next generation of prepay call processing, which does not require proprietary vendor
solutions, requires the pending TIA PN-4287 WIN standard. The acceptance of this
standard by major telecom equipment vendors will signal the end of the current
proprietary trombone and RLT designs. There is an industry-wide concern that hardware
vendors may not widely or completely accept the release of the standard. This would
result in many non-standard IS-41 prepay implementations and would ultimately delay a
ubiquitous prepay roaming network. To offset this concern, NTC has developed and
implemented a patented, ANSI-41 standards-based prepay roaming solution called
iROAM. This system allows for wireless carriers to integrate their prepay roaming into
one platform. This system operates independently of the WIN standards and would
easily integrate multiple carrier-prepay platforms when the WIN standards are complete.

The result of this combination of WIN and patented technology would be a seamless
North American prepay solution that supports all existing digital handset features at
home and while roaming.
ROAMING
NTC utilizes two methods to provide prepay roaming. The first, or on-net model,
incorporates the use of the American Roaming Network. Prepay MINs are unregistered.
When a prepay subscriber’s call comes in to a carrier utilizing on-net roaming, the call is
sent to the on site ARN call processor where the MIN is identified as either an
unidentified roamer, or a prepay roamer from another carrier. If the caller is a prepay
roamer, an inquiry is made to a database asking 1) is this MIN active, 2) does the caller
have money in the account to cover this call and 3) is this subscriber allowed to roam. If
the answer to all three is positive, the call is placed. Any negative responses and the call
are not allowed. If the caller’s account runs out of money during the call, the call is
disconnected even while the call is in progress. Net settlement is processed by NTC.
NTC’s iRoam system will allow real time roaming in off-net situations. A subscriber will
be able to place and receive calls anywhere that the home serving carrier has roaming
agreements. MINs are registered as are the post-paid subscribers. Call charges are
deducted from the caller’s account real time with net settlement processes between
carriers through the carriers’ current clearinghouse and net settlement processes.
NTC APPROACH TO PREPAY

In the early development stages of SmartPay Wireless, much thought was given to the
definition of prepay, and what would prepay look and feel like in two years, five years
and 10 years. The consensus was that prepay wireless service is nothing more than an
alternative billing method that allows a carrier to mitigate exposure and that in the
future, real time billing would expand that mitigation of exposure to the broader base of
post paid service.
NTC also realized that in order for a carrier to be successful with prepay service plans,
the sales and marketing personnel had to be convinced that prepay wireless is not just
for the credit challenged but rather for a broad segment of the market. NTC believes
offering prepay rates higher than post pay does not work.
Prepay wireless is the only product available today that penalizes a person for paying in
advance. For prepay to be successful, the treatment of the prepay subscriber must be
the same as post paid. Rate plans with similar calling areas that include features and
provide roaming must be offered.
Sales staff should be compensated fairly. If a sales representative receives $100.00 for
selling post pay and $10.00 for selling prepay, it is pretty obvious what will be offered
when in fact, studies conducted by successful prepay wireless providers have shown that

prepay is more profitable than postpaid. Considering that there is no phone subsidy and
little if any incremental sales cost, the sales agent should be paid the same for selling
prepay.
Sales distribution through agent locations has also proven to be very successful,
especially when the carrier offers “phone in the box” packaging.
Replenishment must be simple, convenient and available 24 hours a day both in the
home market and while roaming. Multiple replenishment options must be available. The
NTC system does not use debit cards or vouchers that are expensive and difficult to
track. With debit card/vouchers there are commissions to pay, PIN administration costs,
loss and theft. NTC uses an account card that has no value but is simply a means of
branding for the carrier. NTC made the decision early on to find a company that could
provide nationwide real time replenishment. NTC has an exclusive agreement with
Travelers Express to furnish third party replenishment locations nationwide. SmartPay
replenishment can be by cash, credit card or bank draft.
NTC allows the carrier to perform customer service with on-line, real time customer
information. The NTC system operates with Microsoft’s Windows 95 and 98 and is
integrated with the carrier’s customer service screens. Because most prepay customer
service questions deal with account balance information, which is available to the
carrier’s SmartPay prepay customer through a speed dial number on the handset, the
number of customer service calls are a fraction of those experienced with post paid.
NTC BUSINESS MODEL

NTC offers carriers SmartPay in a service bureau business model. NTC receives a
percentage of the per minute charge and access fees. The percentage amount is based
on MOUs per month. This partnering approach has been very successful and the carrier
realizes that NTC is successful only if the carrier is successful. Information including
average costs per minute, minutes of use, number of calls and average revenue per sub
is available to help a carrier evaluate rate plans and formulate future sales strategies.
Because the NTC database may be partitioned, it is an ideal system for use with
resellers. Minutes may be sold in bulk quantities and the reseller may have service
discontinued when a pre-approved limit is reached just like the individual prepay
subscriber.
NTC VISION FOR PREPAY

NTC has from the beginning viewed prepay wireless as nothing more than a billing option
that mitigates the exposure of the carrier and opens new markets. As prepay develops
with rate plans that more closely resemble those of postpaid, the line separating the two
will steadily disappear. Prepay services minutes of use have risen steadily while costs per
minute have declined. Rather than a service for the credit challenged, prepay has

moved into the mainstream. Growth rate projections for prepay wireless over the next
several years are impressive.
The major switch manufactures have come to the realization that prepay service is
moving into wide acceptance from the marketplace and they have begun to incorporate
real time call tear down into proprietary products that will allow a carrier to offer a
“home grown” prepay service. WIN, if and when it is available, will also aid individual
carriers in developing prepay services.
There are a few difficulties that lie ahead for the carriers using switch or WIN solutions
however. Those difficulties are the inability to provide ubiquitous prepay roaming due to
the lack of inter-operability of proprietary systems, the lack of real time back room
functions and real time replenishment outside of the home market.
Carriers now have enough prepay experience to realize that prepayment of services
reduces exposure, fraud, customer service expense, collection cost and operational cost.
Carrier comparisons indicate that net revenue per subscriber on a prepay rate plan is
near or better than the net revenues from the subscriber on a postpaid plan. In the
future carriers will realize the advantage of offering prepay, or more accurately, real
time billing services, to a broader segment of the market.
CONCLUSION
Mobile prepay communications has a bright future due to the capabilities made possible
through deployment of advanced technologies. Within the next five years, we will
witness expanded exploitation of mobile IN technology for prepay service.
Consequently, we shall also see expansion of services to prepay customers and
corresponding expansion of revenues to mobile operators. The acceleration of this
growth will be limited partially by technology availability but perhaps more so by
hesitancy on the part of the mobile operator to deploy.
However, as other advanced technologies emerge, and e-commerce becomes more

pervasive, telecommunications providers of all types will begin to realize the importance
of prepayment. While much of this prepayment will be over smart cards, all mobile
devices can not use smart cards nor are all consumers accustomed to their use. Mobile
IN will consequently emerge to both improve traditional voice oriented prepay
applications as well as provide capabilities necessary for many non-voice oriented e-
commerce applications. The limitations are only based on the compelling applications
that require a mobile phone, prepayment, and network control of resources.

PSINET TRANSACTION SOLUTIONS
global_solutions@psi.com
PSINet Transaction Solutions is a communications network company specializing in the

provision of global financial transaction solutions, established in 1997. The company
started trading as PSINet Transaction Solutions, in November 1999, following the
acquisition of Transaction Network Services Inc. by PSINet. Transaction Network
Services Inc. was founded in Virginia, United States in 1990 and, from its inception, it
designed and implemented the fastest, most reliable, and lowest cost network available
for the transport of transaction-oriented data. This unique technology is now deployed
worldwide by PSINet Transaction Solutions, and has become the preferred network
service in the card processing and dial-up automated teller machine markets.
Through its global, managed, end-to-end solutions, PSINet Transaction Solutions

designs and operates private, secure networks that transport EPOS, ATM, e-
commerce, banking, securities and other financial data for business. Working in
partnership with clients and third party suppliers, PSINet Transaction Solutions
provides bespoke solutions that make transactions faster and more efficient.
PSINet Transaction Solutions also provides management facilities such as real-
time web based transaction tracking that enable companies’ to enhance their
service levels and customer service.
With millions of people all over the world each repeatedly using their credit and
debit cards more and more, the number of transactions is growing. It is the
process behind each of these transactions that PSINet Transaction Solutions
supports by connecting EPOS and ATM terminals to the acquiring bank’s host
computer.
TRANSACTION SOLUTIONS PRODUCTS & SERVICES

PSINET PRE-PAY SOLUTIONS
PSINet Pre-Pay Solutions allows acquirers and mobile phone operators to provide cost
effective electronic top-up solutions, replacing the established paper based method
globally in use at present. PSINet Transaction Solutions can provide an electronic
solution that will reduce cost, combat fraud and provide a convenient channel for
customers purchasing additional airtime. (For more detailed information, please read
on).
PSINET POINT OF SERVICE SYSTEMS

PSINet Transaction Solutions is the world leader in providing EPOS transaction systems.
Originally designed for credit and debit card services, EPOS technology also transports
transactions for ATMs, electronic benefits, health care, gaming, security alarms,
inventory control, order entry, and other transaction-oriented applications. With over

60% dial-up EPOS market share in the UK and over 60% in the US, PSINet Transaction
Solutions transports over 32 million transactions per day.
PSINET AUTOMATED TELLER MACHINE SYSTEMS

PSINet Transaction Solutions is the leading provider of dial-up ATM network
services to support the increasing trend of using ATMs in non-bank locations. The
PSINet Transaction Solutions approach enables ATM operators to deploy new ATMs
rapidly and to replace the costly leased line networks that historically have
supported ATMs. PSINet Transaction Solutions now handles more dial-up ATM
transactions than any of its competitors.
PSINET PRE-PAY SOLUTIONS

CUSTOMERS
PSINet Transaction Solutions already supports electronic top-up facilities for Orange, the
UK’s fastest growing mobile phone network operator, and Vodafone, operators of the
UK’s largest mobile phone network. In addition, top-up communications solutions are
provided to a number of independent service organizations.
GLOBAL, END-TO-END SOLUTIONS

PSINet Transaction Solutions has a secure, reliable network, with immediate access to
credit and debit card processors. This technology, which is the market leader in the
EPOS environment, is already bringing many benefits to the market for electronic top-
ups.
Mobile operators are moving to electronic mechanisms as a means of reducing the

administrative overheads associated with paper-based top-up processes.
The mobile phone operator can simply issue its pre-pay customers with an electronic
swipe card containing their account details. This will allow customers to purchase
additional airtime from an electronic terminal in a retail outlet, using existing EPOS and
ATM infrastructure.
PSINet Transaction Solutions is supporting the deployment of such schemes with

schemes that enable the on-line authorisation of both payment card and the pre-pay
airtime account. Such on-line solutions are dramatically reducing the potential for fraud.
PSINET'S STATED FEATURES & BENEFITS

Cheaper – because it’s electronic and not paper-based, administration costs are
reduced.
Convenient – utilising existing EPOS and ATM infrastructures, the potential is for
customers to be able to top-up their phone at any of hundreds of thousands of
convenient locations.

Faster – this system means customer’s will not need to register their voucher on
frustratingly busy telephone lines. It also means that the mobile phone operator will
have an accurate, real-time view of how much airtime they have sold.
More secure – without the need to distribute and track paper-based vouchers, the
service is more secure. The risk to retailers is also reduced, as they do not have to hold
stocks of vouchers, which are essentially virtual cash.
Management information – PSINet Transaction Solutions can provide customised

management information to suit your business needs.
Network Management – a management centre monitors all elements of the network

24 x 7 to ensure the highest quality of customer service.
PSINet Transaction Solutions can supply a fully robust network enabling customers to
top-up their mobile phones electronically, and enabling us to support your company
between the terminals in the retail outlet to your host.
PSINET MOBILE OPERATOR PRE-PAY SUPPORT

PSINet Transaction Solutions has a dedicated team to provide transaction solutions to
help enable mobile operators to provide convenient, and cost-effective payment
mechanisms for customers to purchase pre-pay talk time.
PSINet Transaction Solutions is already working with two of Europe’s leading mobile
operators, Orange and Vodafone, to provide transaction solutions for their customers in
the UK, and this new team will enable the company to further develop and provide
tailored solutions to the pre-pay market as it continues to develop in the coming years.
CASE STUDY 1: ORANGE LAUNCHES NEW PREPAY SYSTEM FOR

JUST TALK MOBILE CUSTOMERS
On December 5th, 2000, Orange launched a swipe card system to replace its existing
paper vouchers for pre-pay Just Talk customers. Transactions generated by the new
system are supported by PSINet Transaction Solutions, which processes all transactions
and manage settlement and reconciliation services, leveraging its transaction network
and switching capabilities.
The new system will enable Orange Just Talk customers to purchase talk-time at Orange
shops and approved retail outlets, using existing EPOS terminals, with their own
personal swipe card. This eliminates much of the inconvenience that has existed for both
customers and retailers with the paper vouchers system.
This Orange payment service will first be available in over 16,000 participating outlets
with rapid rollout throughout the rest of the UK over the next twelve months. Orange

Just Talk customers will be able to collect a free account card from participating stores,
which can then be registered to their phone with the option of having more than one
card available for use with one phone. Customers can have up to five cards registered to
their phones, enabling family and friends to top up remotely for them.
PSINet Transaction Solutions has provided Orange with a processing service directly
connected to EPOS host systems that acquire transactions from all those retail outlets
authorised to sell Orange pre-pay talk-time. This new service enables the retailer to
provide instant, effortless Just Talk air-time to the customer who simply hands over their
Orange Just Talk account card and their chosen method of payment - cash or
debit/credit card. The retailer then credits the customer’s pre-pay account with the
specified value, which immediately provides the customer with additional airtime.
CASE STUDY 2: UNIQUE SOLUTION HELPS VODAFONE PROVIDE

NEW PRE-PAY TOP-UP SERVICE
On February 7th, 2001, PSINet Transaction Solutions, was chosen by Barclays Merchant
Services to provide transaction network services for its new electronic top-up service for
Vodafone’s pre-pay mobile phone customers. Vodafone's new electronic top-up service
enables its customers to top-up their airtime at participating retail outlets using a
personalised top-up swipe card.
The solution enables the pre-pay customer to simply present their swipe card, along with
their chosen method of payment such as cash, debit or credit card, to the retailer and
their pre-pay account is then credited in real-time with the additional airtime purchased.
This electronic solution alleviates much of the administration, risk and expense
associated with the paper voucher system that has been in use since the introduction of
pre-pay mobile phones.
PSINet Transaction Solutions is utilizing its network and host processing solution to link
BMS Point-of-Sale terminals at retail outlets, with the Vodafone host computer. Each of
Vodafone’s pre-pay customers will be issued with a top-up swipe card that is unique to
their phone.
PSINet Transaction Solutions also provides Barclays Merchant Services and Vodafone
with management information on all transactions, as well as facilities to monitor the pre-
pay transactions in real time.
For further information about any aspect of our products and services, please call
Peter Lyster of PSINet Transaction Solutions on +44 (0) 114 292 0143 or email
lysterp@psi.com

Q COMM
www.qcomm.com
Q Comm International, Inc. is a prepaid mobile transaction processor and information

services company. Q Comm produces a hardware and software system, called
Qxpress™, that enables any retailer around the world, including grocery stores, gas
stations, and mini-marts, to electronically replenish their customer’s prepaid mobile
phones.
Q Comm is based in the United States, has been in the telecom business since 1992, and
became a public company in 1998.
PRODUCT
Similar in size and appearance to credit card processing terminals, Q Comm’s Qxpress™
terminal plugs into a standard phone line and prints prepaid wireless replenishment
vouchers/cards from any operator, in any denomination, on demand. This enables
retailers to eliminate inventory, theft, and stock outages, while providing unique
reporting and inventory management solutions to operators, agents, and retailers.
Only simple programming from Q Comm’s data center is required to add products from
an operator throughout Q Comm’s entire retail network. The products offered through
Qxpress™ can be customized for each individual retailer.
In addition to prepaid wireless, Q Comm currently delivers long distance (phone cards)
and home dial tone service through Qxpress™.
Qxpress™ essentially acts as a conduit through which Q Comm helps operators deliver a
virtually unlimited bandwidth of prepaid mobile and other services. This flexible
electronic platform gives Q Comm, its partner retail sites, agents and operators the
ability to quickly grow sales at relatively little additional overhead, increasing profitability
among all parties.
Qxpress™ units are installed in retail locations by Q Comm and its authorized distributors
- usually major telecom agents, food wholesalers, and mobile operators.
Q COMM’S VISION FOR PREPAID MOBILE

Q Comm forecasts strong prepaid mobile growth worldwide over the next decade. While
the U.S. lags behind Europe and many other places around the world, Q Comm believes
that the U.S. will begin to resemble Europe in terms of the widespread acceptance of
prepaid mobile services in the next few years. This will occur as prepaid pricing
continues on its trend toward parity with postpaid in the U.S. and as major, trusted

operators such as AT&T and Verizon place their seal of approval on prepaid with their
promotion and endorsement of the product.
With prepaid mobile being predominantly chosen over postpaid throughout much of the
world and just emerging in the U.S., retailers, agents and operators will boost
investments in systems that improve product delivery efficiency. This will include
converting from the traditional vouchers to efficient, electronic replenishment systems to
eliminate prohibitive inventory costs, out-of-stocks, and theft, and to achieve improved
inventory reporting and management.
Q Comm International, Inc.

1145 South 1680 West
Orem, Utah 84058
USA
Phone: (801) 226-4222
Fax: (801) 222-9555

SICAP
www.sicap.com
SICAP, provides a suite of innovative and secure solutions in mobile telecommunications

and mobile commerce. SICAP offers a variety of products in the area of prepay & billing,
prepay roaming, add-ons for existing prepay systems and mobile commerce.
Through combination and multiplication of flexible software modules, SICAP creates new
solutions with a short time-to-market. In the prepay & billing segments, it provides
services and solutions such as customer loyalty programs, CDR handling, CDR viewing as
well as customer management and GPRS/IN integration. SICAP also offers credit card
reload, information servers as well as over the air solutions.
Several customers have already successfully launched prepay roaming solutions based
on SICAP's prepay roaming platform. Recently, SICAP rolled out a mobile payment
solution in cooperation with a global softdrink provider which allows a customer to
purchase a beverage from a vending machine with a mo-bile phone. Based on its
significant experience in international mobile communications, SICAP has a strong
market position. SICAP has customers in Europe, Asia and Latin-America - Operators as
well as service providers.
SICAP PREPAY PRODUCT

The SICAP prepay is a flexible platform, which can be run in various modes including
Hot-billing, service node/call forwarding, advice of charge, or in combination with an IN
platform. The advantage of the system are low investment costs and clear migration
path to IN. Therefore if your business strategy demands an Intelligent Network (IN)
prepay solution but you are concerned about high up-front investment costs while your
business grows, or you are confused by the lack of IN standardization. SICAP prepay
provides intelligence now in your network for your pre-paid products and allows you to
move your network to IN prepay when the time is right for you.
SICAP claims that their prepay works especially well for:
§ A young network with aggressive expansion plans
§ A small or medium-sized network
§ Need worldwide prepay roaming as a standard part of your national pre-paid

product
§ A network with plans to move to IN based prepay

ROAMING
The SICAP platform allows for roaming via USSD and call-back. This methodology is
discussed in the roaming section of this report.
RECHARGE
The SICAP platform can interface to a pre-existing voucher system and can collect
requests for replenishment via voice response unit, SMS, or USSD. Alternatively, the
system can be equipped to generate its own vouchers.
REPORTING
The SICAP prepay platform offers both on-line and off-line detailed statistics including
customer data, calling data such as recharge information and calls made, information
about MSISDN blocks used, information about roaming calls, distributor information
(how much income from prepay distributors), and user defined reports.
SICAP Ltd
Bernstrasse 34
3072 Ostermundigen
Switzerland

TELEMAC CORPORATION
Telemac is the global leader in developing and commercializing technology for handset-
based billing and accounting solutions, including prepay wireless technology and m-
commerce transactions. Telemac Technology™ has been licensed to wireless service
providers on five continents (Africa, Asia, Australia, Europe, and North America). More
than 6,000,000 Telemac-Enabled™ mobile phones have been sold worldwide.
Considerably, more consumers use Telemac-Enabled™ mobile prepay phones than use
mobile phones configured with all other handset-based prepay technologies combined.
VISION
Telemac’s first product, introduced nearly 10 years ago, provided a mechanism for
limiting the credit balances in traditional post-paid cellular phones. Then, in 1996,
Telemac began beta testing the first handset-based accounting software for prepay
wireless services. In recognition of its pioneering work, Telemac has received multiple
U.S. and international patents for handset-based billing and accounting software, and
has patents pending in over 30 countries.
Now, Telemac continues its pioneering work:
§ Enhancing the functionalities and security of its prepay technology, which has
become the global standard for handset-based prepay wireless technology;
§ Commercializing and enhancing SmartUse™, which provides a range of billing and

accounting solutions for traditional post-paid wireless customers;
§ Completing development of content-based billing, and other functions to support

wireless data applications, including m-commerce / e-commerce; and
§ Developing functions for other terminals, such as intelligent personal

communicators, focusing on wireless secure financial transactions and Bluetooth.
TELEMAC TECHNOLOGY™
Telemac’s current product, Telemac Prepay Technology™, is a unique, patented switch-
independent, handset-based billing solution for wireless networks. Telemac Prepay
Technology™ is a complete real-time billing system that can be integrated into all digital
formats. The system consists of Telemac’s DAS™, IMA-Modules™, TRAC®, and certain
interfaces. Telemac’s IMA-Modules™ reside in the handset and "enable" the handsets to
communicate with Telemac's DAS™ software, operated by a wireless service provider.
Utilizing TRAC®, a wireless service provider is able to initialize the IMA-Modules™ to lock
Telemac-Enabled™ handsets into the selected network. Telemac Prepay Technology™

then uses powerful encryption technology to transfer the user’s credit within the
handset.
Telemac’s technology allows the handset to securely monitor the value of all calls made,
and decrement the credit balance, so that the user’s credit level is never exceeded.
Telemac Prepay Technology™ has propelled BT Cellnet to more than five million prepay
subscribers in less than two years.
Telemac Prepay Technology™ is the only fully turnkey switch-independent prepay

system available to wireless service providers. Telemac Prepay Technology™ supports
WAP, complements all wireless intelligent networks, and is compatible with future 3G
technologies.
Telemac Prepay Technology™ is licensed to wireless service providers by Telemac in a

variety of implementations, ranging from a license from Telemac with on-going technical
support, to a technical service bureau with the Telemac Advantage™; to a fully managed
service utilizing the BriteStar™ System from InterVoice-Brite Inc. (“IVB”) With a service
bureau or a managed service, as with any other implementation, each wireless service
provider retains full control over every aspect of the service. Not all implementations
are available to all service providers; certain capabilities are planned for introduction in
2000 and 2001.
Telemac Advantage™ is a complete end-to-end technology solution for handset-based

prepay, post-paid, and transactional services for digital wireless service providers.
Telemac Advantage™ features Telemac Prepay Technology™, Telemac SmartUse™
Technology, and sophisticated subscriber and line management technology, including the
related links, protocols, and user interfaces necessary for an end-to-end technology
solution. Not all features of Telemac Advantage are currently available.
The BriteStar™ System, available from IVB, consists of Telemac Prepay Technology™
and sophisticated subscriber, line management and financial technology developed by
IVB, as well as a state-of-the-art call center and operations managed by IVB, a leader in
a wide range of technology services for the global telecommunications industry. Upon
request, SmartUse™ Technology can also be incorporated into a BriteStar™ System.
Telemac’s SmartUse technology applies Telemac’s unequaled performance in prepay

technology to traditional post-paid wireless services. With a SmartUse™ system,
traditional post-paid subscribers and their employers can monitor call usage,
professionals can obtain billing records by client, service providers can control excess
usage by subscribers with limited credit, and the mobile phone can be used for a growing
range of data, m-commerce and e-commerce transactions. Not all features of
SmartUse are currently available.
Telemac Technology™ is designed so that additional functionalities can be added to the
DAS with minimum disruption – generally, a software upgrade is all that may be

required. Thus, a wireless service provider may choose to license both Telemac Prepay
Technology™ and SmartUse™, or to begin with one functionality and later upgrade to
add additional services.
Telemac Technology™ offers full national and international roaming capabilities and
supports a real-time handset display of account data, as well as multiple tariffs for
complex billing categories, such as local, long distance, international, incoming,
operator-assisted, roaming, special numbers, mobile-originated and terminated
messaging, WAP, and other categories specified by a wireless service provider.
With Telemac Technology™, a wireless service provider is able to directly communicate

with each handset through SMS or other data paths to augment account balances,
change rates, offer special promotions, and offer multiple classes of service, including
peak/off-peak billing. In digital formats and in certain analog formats, no user
interaction is required for the service provider to communicate with the mobile phone.
With the Telemac Advantage™, or BriteStar™, a wireless service provider can also
license sophisticated subscriber and line management technology to maximize the
functionality of Telemac Prepay Technology™. Alternatively, many network operators
already own the hardware and most of the software required to implement a prepay
program using Telemac Prepay Technology™. For those network operators, Telemac’s
core technology and a limited number of additional interfaces licensed by Telemac or IVB
may be all that is necessary technically to launch a prepay service.
Telemac does not manufacture phones or provide wireless services to consumers.

Rather, Telemac licenses handset manufacturers the right to integrate Telemac’s
patented IMA-Module™ into mobile phones, and licenses wireless carriers, resellers and
other wireless service providers the right to utilize Telemac’s patented DAS™ software,
which allows wireless service providers to offer state-of-the-art prepay programs and
other billing and transactional services with an initial investment of less than one million
dollars.
Telemac works closely with each of its licensees to integrate Telemac’s technology into
the licensee’s products, and to provide on-going support to enhance and customize
Telemac Technology™ to meet each licensee’s needs. Telemac will also assist in
managing the technology implementation, if requested to do so by a licensee.
Without using network resources, Telemac Technology™ is easily scalable from

thousands to millions of subscribers. Telemac Technology™ works efficiently within an
existing wireless network, and offers features that are not yet available with intelligent
network technology. Due to the efficiency of the design, there is minimal impact on the
wireless network as the number of subscriber’s increases.

Telemac was founded in 1990, and commenced limited prepay services in 1996 when the
first cellular phone incorporating Telemac Prepay Technology™ was introduced in Las
Vegas. Telemac’s licensees began launching full commercial operations in May 1998.
British Telecom’s BT Cellnet prepay program in the U.K. utilizing Telemac-Enabled™ GSM
handsets is one of the most successful launches of a wireless program in the history of
the United Kingdom.
In the United States, prepay wireless services utilizing Telemac Prepay Technology™ are
offered by numerous local carriers, and nationally by Shared Technologies Cellular Inc.
under its marketing venture with MCI WorldCom Inc. Telemac-Enabled™ handsets are
sold in the United States via the Internet, television direct response, and national
retailers.
Telemac’s licensees also are planning to launch service in Australia, Asia and Africa.
During 1999, total worldwide airtime using Telemac Prepay Technology™ approached
$500,000,000.
Telemac’s global handset licensees include Motorola, Royal Philips Electronics, Rok
Communications, and Sensei Ltd.
Telemac holds U.S. and international patents and patents-pending covering wireless
phone accounting, programming, distribution, tracking and call accounting controls, as
well as related wireless technology.
TELEMAC’S MISSION
To develop and market proprietary leading edge handset-based billing and accounting
software and systems to create innovative and economical solutions for wireless service
providers, handset manufacturers, and their customers. Telemac has an unshakeable
commitment to the needs of our licensees and the public who use Telemac-Enabled™
phones.
HANDSETS
In 1997, Telemac entered into a manufacturing agreement with Philips Consumer
Communications, L.P. (“PCC”), a joint venture of Royal Philips Electronics N.V. (“Philips”)
and Lucent Technologies.
At the end of 1998, Philips succeeded to the business previously undertaken by the joint
venture. Since that time, PCC has integrated Telemac technology into both analog and
digital handsets, including the ISIS™ (AMPS / N-AMPS), the Diga™ and the Savvy™ (900
MHz GSM handsets), and the Genie , a dual band 900 MHz / 1800 MHz handset. Philips
is now integrating Telemac’s technology into the Ozeo™, a TDMA mobile phone.

In January 1999, Telemac licensed Sensei Ltd. to integrate Telemac Prepay Technology™
into its GSM handsets. In May 1999, Telemac licensed Motorola to integrate Telemac
Prepay Technology into all analog and digital handsets. Motorola’s first Telemac-
Enabled handsets are M-Series 900 MHz GSM band and 900 MHz / 1800 MHz dual band
handsets. Motorola intends to introduce additional Telemac-Enabled™ models in 2000.
In May 1999, Telemac also licensed Rok Communications Ltd. (“Rok”) to customize and
market Telemac-Enabled™ handsets to be manufactured by licensees selected by Rok
and Telemac. Rok is working with Telemac to customize and increase the availability of
Telemac-Enabled™ handsets.
Telemac is now in advanced negotiations with additional handset manufacturers to

significantly expand the selection of analog and digital Telemac-Enabled™ handsets.
PREPAY SERVICES
Prepay wireless programs utilizing Telemac Prepay Technology™ have been licensed in
Australia, Israel, Namibia, Seychelles, South Africa, St. Maarten, the United Kingdom,
and the United States.
NORTH AMERICA
In the United States, Telemac’s strategy includes a national program from Shared
Technologies Cellular Inc. (“STC”) and MCI WorldCom Inc., and local carrier programs.
Introduction of a national prepay wireless service utilizing Telemac-Enabled™ Philips

ISIS™ handsets began in May 1998, with STC as Telemac’s national wireless service
provider. National advertising began in June 1998, utilizing spokesperson Dick Clark.
STC, a national wireless reseller, provides prepay wireless service through a network of
carriers covering 98% of the United States. From inception, STC and its affiliates
distributed Telemac-Enabled™ handsets via national retailers and television direct
marketing.
In February 1999, STC entered into a marketing and distribution venture with MCI
WorldCom, adding one of the world’s most powerful telephony brands to Telemac’s
national prepay program. MCI WorldCom now has joint responsibility with STC for
distribution of Telemac-Enabled™ handsets, and for consumer marketing of MCI
WorldCom/STC prepay wireless services.
With the participation of MCI WorldCom, Telemac-Enabled™ handsets are now offered
via the Internet, national retailers such as KMart, Bradlees and Ames, and by Home
Shopping Network.

The analog local carrier program began in 1997, and now includes Cellular One affiliates,
as well as numerous other carriers offering Telemac analog prepay services.
At the end of 1999, Telemac began marketing the Telemac Advantage™, a complete
end-to-end technology solution for digital prepay and SmartUse™ services. With this
program, Telemac has added sophisticated subscriber and line management technology
to its core Telemac Technology™.
Beginning in 2000, InterVoice-Brite Inc. (“InterVoice”) began U.S. marketing for the
BriteStar System™, which combines Telemac Prepay Technology™ with hardware and
software developed by InterVoice, as well as a fully managed call center and service
bureau operated by InterVoice. The BriteStar System™ was introduced in the U.K. in
1998 and has helped propel BT Cellnet to more than 5,000,000 subscribers.
Despite the need to create market acceptance for prepay services in the United States,
over 300,000 Telemac-Enabled™ handsets have been activated since June 1998.
EUROPE
In December 1997, Telemac entered into a marketing agreement with Brite Voice
Systems Inc. In mid-1999, Brite merged with InterVoice Inc., creating InterVoice-Brite,
Inc. (“InterVoice”), a highly regarded global technology firm. Working together, Telemac
and Brite developed the BriteStar System™, which offers compelling advantages,
including cost, rapid deployment, and an array of features.
On July 16, 1998, British Telecom's wireless affiliate, BT Cellnet launched service in the
U.K. using the BriteStar System™. BT Cellnet committed approximately US$8,000,000
in advertising to the launch of its initial Telemac prepay services: “Easy-Life” and “U”,
two programs that target different demographics with customized rate plans.
Today, BT Cellnet offers four separate prepay programs using the BriteStar System™,
with retail sales through over 20,000 stores and kiosks, and roaming service throughout
Europe. More than 5,000,000 Telemac-Enabled™ mobile phones have been activated in
the U.K. BT Cellnet’s prepay wireless program, one of the most successful wireless
programs in U.K. history, continues to grow.
To enhance Telemac’s ability to provide resources to its European licensees, in

September 1999, Telemac established a U.K. subsidiary and opened a European
engineering office in Manchester, England.
InterVoice-Brite is now in advanced negotiations to launch BriteStar™ service in

additional European countries.

AFRICA, ASIA AND AUSTRALIA
In March 1999, Telemac entered into a technology license and development agreement
with GSM Cellular (Pty) Limited, since acquired by Vodacom, an affiliate of Britain’s
Vodafone Airtouch PLC .
Under the agreement, Vodacom has the right to launch both prepay and SmartUse™
services in Australia, Israel, Namibia, Seychelles and South Africa. As a result,
Telemac’s technology will be the foundation for prepay programs on every continent,
except only Antarctica and South America.
SMARTUSE™ SERVICES
As early as 1990, Telemac’s engineers had developed handset-based applications for
traditional post-pay customers. But, it was not until 1999 that Telemac began licensing
these uses to its customers.
During late 1999, Telemac began licensing SmartUse™ technology, a suite consisting of
various cost controls and tracking functions for traditional post-paid customers, as well
as handset-based transactional capabilities.
Telemac’s handset licensees are expected shortly to begin integration of enhanced IMA-
Modules incorporating SmartUse™.
In March 1999, Telemac entered into its first license for SmartUse™ technology, when it
included certain SmartUse™ features in its technology license and development
agreement with GSM Cellular.

PREPAY ORGANIZATION PROFILES
INTERNATIONAL TELECARD ASSOCIATION

www.telecard.org
HISTORY
In 1995, a small group of like minded prepaid phonecard leaders gathered with a simple
business plan and a grand vision: to develop a trade association representative of the
rapidly growing and extremely lucrative telecard industry. The association rested on a
key operating premise: that there be a unified interest among those involved early in
these efforts. All those employed in the industry, both then and now, have had an
ardent desire to see the prepaid world prosper and its consumers treated equitably. In
this way, companies that are in direct competition with one another professionally may
yet join forces for the good of the industry. From that early meeting grew the US
Telecard Association, located on Capitol Hill in Washington, DC, and maintained by a
staff headed then and now by Howard Segermark, Executive Director. The USTA quickly
became the unified industry voice on prepaid telecom issues. The founders of the USTA
also had a hand in the formation of the Canadian Telecard Association in 1997. To
reflect the wider scope of the prepaid industry abroad, the association changed its name
to the International Telecard Association soon thereafter and is now in the process of
taking on a more accurate mantle: the International Prepaid Communications
Association.
MEMBER COMPANIES
This new association name encompasses the wide variety of products and services our
members provide to the prepaid telecom arena, among them phonecards, dialtone, long
distance, wireless and VoIP. Members of the association represent an expansive array of
industry services and products: switched resellers, CLECs, wholesalers, distributors,
ISPs, vending machine operators, printers, software developers, service bureaus,
wholesale long distance distributors, IXCs, publishers, switchless resellers, legal and
regulatory consultants, RBOCs, IP telephony service providers, wireless providers, LECs,
brokers, agents, local service providers, promotional card producers, vendors, retailers,
professionals, media and dealers.
MEMBERSHIP BENEFITS
Membership in the ITA signifies a particular firm’s professional commitment to the
promotion and growth of the prepaid industry and a willingness to put ones business and
practices fully behind that commitment. The ITA has vastly expanded and evolved over
the past five years into an association representative of all aspects of the prepaid
market, and now speaks as a unified voice for an expansive array of member companies.
Committees of the ITA represent a wide array of industry interests and garner a high
level of active involvement from our members, and are as follows: Executive, Consumer

Education, Dealers and Collectors, Legal Tax and Regulatory Affairs, Membership and
Development, Patent, Standards and Wireless.
The mandate and vision of the ITA is as follows:
§ Promote the use of prepaid telecommunications by educating the general public,

businesses and public policy officials about industry issues. The ITA has been
involved in promoting the prepaid industry via numerous media outlets including
Dateline NBC, The Wall Street Journal, 20/20, The Today Show, Money Magazine,
Intele-Card News, Telecom Business, Phone + Magazine and Vending Times.
§ Represent the interest of our member companies in particular and of the industry
at large, before government agencies, legislatures, regulators and non-
governmental groups. This is accomplished via close interaction and networking
with, among others, state Public Utilities Commissions, Attorneys General, the
Federal Communications Commission and the Federal Trade Commission.
§ Speak as a representative on behalf of our members’ interests before legal,

regulatory and tax gatherings. The ITA sponsors an annual Tax and Regulatory
Forum at which a panel of experts in the regulation and taxation of prepaid
telecom empower the attendees to take a leading role in industry affairs. The ITA
is also in the midst of the development of a Regulatory Oversight program whose
purpose is to urge equitable enforcement of all regulations within the prepaid
industry.
§ Develop technical and ethical standards for the prepaid industry and encourage
the upholding thereof. The ITA Phonecard Disclosure Guidelines have been
adopted by numerous regulatory bodies and enforced as the norm for those who
operate in the prepaid industry. The newly formed Committee on Prepaid
Wireless Affairs is also currently developing comparable industry disclosure
guidelines for the cellular segment of the industry.
§ Offer an ombudsman service to consumers with inquiries or concerns. A toll-free

hotline manned by ITA staff provides assistance to consumers with prepaid
phonecard inquiries. The education and protection of the prepaid consumer is of
paramount importance and of high priority within the vision of the ITA.
International Telecard Association

904 Massachusetts Ave NE
Washington DC 20002
V 202.544.4448
F 202.547.7417
inquiries@telecard.org

THE GLOBAL BILLING ASSOCIATION
www.globalbilling.org
With billing increasingly at the forefront of the telecoms debate on new services, the
Global Billing Association (GBA), formed in 1998, aims to promote a greater
understanding and awareness of the importance of billing processes and systems within
competitive environments.
One of the GBA’s key objectives is to enable operators to react quickly to market
changes, technological developments and new service offerings. In order to achieve this,
an unprecedented spirit of co-operation and mutual benefit is currently being fostered
between the demand and supply sides of the industry with a series of ground-breaking
discussion groups.
DEBATE AND DIRECTION

By facilitating structured industry debate on key issues, the GBA is in a position to
communicate the challenges, vision and ideas of the billing community directly on to a
wider audience. It is through the GBA’s active participation in the emerging network of
trade associations and standards bodies that the billing industry is now acknowledged as
having a vital role in the delivery of future services.
One major initiative has been the launch of the GBA Operators Focus Group, which has
been created to enable the GBA to address the more immediate problems facing Billing
Managers. The Group, led by Carl Hassan, Director of International Billing at Level(3)
and recently elected President of the GBA, deals with many of the universal issues that
impact carriers and operators globally, and output from this focus group benefits
members worldwide.
Additionally, last year the GBA identified four major themes that have been further
defined for 2001. This initiative has been successful in proving that a concentration of
resources and intellectual debate produces genuine results and benefits for members.
Workshops, facilitated by the GBA, allow service providers and carriers to exchange
views and share experience and information within a confidential and structured
environment. The findings of these workshops are then channeled back to members.
The focus areas cover:
§ Billing for Content

§ Pre-paid
§ Quality of Service
§ Roaming
§ Wholesale
§ Electronic Bill Presentment and Payment (EBPP)

§ Interconnect
§ Total Quality Billing
BILLING FOR THE HERE AND NOW

As the billing industry matures, and the number of suppliers expands dramatically, so do
the challenges facing the customers - the operators and service providers. The problems
that are associated with maturing markets, such as proprietary solutions and lack of
resources, are also areas where the GBA can help. Billing managers are facing increasing
pressures to deliver a total quality billing solution, and the sharing of best practice
principles among members is already proving hugely beneficial.
By providing a focus for the industry, the GBA is ideally placed to direct a channel of
information to the industry, and support a lobbying function that can alert other areas of
the communications world to potential problems before they escalate.
To conclude, the GBA is concerned with promoting the interests of the billing industry
worldwide, and ensuring de-regulation expertise and experience of multi-lingual, multi-
currency systems are shared as part of the global communications development. For
more information about the GBA and the benefits of membership, visit
www.globalbilling.org or contact the GBA on +44 131 225 7855.

PART TWO
ADVANCED CONCEPTS AND

APPLICATIONS
An architectural evolution is underway that, when finalized, will enable much more
robust prepay service offerings. Mobile intelligent network (IN) technologies are one of
the drivers for this evolution. Those prepay service providers that leverage advanced
capabilities such as those provided by mobile IN technologies will enjoy long-term cost
savings, greater customer loyalty, and increased profits.
Throughout this part of the report, we will discuss advanced concepts, applications, and
associated technologies relative to mobile prepay communications. Rather than attempt
to address each of these in sequence, we will label a discussion item as either a concept,
technology, or application as a given subject. We illustration this by the below example.
Example: Concept: Mobile IN
This will enable us to discuss advanced prepay in an order that makes more sense from
a content absorption perspective. For reference, the concepts, technologies, and
applications discussed in this section are as follows:
CONCEPTS
§ Mobile IN
§ Account spending limit
§ Location enabled prepay account replenishment systems
§ Pseudo Location Register
§ Prepay e-commerce applications
TECHNOLOGIES
§ Mobile IN standards
§ Mid-call control capabilities
§ Smart card technologies
APPLICATIONS
§ Account spending limit
§ Location sensitive billing for mobile prepay communications
§ Short messages to inform the customer and provide replenishment

ROAMING WITH MOBILE PREPAY
Not all systems allow roaming (such as many point solutions involving service nodes),
and for those that do, prepay systems can incur a burden on the part of the customer to
initiate the call.
CALL-BACK BASED ROAMING

Some SIM card based solutions involve the customer dialing a prefix or short code via
Unstructured Supplementary Services Data (USSD) connection (step 1). The prefix is
verified by the HLR and a credit check is made by the prepay system server (step 2).
The MSC then initiates a call-back to the subscriber while simultaneously connecting to
the dialed number through the PSTN (step 3). The SMSC then sends a short message
back to the customer indicating the amount of time remaining for the call (step 4).
Mobile terminated calls do not require the prepay customer to dial a feature code. SMS
can alternatively be used as the method for initiating the feature code dialog.
3
SMSC
4
S PSTN
SM
USSD
1
Mobile
Switch VLR SS7 HLR
Visited
Network
Prepay Server USSD

Gateway
FIGURE 7: ROAMING
Figure WITH
7: Roaming SIM
with SIM BASED
based SOLUTION
Solution
One of the cumbersome issues associated with both of these methods (USSD and SMS of
feature code initiation) is the need for the subscriber to remember the feature code,
which often vary in each country visited. SIM Toolkit (STK) enabled phones may be
employed to help alleviate this problem. The STK enables communication between the
SIM card (which contains a localized applet identifying the country and associated code)
and a database. The STK enabled phone initiates a signal (prior to call set-up) which
updates the feature code stored in the phone, allowing the user to initiate a call without
memorizing codes for each visited country.

SERVICE NODE BASED ROAMING
Earlier we discussed the issue of service node (SN) based solutions being a point
solution. As such, service node solutions will in most cases require either the call and/or
messaging to route back to the home network service node. Unless the roaming is
within the same mobile operator's network, routing the call back to the home system SN
is problematic due to the exposure to lost revenue as a result of non-revenue producing
calls to the service node. The more typical implementation will therefore involve
messaging between two different SN and cooperation between the serving and home
mobile network operators.
IP
Network
Service Service
1 Node Node
Visited System Home System
Mobile
Switch 3
PSTN
Figure
FIGURE 8: 8: Roaming with
ROAMING WITHService Node based
SERVICE Solution
NODE BASED
Roaming in this solution requires signaling between the SN in the visited network and
the service node in the home network. First the mobile prepay customer (that is
roaming into the visited network) places a call, which is routed to the visited network SN
(step 1). Next, the visited network SN uses (typically an IP based network) to signal to
the home network service node for instructions for call handling (step 2). Once the
home network SN provides instructions back to the visited network SN, the visited
network SN routes the call back to the visited MSC for routing to the intended
destination via the PSTN.
This method of roaming with prepay is rather cumbersome to implement as it requires

both cooperation between mobile network operators as well as integration between two
potentially different supplier's service nodes. Unlike mobile IN messaging between MSC
and SCP, there is no standard messaging between disparate service nodes, making this
solution an integration challenge.

ARCHITECTURAL EVOLUTION
There is an architectural evolution underway that will fundamentally affect the way
mobile operators deploy and operate prepay and the way that customers use prepay
services. This evolution involves leveraging mobile network intelligence for greater
operational efficiency, greater technical/service flexibility, and a greater breadth and
depth of services. This architectural evolution has to do with advances in the area of
mobile intelligent network (IN) capabilities and technologies.
Concept: Mobile IN
WHAT IS MOBILE IN
In the mobile prepay Communications Technical Introduction, we defined mobile IN and
discussed it at a high level. We will discuss mobile IN at a high level for review. Later in
the section we will discuss specific mobile IN technologies, capabilities, and enabled
applications.
Mobile intelligent network (IN) pertains to the concept of network intelligence. While the
notion of network intelligence is evolving beyond the traditional model of centralized
control and processing, and expanding to network edge devices such as mobile terminals
and servers, the use of the term mobile IN will be used in this report to refer to more
traditional centralized network intelligence. The below illustration depicts a high-level
mobile IN concept.
SCP
SS7
Mobile
Switch
FIGURE 9: MOBILE
Figure SWITCH
9: Mobile LAUNCHES
Switch Launches IN MESSAGE
IN Message to SCP TO SCP
The above diagram depicts a mobile switch that is launching a mobile IN message over
SS7 to a SCP. The SCP processes the request and subsequently provides a reply to the

mobile switch. In order for the mobile switch to recognize the need to launch the
message to the SCP, it must have certain capabilities. These capabilities include:
§ Recognize mobile IN based services in the mobile user's profile (through HLR/VLR
interaction)
§ Recognize the point in call in which action must take place
§ Arm a trigger with the appropriate network address of the SCP to launch the
message
By definition, the mobile switch is also known as a service switching point (SSP) in
mobile in IN terminology. A mobile switch that is not an SSP, and/or is not equipped the
with specific capabilities to handle messaging for IN based service invocation and
control, can not handle mobile IN based prepay.
Before mobile IN came into being, service invocation and control was relegated to the
switch itself and/or adjunct equipment such as a service node (SN). A SN engenders
more of a "point solution" as discussed in the first section of this report. While the SN
approach often provides a fast, low capital expenditure market entry alternative, it is not
as robust as mobile IN as all service control and logic is relegated to the SN itself. This
approach is also not "standards-based", meaning that SNs from various manufacturers
can not communicate with SNs and switches of other vendors. The SN approach also
does not scale as well an mobile IN solutions, meaning that large numbers of prepay
customers are not as efficiently served in terms of capital costs and equipment required.
Technology: Mobile IN standards
The two recognized global standards for mobile IN are Wireless Intelligent Network
(WIN) and Customized Applications for Mobile Enhanced Logic (CAMEL). WIN and
CAMEL are the standards used to provide network intelligence in ANSI-41 and GSM
networks respectively. As WIN standards are introduced, accepted and evolve, they will
become part of the core ANSI-41 standards. In contrast, the GSM CAMEL Application
Part (CAP) represents that portion of the GSM standard that uses CAMEL, and will remain
a separate yet associated standard to the core GSM networking standard, GSM MAP.
However, WIN and CAMEL are both derived from the same intelligent network conceptual
model (INCM), a framework from which the Intelligent Network Application Part (INAP)
was spawned. INAP represents the IN architectural model conceived by the European
Telecommunications Standards Institute (ETSI) for use in fixed networks. Evolutionary
stages of INAP are defined by capability sets (CS) that represent continual improvements
in IN functionality. WIN and CAMEL architectures are based on the INCM framework,
utilizing many aspects of the INAP capability sets as that standard evolves, but also
include capabilities to address mobility management issues.

WIN and CAMEL also utilize SS7/C7 for intersystem data communications. This includes
signaling between and among MSCs, HLRs, VLRs, SCPs, Intelligent Peripherals (IP),
Interactive Voice Response Units (IVRU) and other intelligent network nodes.
The term Mobile IN is sometimes associated with some better known centralized,
intelligent network type technologies such as SMS and the lesser known technologies
such as ISUP loop-back, which will be discussed in the section reviewing network based
prepay technology solutions. It is important to note, however, that when most people
involved in mobile network standards mention mobile IN, they are generally referring to
WIN, CAMEL, or perhaps proprietary vendor extensions of INAP. Unless other wise
stated, we refer to standards based mobile IN technologies when we speak of mobile IN.
MOBILE IN AND THE SCOPE OF THIS REPORT

Later in this section we will discuss certain mobile IN technologies and capabilities
pertinent to mobile prepay communications technology and applications. It is beyond
the scope of this report to provide a thorough introduction of mobile IN concepts, as well
as overall capabilities, technologies, business issues, and applications. For further
reading in this area, we recommend the book "Wireless Intelligent Networking" co-
authored by Gerry Christensen. More information is available at www.mobilein.com.
MOBILE IN BASED PREPAY ARCHITECTURE

The below illustration depicts the architecture based on WIN/INAP/CAMEL prepay
technologies.
IP IP
Mobile
Mobile
Switch SS7 Switch
Visited Home
System System
SCP
Equipped with
WIN/INAP/CAMEL
control logic
Figure 10: Mobile IN Architecture

FIGURE 10: MOBILE IN ARCHITECTURE
We see from the above diagram that the mobile switches are logically connected to the
SCP via SS7. This enables messaging between the home and serving areas for
exchanging information about the prepay customer. We also see that each mobile switch

is connected to an intelligent peripheral (IP) via T-1/E-1 facilities that at as the bearer
channel for voice communications to the prepay customer relative to account status.
When the prepay customer's account reaches a predefined minimum, software logic in
the SCP temporarily connects facilities from the IP to the mobile switch, allowing a
warning tone/announcement to be played and the customer to replenish her account.
Alternatively, the SCP could simply direct temporary connection to a three port
conference circuit in the mobile switch, allowing an announcement to be played that is
discernable to the prepay customer but inaudible to the other party. This allows the
prepay customer to be warned about impending account depletion rather than simply
being dropped in the middle of a conversation.
THE IMPACT OF MOBILE IN ON PREPAY

We will now discuss some of the positive and negative impacts of mobile IN on prepay.
Luckily, the positive impacts far out weigh the negative issues. We will first discuss
these issues from a business needs (mobile operator and user) perspective. The
following section, Mobile IN Technologies, will discuss the various technical alternatives
while putting into perspective differences between technology in United States (primarily
ANSI-41) and Europe (primarily GSM MAP). Subsequently, we will profile two significant
improvements in prepay service delivery and operation in the section Mobile IN
Capabilities.
POSITIVE AND NEGATIVE IMPACTS

It is important to note that there are positive and negative impacts relative to
implementation and operation of mobile IN for mobile prepay communications.
POSITIVE IMPACTS
We will next discuss positive impacts. Many of these impacts are of benefit to the mobile
operator and the prepay customer.
ENHANCED ROAMING WITH MOBILE IN

While there are other methods of providing for roaming as discussed earlier, standards
based mobile IN technologies such as CAMEL and WIN provide for a completely seamless
roaming experience for the customer. The customer no longer has to input feature
codes and/or initiate call-back in order for roaming to occur. Mobile IN supports the
virtual home environment concept in which the customer experiences service as if she
were in her own market.

3
Home Network
PSTN
Mobile
1 2
Switch SCP
Visited Network
FIGURE 11: ROAMING WITH MOBILE IN BASED SOLUTION

Figure 11: Roaming with Mobile IN based Solution
With a mobile IN based solution, triggers are armed in the visiting switch that allow it to
launch a message to the home network SCP, which contains the mobile prepay call logic.
When the mobile prepay customer places a call, the MSC in the visited network launches
a mobile IN message to the SCP (step 1) via the SS7 network. The SCP processes the
request and send a call handling instruction message back to the MSC (step 2). The
MSC then uses that instruction to handle the call (step 3), which is illustrated above as
routing to the PSTN for delivery either to the destination number, or in the event that
the prepay account has diminished, to a voice response unit for notification and/or
recharge.
Proprietary based mobile IN solutions will prohibit this type of scenario for the same
reason as the service node solution - lack of standard messaging. However, standards
based mobile IN solutions (based on WIN and CAMEL) allow for ease of implementation
between network operators with disparate MSC and SCP infrastructure.
LOWER ONGOING OPERATING COSTS

While capital intensive to implement, mobile IN solutions enable lower ongoing cost
operations. One cost savings is in the area of trunking. In the first part of this report,
we submitted that "tromboning" or "back-hauling" is an inefficiency necessitated by SN
based solutions. Mobile IN does away with this requirement in two ways. First, mobile
IN allows post-paid and prepay customers to use the same facilities (trunks). Secondly,
mobile IN enables a serving mobile switch (equipped with appropriate software and with
business arrangements with the home system) to handle mobile IN based prepay calls
without simply "hot lining" (reverting them) back to the home system.

GREATER FLEXIBILITY TO CHOOSE BETWEEN PREPAY AND POSTPAID SERVICE
This is a benefit to both the customer as well as a differentiater for the mobile operator.
In prepay deployments based on point solutions, the mobile operator typically must
assign a dedicated range of mobile phone numbers for prepay customers. This is so that
the switch can perform translations necessary to route calls to the SN and/or call center
for processing. While this works satisfactorily from an operational perspective, it makes
switching between post-paid and prepay calling plans difficult at best. The minimum
affect on the customer is a phone number change. The worst effect is that many
services and features are lost from conversion of post-paid service to non-mobile IN
based prepay service.
ABILITY FOR PREPAY TO MORE CLOSELY RESEMBLE POST-PAID SERVICE

This is perhaps one of the biggest issues that mobile IN solves for mobile prepay
communications. To varying degrees, all non-mobile IN based solutions for prepay
service relegate the customer to less features and fewer service opportunities than post-
paid customers enjoy. This is largely because of differences in call control and
processing.
With non-mobile IN solutions, call control and processing is relegated to static control of
various network and/or handset elements such as SN, subscriber identity module (SIM),
billing software, and others. On the other hand, mobile IN processes a prepay call and
then provides control back to other elements, taking control again only as necessary for
account management and/or feature interactions.
This enables the mobile operator to bring to bear a great breadth/depth of capabilities,
allowing feature and service opportunities that include:
§ Features and services for prepay customers that match those of post-paid
customers
§ Additional services on a prepay basis such as wireless data service (example:

WAP based services)
§ Ability to easily switch between prepay and post-paid service
§ New service support capabilities for more overall robust prepay service offerings
NEW SERVICE CAPABILITIES

Mobile IN allows for several capabilities that enhance, differentiate, and/or add value to
mobile prepay communications. These improvements include:
§ Roaming capability (ability to use prepay service while outside of home system).
Unlike point solutions, standards based mobile IN technologies enable capabilities

for seamless use and operation of prepay services while roaming between mobile
operator systems.
§ Greater mobile operator flexibility in terms of overall solution alternatives.

Separation of call control/processing functions from other aspects of prepay
solutions allows for mobile operator flexibility in terms of allocation of various
prepay functions including call control/processing, distribution, point-of-sale
support, customer care, replenishment, and administration. Whereas non-mobile
IN solutions often preclude choice, mobile IN solutions allow the mobile operator
to choose which function the mobile operator will perform versus those that may
be outsourced to a third party provider. For example, with mobile IN, the mobile
operator could provide call control/processing, but nothing else (or vice versa, or
anything in between). This allows the operator to decide what makes most sense
in terms of resource allocation.
§ Deployment of value-added capabilities such as location sensitive billing (LSB).

LSB is the ability to bill based on location. This mobile IN enabled capability
allows the mobile operator to create more flexible and varied calling plans for the
prepay customer. The customer will be pleased with greater choice. The mobile
operator receives the benefit of more rapid use of prepay cards/vouchers, driving
up usage and profits.
ABILITY TO OFFER MORE SERVICES TO PREPAY CUSTOMERS

As mentioned earlier, mobile IN allows prepay customers to be treated more like
postpaid customers. In terms of services, this means that there are many more services
at the disposal of prepay customers than without mobile IN capabilities.
NEGATIVE IMPACTS
We will now discuss negative impacts. While the positive impacts outweigh the
negatives, fair treatment must be given to negative issues. In terms of purely financial
issues, business case analysis will suffice. However, technology limitations must be
dealt with in a different manner.
CAPITAL INVESTMENT AND OTHER FINANCIAL IMPACTS

While the ongoing costs are much smaller than other solutions, the initial capital
investment for mobile IN infrastructure can be quite substantive. Mobile operators are
required to deploy switch upgrades, SCPs, intelligent peripherals (IP), and other
equipment. The deployment program can be an expensive process that includes
conversion of data and resources. It is important to note that many of these
expenditures must take place for a mobile operator to mobile IN based prepay service,
even if they do not provide mobile IN based prepay to their own (home) customers (but
instead just serve mobile IN based roamers). However, it is highly unlikely that a mobile
operator would make a partial investment (investing in the ability to serve roamers
without serving its own customers).

Additional financial impacts include potential "write-off" of certain existing network
assets such as SNs. This forces the mobile operator to incur premature depreciation
expense.
TIME TO DEPLOY
While the above issues are certainly non-trivial, they do not represent significant hurtles
in the long-run business plan. The major issue is timing. Well-developed business plans
will clearly indicate the long-term benefit of mobile IN based prepay. However, it is
likely that deployment of mobile IN will take a long time. Until sufficient operational and
service benefit economies of scale are reached, mobile IN capabilities will be rolled out
into major metropolitan areas first, with other areas following later to fill-in gaps in
service area. This also means that the largest mobile operators (those with a nationwide
and/or international service "footprint") will be the most likely to deploy mobile IN for
prepay quickly and extensively.
LIMITATIONS OF TECHNOLOGY
Mobile IN is not a panacea. Certain limitations exist that limit the benefits of deployment
and operation.
One limitation of mobile IN based solutions is that the processing is all centralized within
the mobile network. In contrast, SIM based solutions distribute processing requirements
and also lend themselves toward mobile commerce which we shall discuss later.
Another limitation was stated previously: timing/availability of mobile IN. Some mobile
operators may be slow to deploy mobile IN. Fewer still (very small) mobile operators
may never deploy mobile IN for prepay service. This limits the ability for those mobile
operators that have deployed mobile IN to fully realize the benefits for prepay services.
Another example involves prepay service resellers. While mobile IN represents a

significant improvement for resellers over other solutions, it will not likely allow resellers
of prepay service to enjoy the full benefits.
We will discuss resellers in a later section. We will also discuss a couple of potential
solutions to both of the above limitations.
OVERALL EFFECT
With mobile IN based prepay, the prepaid monitoring system is no longer in the call
path, and no longer needs to incorporate switching equipment. The overall effect is such
that mobile prepay communications is more efficient operationally, has less long-term
costs, and has greater opportunity for differentiation through advanced features and
add-on services.
Perhaps the best technical solution, however, will be a hybrid of mobile IN and smart
card based solutions. Mobile IN can be employed for network control of advanced

network-based services while the smart card can be used for distributed processing and
mobile commerce.
MOBILE IN TECHNOLOGIES
Thus far, we have spent considerable effort discussing some of the technological aspects
of prepay. However, in comparison to the business issues, the underlying technology is
of minimal importance, and in fact, should be totally transparent to the user. While
understanding the underlying technology enabling overall system capabilities is
important, the business issues are arguably the most important aspects of a prepay
operation and support.
Apart from patents and trade secrets, technology is ultimately duplicable. Therefore, in
order to focus on product differentiation, there should be a strong focus on business
issues and continuous improvement in the areas of market positioning, product support
and business processes. The next section discusses prepay support and business
processes while prepay offering strategies will be discussed in a later section.
TECHNOLOGIES
We will now discuss various mobile IN technologies. While there are several different
mobile IN technologies, all share the fact that they are network based. Network based
prepay solutions leverage the use of signaling networks for data capture, transmission
and processing. Network based solutions can be broken up into three categories: ISUP
based non-standard, TCAP based non-standard, and TCAP based standard.
ISUP BASED NON-STANDARD

ISUP based non-standard prepay solutions typically utilize an innovative network kluge
known as ISUP-loop back. One limitation of this solution is that the mobile switch must
utilize a loop-back voice trunk for all prepay calls. All prepay calls must first route
through the loop-back voice circuit prior to normal call routing to the PSTN.
ISUP loop-back also requires that the mobile switch contain pre-established translations
that force all prepay customer calls to route (and signal accordingly) over the loop-back
voice trunk. Similar to the point solution this limits customer management and the
ability to offer value added services. TCAP based IN solutions improve on these issues.
This solution was discussed in greater detail in the first part of this report.
TCAP BASED NON-STANDARD

Vendor specific or proprietary mobile IN solutions fall into this category. The vendor
may implement totally unique software or creater proprietary extensions to INAP.
Unlike the ISUP loop-back or the point solution, there are no dedicated resource
requirements with this solution. The only major limitation of the TCAP based non-

standard method is that, due to its proprietary (vendor specific) nature, roaming is
problematic. Roaming can only occur between like switch types that have the same
software logic and triggers armed. This includes implementations that utilize proprietary
extensions of the INAP standard. Roaming agreements also have to be in place between
carriers to support the messaging interactions between serving and home systems.
This solution was discussed in greater detail in the first part of this report.
TCAP BASED STANDARD

WIN and CAMEL provide capabilities for TCAP based standard prepay deployment. They
provide a major improvement over proprietary TCAP solutions by allowing roaming to
take place wherever serving carriers support the necessary triggers and software logic.
This means that, in order to provide service to prepay callers, the serving system must
support WIN/CAMEL standards, even if the serving market does not support WIN/CAMEL
based prepay for its own (home) customers.
Unless otherwise stated, we mean TCAP based standard solutions (WIN/CAMEL) when
we speak of mobile IN within this report.
WIN
As discussed earlier, Wireless Intelligent Network (WIN) is the standards based solution
for ANSI-41 based networks. Industry standards organizations have standardized WIN
based prepay. IS-826 was established to provide standards based capabilities for ANSI-
41 networks. One such capability is the capability to perform mid-call messaging and
control of resources. For example, when a prepay caller's account approaches a
predetermined level, the SCP can issue a message to play an announcement and even
release the call if the account reaches zero (see figure below).
SCP
IP
SS7
Mobile
Switch
PSTN
Figure 12: Mobile IN based Call Redirection

FIGURE 12: MOBILE IN BASED CALL REDIRECTION

The above diagram depicts a SCP sending a message to the mobile switch to play a low
balance warning tone or announcement. Once the prepay customer interacts with the IP
(to replenish), the call is redirected back to the PSTN as usual.
Additional capabilities are added with IS-826 to allow the mobile switch to tell prepay
account databases in the SCP to stop call recording upon disconnection of either the
called or calling party.
CAMEL
Whereas WIN is used for ANSI-41 based networks, Customized Applications for Mobile
Enhanced Logic (CAMEL) is the standards based solution for GSM based networks.
However, most mobile IN based prepay solutions for GSM are based on proprietary
extensions of INAP. This is remains the case primarily because the heretofore-available
version of CAMEL, CAMEL phase I, only has a subset of INAP capability set one (CS-1)
capabilities. Capability Sets are defined in the intelligent network call model as
fundamental capabilities for intelligent networking. For example, CAMEL phase I is
lacking in its ability to utilize the specialized resource function (SRF). The SRF function
provides the ability to utilize adjunct network elements such as the use of IPs for playing
announcements.
CAMEL phase II does allow for the SRF. Many mobile operators will begin to implement
CAMEL once phase II is available, providing the advantage of roaming along with
capabilities enjoyed in CS-1 equipped systems.
CAMEL phase II was defined in standards in 1998, but is only now being completed by
vendors in terms of development, integration and testing. Hardware and software
solutions for CAMEL phase II are in the early stages of implementation with a few mobile
operators across Europe.
One of the significant benefits of CAMEL based roaming versus other methods using SMS
is that is does not involve making multiple calls and tying them together. With CAMEL,
the switches in the visited network automatically signals a request the prepay application
in the home network for call-handling instructions.
PRE-CAMEL SOLUTIONS
We earlier discussed USSD and SMS call-back based solutions. These solutions
represent one approach as an interim step toward CAMEL for GSM prepay roaming.
Several mobile operators have adopted SMS as an interim step because it is relatively
simple, compatible with existing handsets, and available now. There is also an agreed
international billing standard for SMS (unlike USSD). However, the interface can be
somewhat cumbersome as the customer must use a particular menu and there can be
delay in processing due to the store-and-forward nature of SMS.

For these reasons and perhaps others, some vendors such as Logica and Siemens have
deployed call-back solutions for roaming the use USSD. There is no delay in establishing
the connection with USSD and no cumbersome menu to follow. However, it is important
to note again that there is no agreed upon billing standard for USSD, so some mobile
operators may not honor roamer's request to initiate a USSD session.
Alternative migration steps include the use of point solutions, which are typically based
on Service Node implementations in which all calls most be routed through a
programmable switch.
However, many operators have implemented vendor's applications based on proprietary

extensions to core INAP as discussed earlier. This approach is the most like CAMEL in
terms of functionality, but does not allow for roaming or very easily provide for the use
of mobile IN messaging for other advanced features without intervention on the part of
the supplying vendor.
DIFFERENT TECHNOLOGY APPROACHES BETWEEN THE UNITED STATES AND

EUROPE
In the United States, most prepay deployments are not mobile IN based, and those that
are utilize proprietary based TCAP technologies. IN Europe, most prepay
implementations are either SN or SIM card based. There are some mobile IN
implementations, but most are based on proprietary extensions of core INAP capabilities.
DIFFERENCES IN MOBILE IN TECHNOLOGIES

In the United States, many wireless carriers will eventually migrate to WIN based
prepay. Some ANSI-41 based carriers in other parts of the world will adopt WIN, but
likely not as fast as in the United States. Larger carriers will utilize economies of scale to
justify early deployment.
In Europe and portions of the United States that have GSM, INAP will eventually give
way to CAMEL based mobile IN enabled prepay services. However, the migration will not
be any faster than WIN since many of the INAP based prepay deployments enjoy the
core capabilities of CS-1.
DIFFERENCES IN WHO PAYS FOR INCOMING CALLS

While Europe it has always been customary that the calling party pays (CPP), United
States based wireless carriers have always charged the mobile user for outgoing and
incoming calls. This is potentially one of the key differences in the success of mobile
prepay communications in Europe versus the United States. Many experts believe that
CPP would stimulate low usage mobile customers to leave their phone on, driving up
airtime. This would be the same or perhaps even more so for prepay customers who
tend to be cost conscious.

Unlike the United States, Europe is accustomed to metered service for all calls including
local exchange, inter-exchange (long distance), and calls to mobiles. For the United
States to institute CPP, certain technical solutions must be put into place for billing, call
control, and announcement. The caller must be informed via VRU and/or recorded
announcement that a call will be a toll call. There must also be new billing and clearing
arrangements between wireless and fixed network carriers. The Federal
Communications Commission may rule in favor of CPP for the United States, but not
likely before they hold public forums to discuss the pros and cons of CPP.
MOBILE IN CAPABILITIES
We will now discuss some of the mobile IN capabilities in greater detail. Before we
discuss the first capability we will introduce the account spending limit concept.
Concept: Account spending limit
ACCOUNT SPENDING LIMITATION CAPABILITY

Mobile IN provides the capability of providing an account spending limit (ASL) service
versus traditional prepay service, but what is an account spending limit service? ASL
refers to the concept of allowing the mobile service customer to limit spending (control
costs) without the requirement for prepay service. In other words, a post-paid customer
can enjoy the benefits of cost containment without prepayment. This may afford lower
calling rates and/or the ability to consolidate billing and calling plans, while still
benefiting from the cost control aspect of prepayment.
Application: Account spending limit
Since mobile IN allows for any phone number to be utilized in conjunction with prepay
call processing, a post-paid phone number could be assigned to interact with the SCP to
allow only a certain number of calls and/or monetary value per period. The caller could
be alerted when a predetermined level is reached and afforded the opportunity to extend
the limit (with appropriate permission) or pay for calls based on credit.
One must be careful to recognize that ASL services suffer from the same constraint that
mobile IN based prepay services do: lack of universal deployment. This means that if a
serving mobile operator does not have the required capabilities, cost control will not be
available. In order to have truly robust ASL, all mobile operators most participate. At a
minimum, there must be technology put into place and cooperation to warn the ASL
customer when they roam into an area that does not support ASL.
Technology: Mid-call control capabilities

MID-CALL CONTROL CAPABILITIES
The ability to control a call in progress is key to applying value-added features and
services. As discussed in the previous section, the SCP can launch messages to alert the
mobile switch (to play a low balance warning) and/or terminate a call upon account
balance depletion. However, mid-call capabilities can also be utilized to enable
replenishment and value-added services.
Concept: Location enabled prepay account replenishment systems
Location Internet Content: Merchants

Application SCP
SS7 IP SCP Prepay
IP
SS7
PDE
Mobile
Switch
PSTN
Figure 13: Location enabled Prepay Account

FIGURE 13: LOCATION ENABLED PREPAY ACCOUNT REPLENISHMENT
Replenishment
When a prepay customer with a low balance initiates a call, a mid-call trigger from the
prepay SCP can launch a message to establish a connection with a voice response unit
(VRU) in an IP. The VRU can announce the low balance condition and offer options for
replenishing the account. If the caller chooses to replenish, certain advanced capabilities
can be utilized to inform the caller where the closest replenishment merchant (with
prepay cards/vouchers) is located (see figure below).
Through communications from the VRU to the SCP, the SCP is alerted of this request (for
replenishment information). The SCP then launches a message to a location information
platform that interacts with position determination equipment (PDE) (such as E-OTD,
STK, A-GPS, and various network-based means such as TOA and AOA) and merchant
databases and in turn provides information to the SCP about the closest replenishment
establishment. The SCP provides this information to the VRU that in turn plays the
information to the prepay customer.
Note: See Part Five of this report for a discussion of location technology middle-ware and
positioning equipment.

Application: Location sensitive billing for mobile prepay communications
Another valuable location based application for prepay that also benefits from mid-call
control capabilities is location sensitive billing (LSB) (see figure below).
Location
Application SCP Prepay
(LSB)
SCP
SS7
PDE
Mobile
Switch
PSTN
FIGURE 14: LOCATION

Figure SENSITIVE
14: Location Sensitive BILLING FOR MOBILE
Billing for Mobile Prepay PREPAY
Upon initiating call processing, the prepay SCP launches a mid-call message to an LSB
application. The LSB interacts with PDE and also determines whether the prepay
customer is within or outside a predetermined calling zone. The LSB application returns
this information to the SCP that in turn utilizes the data to determine the appropriate call
rating for that zone and dialed number.
LSB is an important value-added service for prepay service as it drives up usage of

prepay cards/vouchers.
Application: Prepay call re-rating based on location sensitive billing and mid-call control
capabilities
In the above example of location sensitive billing, it was assumed that the caller was in a
fixed location. However, mid-call control can be used in conjunction with location
sensitive billing to determine if a prepay customer has left predetermined service zones.
Once the mid-call capabilities have determined if the prepay subscriber has left a
particular zone, the location sensitive billing application will alert the prepay system of
the zone change as indicated in the previous figure. This is a way in which the mobile
operator can protect/control the provision and use of zones in conjunction with
differentiated rate schemes for prepay service based on location.

Determination of the location of the mobile customer during the call requires specific
technologies.
ANSI-41 TECHNOLOGY
The Position Request (PosReq) message is a Wireless Intelligent Network (WIN) message
that allows the location sensitive billing application to determine the location of the
customer. This is facilitated by the location application launching a PosReq to the HLR of
the subscriber. The HLR in turn determines the appropriate VLR that is serving the
customer and requests location information, with cell ID being the most commonly
available information. Whether the VLR has the most up-to-date information is
problematic due to the fact that the customer may in transit and the VLR will get
updates only when the customer traverses location areas within the RF footprint.
Accordingly, additional technologies may need to be employed to extract the cell ID from
the mobile unit.
GSM
In GSM networks, the SIM Toolkit (STK) provides an API to the SIM for a variety of
applications including location determination. As in the above example, the location
application could launch a location request via a SMS message through the SMSC to the
SIM via the STK. At a minimum, cell ID can be extracted from the mobile unit, and
perhaps better location such as that provided by the timing advance calculations or the
network measurement report algorithms. In any event, STK enables mid-call positioning
as well as idle-mode positioning of the mobile unit.
The equivalent of the PosReq in GSM is the GSM Mobile Application Part (MAP) Any Time
Interrogation (ATI). The MAP ATI message also allows the location application to launch
a message to the HLR, but has the same issue of not necessarily getting the most up-to-
date location information. Additional work will likely be necessary to ensure that location
information from the base station subsystem is provided to the network switching
subsystem for ANSI-41 and GSM based networks that use strictly a mobile IN based
solution such as PosReq and MAP ATI respectively.
MOBILE IN SUPPORT OF GPRS

GPRS as an improved bearer for wireless data applications is an important improvement
for other applications such as WAP in addition to engendering new applications through
the efficiency and "always-on" capability of the packet connection. Offering prepay
GPRS services will be critical to the non-voice product market as it will allow customers
to have the convenience of prepay and/or the ability for mobile operators to reach that
specific target market with GPRS based services.

PREPAY GPRS DEPLOYMENT
While providing prepay GPRS services can be accomplished based on CDR based prepay
methods, mobile IN is the preferred mechanism as it provides for increased call control
and does not expose the network provider to fraud or uncollectable revenues.
However, deploying prepay GPRS services with mobile IN is not without challenges.
CAMEL Application Part (CAP) phase 3, which has worked its way through the standards
process, but has not yet been commercially deployed. In the below diagram, we indicate
the architecture associated with CAP3 and the support of prepay GPRS.
gsmSCF
SCP
gprsSSF
SGSN
FIGURE 17: MOBILE IN SUPPORT OF GPRS

Figure 17: Mobile IN Support of GPRS
CAP3 provides for messaging between the interface of the Serving GPRS Support Node
(SGSN) and the SCP. More specifically, these functions are known as the GPRS Service
Switching Function (gprsSSF) and the GSM Service Control Function (gprsSCF). The
gprsSCF is where the applications reside – in this case, the mobile prepay application.
The gprsSSF is where the triggers reside – in this case, the mobile IN trigger for
launching the CAP3 message from the SGSN to the SCP.
CAP3 provides messaging between these interfaces to allow for service control. For
mobile prepay, this service control means that messaging will occur between the
gprsSSF and the gprsSCF. This messaging accomplishes the goal of letting the prepay
application know that a service event has occurred, just as in a voice call a mobile IN
message is sent to the application to indicate a request for service (either an incoming or
outgoing call attempt). In the case of this non-voice session utilizing GPRS as the
bearer, there is not a connection in the same sense. GPRS sessions are associated with
attachment or detachment of the GPRS device to the SGSN for purposes of
sending/receiving data and then ending the session. Accordingly, the gprsSSF trigger is

armed to detect the attach/detach state of the GPRS device rather than a voice call from
a GSM phone.
In terms of implementing, mobile IN based prepay GPRS, there are some issues of
technology availability. GPRS equipment such as Gateway GPRS Support Nodes (GGSN)
and SGSN are available and many operators are beginning to deploy. However, the
SGSN equipment does not yet support the gprsSSF function. In order to combat this
issue, mobile operators may need to consider forcing all GPRS traffic back to GGSN
(which do have gprsSSF) so that they may offer prepay GPRS services. While this would
be a drastic move, it is one that would be alleviated once vendors provide gprsSSF
functionality.
HYBRID MOBILE IN AND SMART CARD BASED PREPAY

While mobile IN is required for network control of prepay GPRS, its deployment does not
preclude deployment of smart card based prepay. This is one of the reasons why it is
likely that hybrid mobile IN/smart card based prepay systems will emerge. A likely
deployment example is one in which the mobile IN system handles the SCF function
while the smart card handles the Service Data Function (SDF). The SDF includes
functions such as amount of credit on the account, rate plan, and other factors. The SCP
would handle SCF functions such as call/session rating, account decrementing, and other
functions. Communication between the SCP and the smart card would happen by way of
SMS and/or GPRS. This application would require SIM Toolkit or some other secure API
to ensure secure transactions.
TARGET MARKET IMPLICATIONS

In the next part of this report - Marketing and Business Issues - we discuss the major
target markets for prepay service, but we discuss the target market implications of
mobile IN here for the sake of continuity in discussing these particular issues. Read
ahead if you need to do so.
Mobile IN will benefit all of the target markets by virtue of lower cost prepay service due
to operational efficiencies enabled by the mobile IN architecture. We will now discuss the
implications of deploying/operating mobile IN regarding marketing to the above groups.
CREDIT CHALLENGED
Mobile IN will benefit the credit challenged by removing some of the sigma associated
with prepay service. Prepay users will no longer need to be assigned specific numbers
(as in a SN based solution) or specific phones (as in many handset-based solutions).
The credit challenged will also be availed to many services and features on a prepay
basis that they here-to-fore hand did not have access to use.

TEMPORARY AND INFREQUENT USE
This class of user will benefit from additional access to features. They will no longer
have to put up with a minimal set of capabilities just because they are traveling or in
some other temporary situation.
ANONYMITY MARKET
This market will not necessarily benefit as much from mobile IN technologies. In fact,
the ability to track usage will improve with mobile IN, something the anonymous user
does not want. Introduction of mobile IN will perhaps create a new market for non-
mobile IN based prepay service at a much higher price to the anonymous user market.
If you want "dumb" service that doesn't have records of your location and/or usage, you
have to pay a premium.
COST CONTROL
This market segment may be the biggest beneficiary. As discussed earlier, the ability to
offer ASL services will allow the truly cost control user to have the type of service and
support they want, without the necessary constraint of prepayment that comes with
non-mobile IN services.
OTHERS (INCLUDING CONVENIENCE PURCHASE, AFFINITY PURCHASE, AND

GIFTS)
The major benefit for this market segment is simply more value for the money.
IMPACT ON STRATEGY
ABILITY TO OFFER MORE CUSTOMIZED OVERALL SERVICE TO PREPAY
CUSTOMERS
Service can be more customized with mobile IN technologies. The prepay customer can
choose which additional services are desired, rather than assuming they are unavailable.
This will allow the mobile operator the flexibility to market to groups that were
previously ignored once the initial sale is made. This also underscores the importance of
tracking customer usage and behaviors. We refer back to our discussion in the first part
of this report regarding call detail records and service detail records (SDR). Capturing
and acting on SDRs will be especially important in terms of target marketing to meet the
service and feature needs of various prepay user groups and sub-groups.
IMPROVED SEGMENTATION CAPABILITIES

Per the discussion above, a prepay customer is no longer just that prepay. Instead,
prepay becomes truly just an alternative payment method. In fact, with ASL
capabilities, the customer need not be prepay if all they want is cost control.
ACCOUNT SUBSCRIPTION LIMIT STRATEGY

While some existing prepay customers may want to switch to ASL, the more important
aspect of the successful ASL strategy is to offer ASL as an add-on feature to ALL existing

customers. This will enable the mobile operator to benefit from a new service capability.
Many wireless carriers in the United States may fear ASL as they currently charge a
premium for prepay over post-paid service. The fact of the matter is that the
incremental difference in price between prepay and post-paid will diminish in time
anyway in the United States, reaching more of an equilibrium as it has in Europe. Mobile
IN will only accelerate this steady state price. Therefore, shrewd United States based
wireless carriers will actually embraced ASL as a valued-added, revenue producing
service instead of a threat.
RESELLER SUPPORT CAPABILITIES ARE IMPROVED

Reseller support will be improved with mobile IN. Whereas many mobile operators avoid
any form of co-location or "direct connection" (e.g. a "trunked" solution), they will be
much more willing to allow resale based on logical network element controls. However,
they will not allow access and/or control of the mobile IN logic (triggers, translations,
etc.). We will discuss this in greater detail in the next section.
ATTACK CHURN THROUGH DEPLOYMENT OF ENHANCED SERVICES

The fact that mobile IN allows greater service variety and robustness bodes well for
reduced churn. As prepay service offerings are differentiated through mobile IN,
customers will be less likely to leave for other providers. Mobile IN will facilitate SDRs
and direct marketing of customized service packages for this differentiation to take
place.
BUNDLING PREPAY WITH VALUE-ADDED SERVICES

We again state that value-added services such as ASL and LSB are the key to significant
differentiation and improved average revenue per customer. Mobile IN provides the key
enabler for value-added services as call control and services are no longer relegated to
the capabilities of the prepay platform itself.
LIMITATIONS OF MOBILE IN AND POTENTIAL SOLUTIONS

LIMITATIONS
First we will discuss the limitations of mobile IN and then we will evaluate potential
solutions.
NON-UBIQUITOUS AVAILABILITY OF MOBILE IN

As discussed earlier in this part of the report, mobile IN technologies such as CAMEL and
WIN will not be ubiquitously available for a few years based on the development and
availability of standards, development by vendors, and implementation and support by
mobile operators. This will leave of gap in the ability of mobile operators who do invest
early in mobile IN technology to effectively serve prepay customers. The mobile
operators will not be able to support prepay based roaming with mobile IN until serving
carriers equip their systems with necessary capabilities to support prepay roamers.

MOBILE OPERATORS WILL NOT ALLOW ACCESS TO SCP/HLR BY RESELLERS
Mobile IN provides a significant incentive for mobile operators to allow resellers to sell
prepay service. Without the dedicated trunk-dependent solutions that point solutions
require, mobile operators will be much more willing to allow resale of prepay service with
mobile IN based architectures. However, mobile operators will likely only establish very
basic triggers for resale providers in their network elements. Mobile operators will also
likely be very protective of their databases and mobile IN resources. Therefore, resellers
will have only static resources at their disposal, unable to configure triggers and other
capabilities for value-added services and capabilities.
POTENTIAL SOLUTIONS
Now we will discuss some potential solutions to the above issues.
OVERLAY APPROACH FOR MIGRATION TO CAMEL FROM INAP

One solution for migration to standards based mobile IN is to implement an overlay
architecture. In this overlay architecture, CAMEL phase I could be used in the home
market and to enable roaming between CAMEL enabled serving networks and home
networks. This network could be over-laid with INAP should a mobile user require
specific resources that are unavailable without CAMEL phase II support (see figure
below).
INAP SCP SCP CAMEL
IP
SS7
Mobile
Switch
PSTN
Figure 15: Overlay Mobile IN Architecture: CAMEL with

INAP
Call control could be relinquished to INAP based systems in the event that specialized
resources are required as depicted in the above illustration where INAP based SCPs
direct call control to an IP for announcements. However, this does not solve the problem
of no mobile IN capability and/or the potential that the serving mobile operator may
simply not wish to participate in mobile IN service interactions.

PSEUDO LOCATION REGISTER
We will now discuss the concept of a Pseudo Location Register (PLR).
Concept: Pseudo Location Register (PLR)
In the first part of this report, we reviewed various network elements such as the HLR,
VLR, and MSC. We also discussed the registration process. However, if a serving
systems does not participate in mobile IN based prepay, the prepay customer will be
unable to register with a WIN/CAMEL trigger profile and thus be unable to utilize mobile
IN based prepay. One solution is to implement a PLR (see figure below).
Home
MSC/HLR System
PLR SCP
SN
SS7
MSC/VLR
PSTN
Visited System
FIGURE 16: PSUEDO LOCATION REGISTER ARCHITECTURE

Figure 16: Psuedo Location Register Architecture
In the above illustration, the PLR (software logic on an SCP) can receive a registration
from the serving system MSC/VLR. The response back to the VLR can be to "hotline" all
calls from the mobile customer. These hot-lined calls would be directed to some other
resource such as a SN (typically located in the home system) for processing. While not
as efficient (from a trunking perspective) as seamless mobile IN, this architecture allows
the home system mobile operator to provide relatively consistent and robust prepay
service to its customers (through the capabilities of the SN) even when the serving
system does not have mobile IN capabilities. While not all of their services would
necessarily be available as they roam, customers would at least be assured that they
could use basic prepay services when roaming.
The PLR is also an alternative for resellers who want to offer basic mobile IN based
services to some customers (with efficient roaming) and perhaps more advanced
services (but yet less efficient due to back-hauling) through the SN.

OTHER ADVANCED TECHNOLOGIES FOR PREPAY
SHORT MESSAGING SERVICE APPLICATIONS
Short message service (SMS) is a technology that utilizes SS7 as a delivery vehicle to a
Short Message Service Center (SMSC) platform. The SMSC acts as a store-and-forward
repository for short messages to the mobile phone. For more information about SMS,
see the Mobile Lifestreams report Success 4 SMS at www.mobilesms.com.
Application: Short messages to inform the customer and provide replenishment
Through interaction between the mobile IN enabled systems and a short messaging
service center (SMSC), the SMSC could be utilized to send short messages (on a
programmatic and/or on-demand basis) to inform the prepay customer of account
status.
SMS can also be the vehicle to provide the mobile user prepay card/voucher codes for
replenishment of the account via a VRU. In the first part of this report, we discussed the
concept of service detail records (SDR). If an SDR record/trend indicates that a prepay
customer has not replenished very much (or a long time ago), an SMS message could be
sent to the user, alerting him that he will have a discount on his next prepay voucher if
he buys now.
INTERNET AND WIRELESS DATA

The Internet and Internet Protocol technologies are revolutionizing every aspect of
society, but especially in the area of telecommunications. Mobile prepay
communications is no exception. Wireless data services and capabilities will continue to
expand and generate new areas of revenue and differentiation. We will now explore
some of the implications for prepay service.
PREPAY WIRELESS DATA SERVICES

As wireless data services such as those based on WAP, GPRS, and UMTS start to pick up
momentum, these services need a prepay option to fully realize benefits to all potential
customers. Mobile IN technologies will need to evolve to meet these needs.
PREPAY AND OTHER TECHNOLOGIES

Other technologies are emerging that will affect and be affected by prepay. For
example, Bluetooth is a technology that enables ad hoc networking to establish a
personal area network between devices and/or to control resources. Bluetooth is one
example of technologies that will change the way we live and do business. An example
is the ability to walk up to a Bluetooth enabled soda machine and purchase refreshment
with a Bluetooth enabled phone. However, how will this be billed and accounted for? It
is likely that many of these e-commerce type applications will need to be on a prepay
basis.

FUTURE OF PREPAY WITH ADVANCED CAPABILITIES
IMPROVE RESOURCE EFFICIENCIES
In the beginning of this part of the report, we discussed fundamental changes in prepay
service architecture. Mobile IN technologies are driving these changes, allowing mobile
operators to leverage economies of scale for more efficient use of physical resources as
well as reduced costs. While small at first, these improvements will grow in direct
proportion to the number of participating mobile operators who use mobile IN for prepay
service.
MORE ROBUST SERVICES AND GREATER VARIETY

Mobile IN and other advanced technologies will enable much more robust service
implementations and greater variety of services. Prepay customers will no longer be
constrained to basic services only but will instead have access to all services available to
post-paid customers. Furthermore, many e-commerce applications may require
prepayment, thus making everyone a potential prepay customer.
SUPPORT FOR PREPAY E-COMMERCE

Many technologies are evolving to support e-commerce including wireless data
infrastructure and handsets, Bluetooth, location technology and applications, intelligent
agent technology, and the use of customer profile databases. Many experts predict that
the number of wireless data capable phones will outnumber the current number of
personal computers by the year 2005 or so. While their numbers are currently small,
consumers are becoming increasingly familiar and interested in using their mobile
phones for exchanging non-voice based information/content and performing
transactions.
Advanced prepay capabilities are potentially another key element in this chain of
technologies and business trends. It is likely that many e-commerce applications will
either require prepayment or at least make more sense with it.
Concept: Prepay e-commerce applications
Prepayment of tolls would be popular with commuters wishing to not slow down while
going through a toll facility. This could be accomplished with a Bluetooth enabled phone.
Prepayment of public transportation could work in the same manner.
Prepayment could be used for many third generation mobile driven services. Examples
include prepayment for games, gambling, financial trading, and ad hoc service needs
such as video calling and picture/video recording.
The needs for prepayment for these e-commerce services meet the same target markets
as those for traditional voice oriented prepay services including credit challenged,
temporary and infrequent use, anonymity market and cost control. However, the impact

on these target markets may be different between the United States and Europe based
on differences in technology and association adoption.
Technology: Smart card technology
In Europe, consumers are much more accustomed to the use of smart card technology
for prepayment and debit based purchasing of goods and services. Therefore, many e-
commerce services will likely be embraced much more quickly in Europe versus the
United States. Ironically, however, mobile IN may prove to be even more critical for
prepay e-commerce in the United States (where there are few smart cards utilized). The
mobile IN platform can provide the prepay account management for non-smart card
based e-commerce applications.
SUMMARY
Mobile prepay communications has a bright future due to the capabilities made possible
through deployment of advanced technologies. Within the next five years, we will
witness expanded exploitation of mobile IN technology for prepay service.
Consequently, we shall also see expansion of services to prepay customers and
corresponding expansion of revenues to mobile operators. The acceleration of this
growth will be limited partially by technology availability but perhaps more so by
hesitancy on the part of the mobile operator to deploy.
However, as other advanced technologies emerge, and e-commerce becomes more

pervasive, telecommunications providers of all types will begin to realize the importance
of prepayment. While much of this prepayment will be over smart cards, not all mobile
devices can currently use smart cards nor are all consumers accustomed to their use.
Mobile IN will consequently emerge to both improve traditional voice oriented prepay
applications as well as provide capabilities necessary for many non-voice oriented e-
commerce applications. The limitations are only based on the compelling applications
that require a mobile phone, prepayment, and network control of resources.

PART THREE
MARKETING AND BUSINESS

ISSUES
Withstanding patents and trade secrets, technology can ultimately be duplicated.
However, sound marketing and business strategy can create success and long standing
barriers to entry against competitors. In this part of the report, we discuss the
marketing and business issues that are key to the mobile prepay industry.
MARKETING
We will begin by discussing the marketing issues associated with mobile prepay
communications services. As we have discussed in earlier publications, technology is an
enabler of business. Withstanding patents and trade secrets, technology can ultimately
be duplicated. However, sound marketing and business strategy can create success and
long standing barriers to entry against competitors.
THE FOUR P'S

No discussion of marketing would be complete without at least reference to the four P's -
product, promotion, place, and price - relative to the subject at hand.
PRODUCT
The product is mobile prepay communications, with a clear need in the marketplace, so
the important point is the manner in which the product is positioned in the marketplace
(see target market). Therefore, promotion and place is key to success.
PROMOTION
An excellent example of the power of promotion (or lack thereof) is the fact that, by and
large, prepay remains stigmatized as a merely a "credit challenged" service in the United
States. This could not be further from the truth as tremendous the success of prepay in
other market segments has been proven in other parts of the world.
PLACE
This P has to do with marketing and distribution. The more that the prepay customer
believes in the value of the service, the more that she will use it. Convenient recharge
will enable this model to perpetuate.

PRICE
When everything else considered equal, price can sometimes be the turning point
between success and failure. Early prepay deployments in the United States are an
example of pricing set to meet a perceived limited market, which ironically became a
self-fulfilling prophesy. A view that prepay will become more main stream, as it has in
many parts of the world, dictates that one should price accordingly.
4
As technology matures, it will enable new business processes that will change the face
of the prepay market. However, careful optimization of the four P's remains a
fundamental tenant of success.
CONSUMER BEHAVIORS AND SERVICE EXPECTATIONS

Prepay customers are not unlike post-paid customers in the sense that they have certain
basic needs and desires. Prepay service providers that meet these requirements will be
in the best position to maintain and grow their customer base and unit profits. We will
next explore customer behaviors and expectations.
§ Need for mobility
The increasingly active lifestyle of today dictates the need for anytime, anywhere
communications. This is no less true for prepay customers as they have the need to
roam and have the same service as in their home market. Accordingly, service
providers must provide seamless service at reasonable rates to prepay customers.
§ Desire for increased control
Prepay service is a perfect illustration of people's desire to have more control over
their lives - in this case, control over expenditures. A case in point would be the
father who wants to have assurance that his daughter in college can call home when
necessary but have only a limited discretionary calling "budget" thanks to mobile
prepay communications. We will expand on this example in the Business Strategies
for profitable Business section.
§ Ready access to information
The Internet society we live in today has changed and will continue to change our
expectations of how we share information. Mobile Internet will change our
expectations further as we will no longer be tethered to a fixed network for access to
information. Prepay service will play an important role as many people will find
prepayment a convenient and in some cases required for transactions. A mobile
operator does not want to send a bill to someone for pizza. However, they can
4
As outlined in the Advanced Prepay Concepts and Applications part of this report

establish a relationship with a financial settlement institution that would gladly clear
the transaction for a fee.
§ Expectations of greater value
The time of when consumers would accept whatever is offered is long gone.
Customers are increasingly savvy of technology and its capabilities. Once exposed
to technology in one area, it is easy for consumers to assume that it should be
available via another medium. For example, why shouldn't instant messaging be
available on mobile phones? Why shouldn't this leverage location technology to
locate friends and co-workers? We will witness the mobile device increasingly
become a device to make our lives not just easier but higher quality lives. Many of
these services will be paid for in advance of use.
PREPAY TARGET MARKETS

There are four major market segments for prepay: credit challenged, temporary use,
anonymity and cost control. Each of these segments has unique requirements.
CREDIT CHALLENGED
The credit-challenged segment of the market consists of individuals who have not yet
established credit or who have impaired credit. In the United States, this market
segment represents approximately 30% or more of all requests for mobile service.
Wireless carriers meet this demand by offering pay-in-advance mobile service, limiting
their liability and risk of loss.
TEMPORARY AND INFREQUENT USE

Travelers, temporary users and “glove box” users make up this category. Visitors from
another country may need to procure prepay service in order to have mobile service
available. A person may not have mobile service in his own country, or if they have a
home mobile service provider, that mobile carrier may not allow or support roaming into
the visited country. This can also happen when roaming within a country.
Temporary users are not travelers. Instead, they seek prepay as a means of short-term
mobile communication, allowing them service without the service commitment
agreement that many mobile carriers require for post-paid service.
The glove box user is the term applied to infrequent users. This group has a phone
primarily for safety and security purposes and is typically located in the glove box of
their car until needed in an emergency or for road assistance. This group does not need
post-paid service to make emergency calls, as they are free to any caller. Mobile users
in this segment do not want to commit to a post-paid rate either for normal calling.
Many post-paid calling plans entail a flat monthly fee for a certain number of minutes.
The infrequent user does not use all his minutes, making the effective cost per minute

very high. These users would rather have the option to buy a fixed number of minutes
that can be used (before the credits expire) over a reasonable amount of time.
ANONYMITY MARKET
The anonymity market contains individuals who prefer the discretion of conducting
business in a pay-in-advance manner. This group does not consist only of individuals
who may be engaged in illegal or immoral activities. In fact, mobile users who regularly
carry and use a business owned phone might find prepay a useful alternative for
personal calls, rather than carrying a separate phone.
COST CONTROL
This category is the broadest and expected to be potentially the largest growth segment
for prepay services. This segment includes the cost conscious and family-use consumer
markets as well as the enterprise market for cost control. Examples include mobile
service budget limits for college students and cost control for corporate fleet operation
communications.
OTHERS
We have discussed the major segments, but there are other potential drivers for prepay
usage. For example, a prepay service is sometimes purchased as a gift. Purchasing a
prepay service is also generally more convenient as little or no information is required
from the customer by the sales agent. Finally, mobile carriers and resellers can market
prepay service on an affinity basis; prepay cards or vouchers can be easily associated
with affinity groups such as the Boy Scouts. Customers will sometimes buy prepay cards
due to the affiliation or perhaps even as a collector’s item.
MARKET SEGMENTATION LEADS TO PRODUCT SEGMENTATION

Based on the various target market segments and other factors, mobile prepay service
providers can benefit greatly by segmenting their product offerings based on market
segmentation.
PREPAY WITH A MINIMUM RECHARGE AMOUNT

This is the traditional prepay program, geared toward those that are not cash flow
challenged, but rather just want the convenience of prepay.
PREPAY WITH LOW MINIMUM RECHARGE AND EXTENDED ACCOUNT

EXPIRATION
This is for the "glove-box" target market or infrequent user. Mobile prepay service
providers could charge a high rate (extra per-minute fees) to this group in return for
allowing an extension on the account before a recharge must occur.

PREPAY WITH NO MINIMUM RECHARGE
This type of service offering meets the needs of the customer who wants prepay, and
wants to recharge frequently, but doesn't necessarily have a lot of money to recharge.
MONTHLY FEE WITH BUNDLED MINUTES

This type of service offering is almost exactly like post-paid, only it is mobile prepay.
This meets exactly the needs of the cost control market. For an additional charge (extra
per-minute fee), minutes could be rolled over from one month to the next.
LOW MONTHLY FEE WITH NO BUNDLED MINUTES

This type of service offering meets the needs of the customer who wants to keep prepay
service, but does not want to worry about an expired account or minimum recharge
amounts. The monthly fee would be used to pay for the cost (plus a profit) to maintain
a potential inactive account on the prepay system.
SPECIAL RATE PLANS FOR NON-VOICE SERVICES

Special rate plans should be offered for those hooked on SMS or WAP based services.
CLOSED USER GROUP PLANS

Special rate plans should be offered to those who want to benefit from frequent calling to
certain groups such as friends and family. All other calls would be a higher rate.
SUMMARY OF PRODUCT SEGMENTATION

There should be two goals of product segmentation:
1. Make sure that people are on the right plan to maintain their loyalty (prevent them
from churning to another network)
2. Try to steer people to the plan that provides the best profit margins to the mobile
prepay service provider
Balancing the two above goals can be quite difficult, as they can at time be mutually
exclusive objectives. It is incumbent on the service provider to optimize the service
offerings, while keeping them relatively simple, easy to understand and use, and
allowing customers to recognize and appreciate the value.
MARKET DEMOGRAPHICS AND REGIONAL MARKETS

Prepay in Europe, Latin America, Asia and parts of Africa far outpaces the rate of growth
in the United States. As an example, we see a story of contrasts between Latin America
and the United States.
One thing that is common among all markets, however, is that prepay service is
effective at each stage of the product life cycle including:

§ Low-penetration, developing markets
§ Low-penetration, developed markets
§ High-penetration, developed markets
ASIA PACIFIC
Just as in Europe, mobile prepay is a growing market segment, especially for new mobile
network provider market entrants. With high mobile penetration in certain countries,
mobile prepay represents and opportunity to further expand market penetration into new
market segments. In some of the larger, yet less developed countries such as China,
India and Indonesia, mobile prepay is an opportunity to kick-start the penetration of
mobile service into a large base of potential subscribers.
Mobile penetration in a few select countries as of 4Q00:
§ Australia 53%
§ Burnei 34%
§ China 7%
§ Hong Kong 74%
§ India < 1%
§ Indonesia 2%
§ Japan 45%
§ Malaysia 27%
§ New Zealand 51%
§ Singapore 76%
§ South Korea 56%
§ Taiwan 79%
§ Vietnam 1%
INDONESIA
Of the approximate 3.4 mobile customers in Indonesia, about 75% are prepay
customers, with about 85% of all new customers added to the prepay base. While an
excellent penetration for prepay of the total customers, total mobile penetration in
Indonesia remains at approximately 2% of the population. Indonesia is an excellent
example of an opportunity exploit prepay as a means of building a mobile services
business to sustainable and profitable operational levels.
EUROPE
Europe leads the world in overall mobile penetration. Below is the penetration in a few
select countries as of June 2000:
§ Finland 76%
§ Italy 62%
§ Ireland 56%

§ Spain 51%
§ Belgium 39%
Prepay is growing at a brisk pace in Europe with some operator's prepay penetration
over 70%. The overall average penetration is just above 50% in Western Europe as
prepay overtook post-paid in 2000. Prepay is expected to overtake post-paid in Eastern
Europe in the 2003 timeframe.
While prepay is enjoying great success in Europe, customer retention is a major issue
due to mobile number portability (MNP) and the ability of customers to switch operators.
We shall discuss MNP more later in this report.
AUSTRIA
According to the Strategis Group, MaxMobil of Austria had 1,200,000 prepay customers
against a total customer base of 2,100,000 as of Q4 2000.
CZECH REPUBLIC
Prepay penetration in the Czech Republic is about 76% of total mobile customers.
LITHUANIA
Prepay penetration is 39% of total customers against a mobile penetration of about
13%.
UNITED KINGDOM
The UK is enjoying splendid growth in mobile prepay. For example, from the January
15th, 2001 edition of Wireless Week:
§ Vodafone added 1.4 million customers is Q4/2000 - 1.2 million were prepay
§ One 2 One grew to 8 million plus customers by Q4/2000 - 6.4 millions of those
are prepay
According to the Strategis Group, BT Cellnet had 6,690,000 prepay customers against a
total customer base of 10,244,000 as of Q4 2000.
MIDDLE EAST
LEBANON
According to the Strategis Group, FTML-Cellis of Lebanon had 255,000 prepay customers
against a total customer base of 382,000 as of Q4 2000.

AFRICA
SOUTH AFRICA
Customers on prepay plans in South Africa represent 68% of total customers.
LATIN AMERICA
As much as 73 percent of the mobile customer growth in Latin America is expected to
come from prepay through 2003. Prepay currently represents slightly less than 50% of
all overall customers in Latin America as of 2001.
Prepaid vs. Contract in Latin America
50.0%
40.0%
Penetration
30.0% Contract
20.0% Prepaid
10.0%
0.0%
1999 2000 2001 2002 2003
Year
FACTORS FOR RAPID GROWTH IN LATIN AMERICA:

§ Pent-up demand due to limited wireline infrastructure
§ Calling party pays available in many markets
§ Reduced account fraud including lower risk international calling
§ Cash economy embraces prepayment
BRAZIL: A LARGE MARKET OPPORTUNITY FOR PREPAY IN LATIN AMERICA

Prepay represents approximately 50% of all mobile usage in Brazil. Being a large
market in this region, studies indicate that by 2005 Brazil will represent up to 38% of all
projected prepay in Latin America with Mexico at 18% and Argentina at 13%.
CANADA
According to the Canadian Wireless Telecommunications Association, as of March 31,
2000, prepay penetration was about 17% overall across mobile network operators. The
breakdown:

§ Bell Mobility: 3.5 million total, 525 thousand prepay
§ Rogers: 2.2 million total, 322 thousand prepay
§ Microcell: 655 thousand total, 275 thousand prepay
§ Clearnet: 615 thousand total, (included in Bell Mobility figure)
MEXICO
Prepay represents the method of service for approximately 80% of the mobile users in
Mexico. One of the factors that led to this significant growth was the strategy of mobile
operators to extend the expiration limit on the prepay account, allowing the customer to
wait longer to use the airtime. This is a very good example of a specific demographic
and target market need that, when met, led to improved penetration of service.
UNITED STATES
Prepay is growing at a more moderate rate in the US.
Prepaid vs. Contract in US
60.0%
50.0%
40.0%
Penetration
Contract
30.0%
Prepaid
20.0%
10.0%
0.0%
1999 2000 2001 2002 2003
Year
FACTORS FOR MORE MODERATE GROWTH IN THE US

§ Continued sigma associated with prepay users
§ Lack of calling party pays
§ Cost of prepay service vs. post-paid service
§ Credit economy shuns prepay
MARKET DEMOGRAPHIC SUMMARY

While we used Latin America and the United States as an example, it is true that there
are significant differences between each major market area. If compare Europe to Latin

America for example, both have high prepay customer penetrations, but for different
reasons. Europe tends to be more cost control oriented versus Latin America which is
simply a cash oriented society. The important point is to key on those distinguishing
characteristics that make the target market unique.
MARKETING STRATEGIES
We will next discuss marketing and sales strategies for prepay service providers.
CARRIERS/OPERATORS
Mobile operators are at the top of the value chain in terms of prepay service delivery and
in the best position to fully realize the opportunity. Whereas resellers must buy airtime
from the wireless carrier, the mobile operator has control over those costs, thereby
allowing the carrier to focus on market segment differentiation and delivery of value-
added services. Examples of some innovative mobile operator prepay programs are as
follows:
§ Teensafe programs - prepay service wherein the child can only call emergency
number and home number
§ Campus phone - prepay service wherein the student has unlimited campus
5
calling at a prepay flat-rate, can make calls outside of campus at the prevailing
rates, can call home anytime/anywhere at a flat rate, and can call emergency
number anytime/anywhere
§ Personal use of business mobile phone - many employees have a mobile phone.
The mobile operator could offer a plan wherein the customer may have unlimited
6
use of the phone while at the home zone .
RESELLERS
It is more difficult for resellers to create differentiation, as they do not have control over
the enabling infrastructure. Furthermore, resellers do not have control over costs, as
they must buy airtime from the wireless carrier. Resellers must therefore focus primarily
on certain market segments and/or develop unique marketing programs.
Distribute refurbished phones in cost control/credit challenged markets such as students

and glove box users. This will keep the cost of acquisition low for the reseller. Offer
upgrade programs for better phones to long-time and high use customers.
Institute special co-marketing programs such as alliances with roadside assistance and
traffic information services. Calls to these businesses are free. The towing service pays
5
Note: This service would require location technology for service.
6
Note: This service would require location technology for service.

for calls, but benefits from the business. The traffic information service is advertiser
supported.
If the mobile operator allows, offer personal number service and/or SMS to help create
loyalty to the reseller.
REPLENISHMENT AND DISTRIBUTION STRATEGIES

In the first part of this report, we discussed replenishment and distribution issues. We
will now expand on that discussion to evaluate various alternatives for replenishment
and distribution. This is a key area as we recommend business strategy later in this
publication.
RECHARGE METHODS
There exist various methods prepay customer recharge. These methods, along with
their advantages and disadvantages, are as follows:
CALL CENTER REPLENISHMENT

This method entails the use of customer care personnel accepting calls for
replenishment. The customer care representative takes the request and processes the
recharge within the prepay system.
§ High "touch" of human interaction is perhaps the only acceptable method for
some customers
§ Chance to "up-sell" services to customer
DISADVANTAGES
§ Expensive to service provider
§ Inconvenient compared to other methods
HANDSET
This method entails a customer self-replenishing via the handset. Various options are
available including over the air via SMS, WAP, or USSD or IVR via DTMF.
§ Convenient for user

§ Low cost replenishment system for service provider
DISADVANTAGE
§ Must authenticate the user - chance for fraud
RETAIL OUTLET
This method entails recharge at a retail point-of-sale (POS) location such as a
convenience store or department store. The most common payment option is a

7
disposable debit card or voucher. However, an account card is a viable option for point-
of-sale replenishment.
In the United States, retail outlet locations for distribution of prepay cards fall roughly
into the following percentages:
§ Discount or department store 26%

§ Convenience store 25%
§ Grocery store 15%
§ Gas station/truck stop 8%
§ Warehouse 8%
§ Drugstore 7%
§ Other stores 4%
§ Other types of retail outlets 16%
As discussed in Part One of this report, POS activation (POSA) is an important issue.
Activating cards at the POS helps in the following ways:
§ Reduce shrinkage (stolen/lost cards)
§ Allows cards to be placed on store shelves (rather than placed out of sight in cash
draws)
§ Allows for consignment billing - the ability to keep cards separate from the
physical product/service - the mobile phone and prepaid service - allowing
merchants to keep a zero cost inventory (they only pay for cards once activated -
allows no risk, low cost merchandizing)
CHARACTERISTICS OF RETAIL OUTLET DISTRIBUTION

§ Extends "market presence" and distribution of service provider
§ Helps promote spontaneous purchase prepay replenishment
DISADVANTAGES
§ Customers may spend money on beer instead of phone
§ Fraud at point-of-sale
ATM
This method entails recharge at an automatic teller machine (ATM).

7
Use once and throw away.

§ Helps promote spontaneous purchase prepay replenishment
§ Prepay customer may recharge in non-standard amounts
DISADVANTAGE
§ Not all ATM's will work with prepay replenishment system
§ Must either have special ATM to produce voucher or establish financial clearing
with prepay account card provider
INTERNET
This method entails recharge via the Internet. This will typically occur via a PC from a
fixed network. As WAP and other non-voice technologies expand, however, Internet
based replenishment will increasingly occur while mobile.

DISADVANTAGE
§ Not all customers are willing to replenish via the Web
§ Must either have special ATM to produce voucher or establish financial clearing
with prepay account card provider
PAYMENT OPTIONS
CREDIT CARD
This entails the use of a charge or credit card such as American Express, Visa, or
Mastercard.
ADVANTAGES
§ Convenience - the customer does not need to have cash
DISADVANTAGES
Transfer from bank account
This entails transfer of monies from a bank account to a prepay account.
Advantages
§ Independent of card distribution
§ No margin share with card issuer
Disadvantages
§ Cumbersome
§ Takes up to seven days

§ Potential for mistakes in processing
Disposable debit card or voucher

This is the typical purchase of a debit card/voucher that contains a PIN. Once used, the
card is no longer valid.
Advantages
§ Easy to use
§ Dealers like follow-up business
§ Dealer participation in airtime
Disadvantages
§ Good distribution is critical
§ Security and fraud must be managed at point-of-sale
§ Margin, handling, and administrative cost
8
§ Customers may want non-standard replenishment amount
Account card
This method utilizes a permanent card that is used to recharge a prepay account. The
card has a magnetic strip for use at the point-of-sale. The card also has a serial number
and PIN for replenishment via the Internet, ATM, handset, or call center.
Advantages
§ Creates affinity between user and provider
§ Allows purchase of non-standard amount for recharge
Disadvantages
§ Has to be replaced if lost
§ Recharge can not be given as a gift to existing customers
BALANCE CHECK METHODS

The ability for a user to check prepay balance is crucial to maintaining cost-effective
service and a high level of customer support. Accordingly, various balance check
methods are provided below for reference. Some of these same methods may be
employed for alerting the customer of low balance or non-replenishment (after a
specified period of time).
§ Call center
§ IVR via DTMF
§ Handset via SMS, WAP or USSD
§ Internet (from PC)
8
Most debit cards are sold in standard face-value amounts determined by the issuer

ALERTING THE PREPAY CUSTOMER OF A LOW BALANCE
Experience indicates that prepay customers will invariably allow their balance to reach
zero, possibly not recharging the account for days, weeks, or perhaps months. Some of
these users may never recharge while others are simply on hiatus for some reason. It is
imperative to have various mechanisms in place to deal with this situation such as churn
prediction tools and loyalty programs. Low balance alert is the first line of defense in
preventing slow or non-replenishment.
The user may be alerted via the mechanisms mentioned above in the balance check
section. While it is a given that these capabilities must be made available by the mobile
operator, the important issue for discussion is policy regarding when and how to alert.
Mechanisms must be in place to alert the user immediately when a low balance threshold
is met, allowing the customer the opportunity to recharge prior to being disconnected
(upon reaching zero balance) or be reverted to an IVR, either scenario being a
inconvenience and/or potentially embarrassing. Beyond this initial alert, the mobile
operator must have churn prediction algorithms and marketing and loyalty programs in
place to prevent churn and encourage recharge. Service Detail Records (SDR) discussed
in the first part of this report are an important element of churn prediction and policy
regarding implementation of loyalty programs.
SUMMARY
While prepay customers will go out of their way for initial purchase of phone and airtime,
they wan convenience for recharge, or they are likely not to replenish at all.
Accordingly, mobile operators need to implement effective marketing and replenishment
strategies.
STRATEGIES FOR THE PREPAY PROGRAM IMPLEMENTATION

BUSINESS ISSUES
LOYALTY PROGRAMS
As we alluded earlier, loyalty programs can be a critical part of a customers overall
retention strategy. However, systems and processes must be put into place to enable an
effective loyalty program. Prepay systems must have robust SDR capabilities to alert
points-of-sale and other systems that predetermined activity has taken place. For
example, an SDR could alert an SMS Center to send a SMS message to a user, alerting
him that he will have a discount on his next prepay voucher if he buys now. Another
example would involve alerting the point-of-sale equipment to offer a discount to the
user upon recharging (if they meet certain criteria or if a special promotion is offered).
However, the latter example would be much easier to implement with an account based
replenishment system.
Certain companies such as SLP InfoWare provide predictive CRM tools for providing an
early warning when customers may churn to other mobile operators prepay plan. These

types of tools should be used in conjunction with a loyalty program to ensure the right
measures are brought to bear on customers that need extra attention.
SEGMENT STRATEGY IMPLEMENTATION

To the extent possible, customers should be pre-qualified to determine their real needs
prior to making a prepay service sale. However, to do this would require gathering
customer data, which is problematic with prepay. This means that a wireless operator
must attack the issue with proactive marketing.
Marketing programs should address at least three tiers of users: moderate to high end
cost control users, credit challenged moderate users, and low-end glove box users. High
end users should be targeted to receive digital phones, advanced features, and low rates
(with perhaps post-paid service using a prepay process to provide cost control), and
advanced features. These users should also have the most attractive loyalty programs.
Credit challenged moderate users should be targeted with analog phones that have an
associated higher per minute service rate or more expensive digital phones with a lower
per minute service rate and should receive good loyalty plans based on their actual
replenishment rate. They should also be targeted with value-added services to drive up
revenue per unit and usage. Location Sensitive Billing (LSB) could be used to increase
their usage.
Glove box users can be targeted with analog phones and, in return for longer voucher
shelf life (time before account credits expire), they should pay the highest rate plans for
service. They could also receive loyalty programs geared toward infrequent
replenishment. Finally, they should be offered services such as LSB to attempt to move
them to the next tier in terms of usage.
OFFER VARIOUS FEATURE ADD-ON'S

In order to keep customers "hooked" to the service and to improve unit margins, it is
important to offer various feature add-on's. Many of these additional features/services
could be non-voice oriented, thus is important to target the use of SMS for delivery.
While many customers will not want to have SMS mobile origination capability and/or the
mobile operator may not have yet deployed the infrastructure/application to offer
prepaid SMS, mobile termination SMS may still be employed to offer features/services
(charged to the customer on a monthly basis) such as:
§ Joke of the day and horoscopes

§ News and financial information
§ Voice mail notification
At the discretion of the mobile operator, certain mechanisms may need to be put in force
to prevent the number of SMS messages from becoming prohibitive and/or prevent
messages from certain sources, as the customer is paying a flat, prepaid rate for SMS

mobile termination. It is recommended that the mobile operator have a plan in place for
full (mobile origination and termination) capabilities via prepay, as many customers may
want full flexibility to receive and send SMS once they get hooked.
Many of the feature add-on's can and should be marketed to the customers as they are
engaging in activities such as account monitoring and recharge. The Internet is a perfect
low-cost, 24 hours/day vehicle to promote these add-on's.
OFFER VARIOUS PROMOTIONS

One way to boost penetration of the market for mobile prepay is to offer virtual prepay
cards or vouchers. These vouchers are simply a document that typically provides a
serial number and PIN for activation of a prepay account, which may be problematic
based on the type of technology supporting that mobile prepay network.
These vouchers can be easily offered in a variety of high profile, low-cost manners such
as attaching them to consumer goods and banner advertisements. These virtual cards
could even be given away as gifts by other merchants (such as a thank you for doing
business and/or completing a survey), allowing the mobile operator to leverage a very
low-cost distribution network.
The idea is to get consumers to try a given mobile operator's prepay service in situations
in which the consumer already has a phone and either post-paid or prepay service from
another plan.
Since the vouchers are a virtual unit (no physical card), they may be distributed via the
Internet. They may even be exchanged via email or SMS between business and
customer, friend, and colleague.
It is important to reiterate, however, that it can be problematic to offer virtual

cards/vouchers with the multitude of different service providers, networks, and
technologies. This strategy may be best reserved for attack on a very targeted market
and/or competitor.
Perhaps the best use of such a strategy will be in support of certain mobile commerce
business models. For instance, an existing mobile prepay customer may listen to an
advertisement from a merchant in exchange for a voucher at the end of the ad as a
reward. This type of mobile commerce would be particularly more useful with the
implementation of additional technologies such as location based applications. The user
could be pin-pointed as being near a merchant location and then be offered the
advertisement in return for the reward of prepay time on the account. The award could
even include a discount on merchandise from the merchant.

RESELLING AND OTHER DISTRIBUTION STRATEGIES
Mobile carriers have an excellent opportunity to leverage increased sales and network
through resellers. However, many carriers are averse to allowing direct connection to
their switch as required by point solutions. This will no longer be a concern with mobile
IN that facilitates connectionless signaling between the mobile carrier switch and the
prepay platform containing the reseller’s user data.
The proverbial “double edged sword”, however, is that these resellers will also want
access to WIN and CAMEL triggers necessary to offer value-added services. Mobile
carriers are likely to want to offer access to basic service for prepay but want to limit
access to potentially differentiating capabilities.
TECHNOLOGY ISSUES
As discussed earlier, technology deployment will be driven by market needs.
ACCOUNT VS. DEBIT BASED SYSTEMS

Unlike debit-based systems that utilize “consumable” or “throw away” cards or vouchers
for replenishment, account based systems use permanent cards that are associated with
the user. These cards are used like an ATM or consumer debit card whereby money is
put into the account (through various means) and the account is credited. The account
is only debited once prepay service has been used.
This provides an advantage at the point-of-sale as the user is easily identified for
replenishment discounts based on loyalty. It can also provide a marketing advantage as
cards can be branded or co-branded (again like ATMs), allowing users to replenish
wherever they see the brand name displayed.
MOBILE IN
It should be the goal to ultimately deploy mobile IN based prepay systems. The benefits
of mobile IN are numerous, but what about the lack of ubiquitous triggers for an
estimated five years? CAMEL and WIN will not support serving carriers that do not have
the triggers, but there is a way around this issue.
DIGITAL PHONES
Digital phones should be provided initially to high-end prepay customers as prices
continue to drop and ultimately to every customer as the increased system capacity and
potential for feature deployment also benefits the operator.
LEVERAGE THE INTERNET

The Web should be exploited to the extent possible for the following:
§ Sales to new prepay subscribers

§ Balance check and replenishment to existing subscribers
§ Offer special promotions as discussed above

§ Advertise new services and feature add-on's
§ Provide news of upcoming features and new phones
§ Provide a FAQ and ability to send questions to customer service
The intent is to leverage the Internet to provide 24 hours/day, 7 days/week, 365

days/year customer service. This is not only of benefit to the customer in terms of
satisfaction, it is also a means of reducing the cost to support customers.
BALANCE CHECK AND LOW BALANCE ALERT

As discussed earlier, it is critical to provide this capability as the most important goal is
to ensure recharge. Otherwise, the customer will not have an opportunity to judge other
things like cost/performance and quality of service.
COMMERCIAL OFFERINGS
EUROPE VS. UNITED STATES
Prepay is huge in Europe, with some operators enjoying 50% or more prepay
penetration. Some PCS carriers in the United States are realizing comparable success,
but by and large the penetration rate is somewhere around 5% of the overall customer
base. This is expected to change, however, with some estimates ranging too as high as
20% of overall prepay penetration in the United States by the end of the year 2002.
Prepay is a more mature and accepted service in Europe. This is due to cultural
differences as well as to technology. There is no stigma in Europe associated with
prepay service. In the United States, some people assume that a person is “credit
challenged” if they have a prepay phone, when in fact they may merely desire cost
control. Another reason that there is a more mature attitude towards prepay is Europe
is the same reason post-paid is more prominent. GSM is a ubiquitously available
technology, allowing customers to roam from country to country and SIM based prepay
allows customers to use their service virtually everywhere throughout the whole of
Europe.
Europe also has a well-established Calling Party Pays (CPP) mentality and the network to
support it. Unlike the flat-rate local calling (from fixed network to another fixed number)
available in the United Stated, Europeans are accustomed to paying usage sensitive
pricing for all calls (local, long distance, and calls to mobile numbers). In Europe, mobile
numbers are all assigned to the same major number block (like an NPA or Area Code in
the United States). This means that a caller always knows when they are calling a
mobile number (a call that usually costs more than calls to a local wireline number).
Due to the pervasiveness of CPP in Europe, mobile prepay users (like post-paid users)
receive proportionately more incoming calls than their United States counterparts.
Everything else considered equal, this means more revenue for the mobile operator.

PRICING
Generally speaking, prepay pricing is more in line with post-paid pricing in Europe
compared to the United States. Some European operators charge a minimal premium
(no more than 20% above post-paid price). Others do not charge any premium. The
reasoning is that, due to the much lower cost of acquisition, lower prices are merited.
The situation is currently much different in the United States where the premium for
prepay service can be as much as two to three times that of a post-paid service. This is
beginning to change, however, as some operators are offering prepay pricing plans that
are approaching the per minute cost of some of their own post-paid plans.
Perhaps the reason for the difference in pricing between Europe and the United States
has to do with market maturity and ubiquitous technology. As we discussed, prepay has
been more mainstream in Europe for a long time relative to the United States. This is
due to the ubiquitous nature of GSM SIM solutions and the effect on consumer behavior
due to other pervasive technologies such as CPP. These cross continental difference are
likely to change as mobile IN is deployed as the standard in the United States for prepay
service, driving innovation, greater service flexibility, and lower prices.
In addition, many prepay providers in the United States heavily subsidize the cost of the
mobile phone, or in the case of some resellers, offer cheaper model refurbished phones.
In contrast, Europeans view prepay as a convenience - not just for the credit challenged
or those with little money. The cost for phones tends to not be heavily subsidized in
Europe. Next, we compare and contrast prepay pricing plans, using select mobile
operators in England and the United States for comparison.
CALLING PLANS ENGLAND 9
BT CELLNET
Type of Calling Cost (Pence)
Standard Call Rates (peak/off peak/weekends) 25/10/2p
Calls to other BT Cellnet mobiles (peak/off peak/weekends) 10/10/2p
Calls to other mobiles (peak/off peak/weekends) 50/25/25p
Text messaging (per message) 10p
Voicemail 10p
Mobile Internet 10p
9
Information to compare and contrast these select mobile operators' calling plans was derived from each
respective company's web page, which reflected then current calling plans. Neither the author and Mobile
Lifestreams nor can be responsible for any changes that may occur after publication.

ONE 2 ONE
§ Cost for first two minutes of use each day: 30p/minute (local calls, national, and
other One 2 One customers)
§ Cost for calls after first two minutes use each day: 5p/minute (local calls,
national, and other One 2 One customers)
§ Calls to other mobile operator's customers: 30p/minute (any time)
§ Mobile Internet: 10p/minute (any time)
§ Text messaging: no additional charge
ORANGE
Just Talk
§ Calls from as little as 5p/minute off-peak
§ Text messaging from as little as 5p/message
Out There
§ Five free text messages per day
§ Up to 60 seconds of free calling if account goes to zero
On Campus
§ Calls from as little as 3p/minute off-peak
§ Text messaging from as little as 3p/message
VIRGIN 10
Prepay and post-paid calling is the same price
§ Cost for first 15 minutes of use each day: 15p/minute

§ Cost for calls after first 15 minutes use each day: 5p/minute
§ Free voice mail retrieval
§ Text messaging: 10p/minute
VODAFONE
Smartstep
§ Cost for first three minutes of use each day: 25p/minute
§ Cost for calls after first three minutes use each day: 5p/minute
Allcalls
§ Monday-Friday: 35p/minute peak and 10p/minute off-peak
§ Weekends: 10p/minute peak and 5p/minute off-peak
10
Many know Virgin only as an airline. They are also a mobile virtual network operator.

§ Calls to other mobile operator's customers: 50p/minute weekdays and
30p/minute weekends
§ All calls charged per second billing
Original
§ Monday-Friday: 35p/minute peak and 5p/minute off-peak
§ Weekends: 2p/minute
§ Calls to other mobile operator's customers: 50p/minute peak and 30p/minute off
peak weekdays and 30p/minute weekends
CALLING PLANS UNITED STATES

AT&T
AT&T recently launched an improved prepaid program, which includes the following:
§ AT&T VoiceMail with Message Waiting Indicator

§ Call Waiting
§ AT&T Caller ID
§ Call Forwarding
§ Three-Way Conference Calling
§ Line Blocking
§ Per-Call Blocking
§ AT&T PCS Text Messaging
AMOUNT PRICE/MINUTE PRICE/MINUTE

Local National
$25 $0.50 30 days
$50 $0.40 180 days
$100 $0.40 180 days
$200 $0.40 180 days
Domestic LD Included Included
Domestic Roaming $0.85 Included
Recharge methods
AT&T wireless provides three ways to recharge including online, calling a toll-free
number, and visiting an AT&T store or authorized dealer.

CINGULAR WIRELESS
AMOUNT MINUTES PRICE/MINUTE EXPIRATION
$10 20 $0.50 30 days
$20 50 $0.40 180 days
$30 75 $0.40 180 days
$50 125 $0.40 180 days
$90 225 $0.40 180 days
All calls outside the Cingular Wireless network are charged at $1.95/minute.
SPRINT PCS
Sprint PCS recently discontinued its own prepay program. However, Sprint PCS
launched its Private Label Services program last year, a distribution channel for wireless
resale. Through this program, wireless resellers will develop and promote their own
branded programs, with network services provided on the Sprint PCS network. Among
other things, this program allows affiliates to use the Sprint PCS network to sell mobile
prepay service.
VERIZON WIRELESS
Verizon recently rolled-out a National Prepay Wireless plan, which requires a tri-mode
phone and includes the following:
§ Includes Roaming in all Verizon Wireless network Cities

§ Includes domestic long distance from all Verizon Wireless network Cities
§ Basic voice mail
§ Caller ID (but not available in all areas)
§ Call Waiting
AMOUNT MINUTES PRICE/MINUTE EXPIRATION

$30 60 $0.50 60 days
$50 125 $0.40 60 days
$75 214 $0.35 60 days
$150 750 $0.20 60 days
MOBILE MARKET TRENDS AND THE FUTURE OF PREPAY

We will now explore some of the more significant trends that will impact the future of
mobile prepay communications service.

COMPETITIVE THREATS TO MOBILE PREPAY
Customer Migration to Post-paid Plans
In certain market segments, customer migration from prepay to post-paid is as natural
as coming of age and building one's credit ability/history. For other markets and market
segments, prepay remains a convenience - not a stigma. For these markets and market
segments, mobile operators need to focus on the positives of prepay.
One might ask questions like: "Why care if customers migrate from prepay to post-paid
anyway?" "Doesn't the mobile operator get to keep the revenues anyway?"
The point here is that the mobile operator must first KEEP the customer if they are to get
any revenues. It is much cheaper to keep a customer then to obtain a customer, even
for prepay. Accordingly, mobile operators must fight to keep their prepay customers on
their prepay plans, lest they try another operator's post-paid or prepay service.
While for certain market segments, prepay remains a convenience, one of future
impetuses for migrating to post-paid service is simply cost. Particularly when mobile
operators roll out 3G networks, new business models will emerge in which non-voice
services garner higher fees and voice based services become more of a commodity. In
this scenario, 3G based post-paid voice may be significantly cheaper than 2G based post
or prepay service. While this again does not affect the operator (so long as they can
keep the customers on their own network), it does affect the prepay industry.
Accordingly, the ability to support prepaid 3G voice and data services will be particularly
important.
Throwaway Phones
A currently small, yet grow threat to the prepay industry is the emerging throw away
phone market segment. Companies like Dieceland (www.dtcproducts.com) are
developing disposable mobile phones and computing devices. The notion is that people
will buy a throwaway phone as a convenience, and perhaps because it is cheaper, rather
than purchase a (normal, durable) phone and simply recharge when needed. Perhaps a
good commercial example would be the success of disposable cameras.
While this notion may seem crazy to some people, it actually has merit in certain market
segments. For example, the traveling customer who does not have roaming service
from his mobile prepay provider would definitely be a customer for such a product. This
underscores the one of the business drivers for the need for improved roaming support
for mobile prepay, which we discuss in the next section. Even if roaming is supported, if
there is not a convenient mechanism in place for replenishment, disposable phones are
still a viable option for the traveler.
Another market segment for this type of product is the gift market. People would be
much more inclined to purchase a disposable phone that costs $10.00 (and has 30
minutes of airtime) rather than pay $100-$300+ for a phone plus airtime. The recipient

of such a gift also benefits as they are locked into any one network provider or plan,
allowing them to try prepay service before making any long-term decisions.
Competitive threats such as these underscores the need for mobile operators to
engender loyalty and offer differentiated, value-added services to their traditional prepay
customers. If successful, mobile operators could actually exploit such a threat (the
disposable phone product) as an opportunity to gain airtime revenues while getting new
customers try a low-end prepay service as a prelude to up-selling to a more valuable
traditional prepay service.
It is important to note that this disposable technology for mobile communications has
not yet been commercially proven. We shall watch developments here closely.
INCREASED ROAMING: SERVE THOSE BUSINESS TRAVELERS AND TOURISTS!

With international tourist arrivals growing from about 450 million in 1990 to about 650
million in 2000, and mobile phone user service expectations ever-increasing as well, the
ability to offer prepay services to roamers is of the utmost importance. Mobile operators
should strive to seamlessly serve inbound roamers into their networks from other
networks.
While supplying temporary phones and vouchers is always an option, it is certainly not
the best option in a world in which seamless service is expected. Despite the inherent
challenges of weaving together disparate networks and prepay systems, mobile
operators must strive to ensure seamless roaming among all major mobile network
roaming partners.
NON-VOICE SERVICES
Leading mobile operators are beginning to deploy prepay non-voice services such as
Wireless Application Protocol (WAP). This enables the wireless carrier to offer WAP
services to a much broader customer base than if restricted to post-paid alone. While
WAP services have been historically based on circuit switched connections and billing is
based on access duration, WAP services that use GPRS as the bearer will be packet
switched and billing will be based on amount of data accessed as well as content based
pricing scenarios.
In order to fully support prepay WAP customers, mobile operators will need to support
separate rate access, throughput, and content billing. This will also enable revenue
share with content providers for services to prepay customers.
Logica recently announced the launch of its prepaid billing platform, which allows for
billing messaging services on a prepaid basis, without the need for a CDR (hot billing)
type solution which is prone to fraud.

In late 2000, Dual Point Communications announced the launch of its web-enabled
handset for the Unites States prepay market.
INTRODUCTION OF DATA ORIENTED VALUE-ADDED SERVICES FACILITATED BY

WAP, GPRS, AND LOCATION BASED APPLICATIONS
It is fortunate that in Europe and other GSM territories, where prepay penetration is the
highest, GSM is also the predominant technology. This is fortunate because the
introduction of GPRS will enable GSM networks to more fully leverage WAP by providing
a more efficient, packet-based bearer for communications.
We discussed earlier that prepay customers desire to have the same types of service
features as post-paid customers. This is also the case with GPRS enabled WAP features
which introduces the possibility for a variety of new types of features including:
§ Enhanced web browsing
§ File transfer
§ Vehicle positioning and other location based services
§ Remote LAN access and various other corporate applications such as collaborative
working
The advantages of faster connection speed and immediacy of information enable all of
these services. Furthermore, the always-on capability enabled by GPRS will facilitate
many "push" type services as we have seen already in offerings such as NTT DoCoMo's
iMode service which also uses a packet network for mobile data.
By definition, push services are those that do not require user interaction at the time the
service is delivered. Instead, the customer establishes a relationship with the content or
application provider in advance. Examples include daily jokes or horoscopes, news and
financial information, or other alerts and entertainment.
All of the aforementioned is enhanced by location technology and applications, which we

discussed earlier as a value-added application in and of itself.
The key issue here is how to pull all of these technologies together so that it is seamless
to the customer and efficient and cost effective to the mobile operator.
As a case in point for the virtue of moving ahead aggressively, BT Cellnet was the first
European operator to commit to large-scale prepaid WAP deployment, allowing them to
lock in up to 90% of the prepay WAP market in the UK in 2000.

MOBILE COMMERCE
Many mobile commerce services will be non-voice services, meaning that mobile
commerce is expected to be mainly information and transaction oriented.
It is also believed that mobile prepay is perhaps the best vehicle for most mobile
commerce situations in which a micro-payment is required.
We will next discuss some of the market trends and the potential future of prepay in this
area.
THE USE OF CARDS IN MOBILE COMMERCE

From reading this report you know that there are all types of cards. For review:
§ Debit cards - These are typically throw-away or virtual cards whose only
purpose is to recharge the prepay account. Often these cards are sold at
merchant locations and must be activated at the point of sale wherein the prepay
customer may immediately replenish the prepay account or wait until later.
§ Account cards - These cards are sturdy, reusable cards and look just like typical
consumer debit/credit cards, but are used to provide account information. The
mobile prepay user will typically use the magnetic strip on the card to replenish
his account at a point of sale location.
§ Smart cards - These are the cards that are embedded with a microchip and used
to provide mobile prepay service with the handset. A Subscriber Identity Module
(SIM) is a perfect example of a smart card.
Of the three types of cards, the last two best lend themselves towards mobile commerce
as they are permanent cards that may be used for more than just the purpose of
recharging the prepay account for minutes.
STORED VALUE AND UNIVERSAL CARDS IN MOBILE COMMERCE

The concept of stored-value is one in which an account and/or card may have value
stored in which may be other than simply minutes of airtime on a mobile phone network.
In consumer terms, this is the debit card concept, however, unlike consumer debit cards
that are usually limited to the recharge/disbursement means allowed by the financial
institution, stored-value accounts/cards may be used and replenished in a variety of
manners.
Account cards and smart cards are the vehicles for the notion of a Universal Card that
may be charged with value that may be used in a variety of commerce. The idea is that
the card could be used for a multitude of consumer needs such as shopping, bill paying,
and entertainment.

Debit (consumable) cards may be stored with some type of value such as the ability to
purchase groceries, gifts, refreshments, etc. These types of cards could be distributed in
physical form at merchant locations and/or as virtual cards/vouchers. The distinguishing
characteristic of these cards is that typically they may be used once. However, it is
possible to use these cards store value in a universal account which could be used in
conjunction with the prepay system and/or smart card.
AD HOC NETWORKING, SMART CARDS, AND MOBILE COMMERCE

Bluetooth technology is perhaps the best example of an ad hoce networking technology
that will enable mobile commerce. Used in conjunction with prepayment systems,
bluetooth will allow the user to wirelessly transact payments as well as recharge to the
prepay account.
Bluetooth establishes a personal area network (PAN) between all bluetooth enabled
(typically mobile) devices. For example, the PAN enables a mobile phone to
communicate with a laptop, making things such as prepaid Internet from the mobile
phone company more of a reality.
Bluetooth allows such a connection at a distance of up to 10 meters in a secure format

due its encryption algorithms. On the downside, however, the Bluetooth requires that
each enabled device "acquire" one another before communication may take place,
slowing down connection time, and in some cases, preventing it from happening. In
contrast, infra-red allows more rapid ad hoc networking but is not as secure.
Ad hoc networking will allow the smart card-enabled mobile phone to make payments as
well as recharge the smart card.
Payment Scenario: The prepay customer walks up to a refreshment dispenser and gets
a beverage. This is facilitated by Bluetooth communication between the mobile unit and
the beverage machine. Bluetooth provides a communications link to the beverage
machine. The SIM Toolkit (STK) provides an API to the SIM so that the SIM may
acknowledge available funds, decrement the funds appropriately, and send a message
through the STK to the beverage machine that it is OK to provide the beverage.
Recharge Scenario: The mobile prepay customer approaches a kiosk that is advertising
a certain consumer product. The kiosk indicates that if the consumer watches and
listens to an advertisement and answers a couple of questions, she will get some airtime
as credit and a discount at the store. The prepay customer decides to listen to the
advertisement and is instructed to point and click at the Bluetooth-enabled kiosk. After
listening to the advertisement, the prepay customer has ten seconds to point and click at
the kiosk again to receive the credit and discount. The customer is then given the option
to engage in a survey in which the phone is used to make choices. The reward for this is
actual store credit, provided to the customer's account via Bluetooth, STK, and the SIM.

MOBILE PREPAY AND MICROPAYMENTS
Most mobile commerce will involve opportunistic and/or spontaneous payments of
monies. Not many people will buy a car while when they drive past a automotive
dealership (but they may be interested in knowing about sale prices). However, many
people would buy a beverage from a vending machine while in a shopping mall.
Mobile prepay lends itself especially to these micro-payments. The belief is that
especially the youth market will be most apt to maintain a universal account for buying
everything from sodas to sneakers as well as mobile communications services. Parents
could conveniently put money into the account just as they would pay a weekly
allowance. For young people, prepay mobile commerce may be the only way to shop
on-line as they typically will not have access or be eligible for credit cards - the normal
means for shopping on-line.
These electronic wallets will not only allow portability of funds but also allow merchants
to electronically add to these funds through various promotions. The actual credit to the
account could be accomplished via Bluetooth, offering special promotional stored value
cards, and/or through electronic transfer.
The universal account could be managed on the Internet. Each account could have its
own profile. According to the profile, a customer could receive solicited and/or
unsolicited credits goof for various goods and services. Many merchants would want the
credits to be time-bound or even time-windowed, allowing for the merchant to have
protection from over demand and/or maximum flexibility to increase sales during
historically slow sales periods.
PREPAID MOBILE COMMERCE AND FINANCIAL CLEARING

Mobile commerce based on mobile prepay will require clearing just as will post-paid
service. The model is one in which their is a financial institution that handles financial
clearing between the mobile communications company collecting the funds/credits and
the merchant that requires crediting for purchase of goods and services.
Unlike a post-paid customer who would see a summary report of purchases and inclusion
of the sum as a part of a monthly bill, the prepay customer has no monthly bill.
Accordingly, another value-add for prepay customers whose engage in mobile commerce
would be to offer such a summary of purchases on a on-line account via the Internet. It
is likely that many prepay customers who engage in mobile commerce would be willing
to pay an extra fee just for the ability to see where the monies are spent. In fact, this
capability would be an interesting capability for parents to see how their children's
allowance is being spent and/or to view general spending habits. This is also a impetus
for the child to begin to pay for his own prepay service so as to hide such personal
activities from the parent!!

HANDSET BASED INTERNET REPLENISHMENT WILL LEAD TO MOBILE
COMMERCE
Use of the handset to recharge over the Internet using technologies such as Wireless
Application Protocol (WAP) will be one of the precursors to mobile commerce. WAP will
be used for recharge of basic voice services, value-added non-voice services, and
content-oriented services. This will also be the precursor to transaction-oriented mobile
commerce. For example, the prepay user can by movie tickets at the same time she
recharges her universal prepay account from which she debits her voice, basic WAP
service, and her personalized trivia question of the day service.
THE EVOLUTION OF MOBILE COMMERCE VALUE

The value proposition for delivery of mobile commerce services will evolve from the early
stages of flat-fee non-voice services to a more value-oriented transactional approach.
1. Flat-fee based services

2. Fee per transaction services
11
3. Fee per capacity services
12
4. Fee per value of transaction services
This evolution is driven by mobile operators' desire to be more than just a bearer of
service. Instead they desire to be a full owner in the value chain of service delivery to
customers. This is important for all types of customers and services, but perhaps even
more important for mobile commerce to prepay customers who tend to have less loyalty
then post-paid customers. Consequently, mobile operators will align themselves with
key partners for co-branded content and transaction services, possibly even aligning
themselves with banking and other financial institutions for the delivery and clearing of
transactions.
WHICH MOBILE COMMERCE SERVICES WILL BE POPULAR?

While financial transactions and micro-payments will eventually catch on to the
mainstream user, mobile operators will enjoy success in this area for primarily the large
youth market and a few other more niche market segments.
So from where shall prepay commerce come from?
Two of the biggest areas for mobile commerce will be mobile entertainment and
messaging.
Mobile entertainment includes:

§ Mobile gaming
- Adult themes such as gambling
11
Number of bytes used/downloaded
12
As determined by the provider and the specific premium service

- Trivia and "follow-along" games such as "guess the next play" at a sports
event
- Youth oriented games
- Video clips (and ultimately with 3G) full length movies
- Treasure hunt, catch the thief, and other location based games
§ Mobile music
§ Jokes, virtual pets, photo images and horoscopes
§ Movie trailers
§ Ringtones
Mobile messaging includes:

§ Basic messaging via SMS
§ Mobile chat
§ Find a friend/date service
§ Other presence and availability services such as an alert when a friend to enters a
zone, comes into the proximity of the user, or logs onto her ISP
MOBILE ENTERTAINMENT
Mobile entertainment is already huge in Japan with NTT DoCoMo's iMode service in which
customers play various games and have content such as "virtual pets" automatically
downloaded to their phones. While some of this may be cultural, and also be influenced
by other issues such as long commute time (e.g. need to kill time) to get to work,
entertainment is something that everyone can relate to and embrace. Entertainment
also captures the massive youth market, which tends to have a lot of disposable income
- because young people generally dispose of what income they do have on fun.
Prepaid mobile entertainment makes a lot of sense as it fits well with the psychology of
entertainment spending, which for some product market segments, is geared toward
spontaneous spending. Many people would not make spontaneous purchases on large
ticket items and/or with "real" hard cash or credit. However, the prepay account is
already "paid-in", making it easier psychologically for people to spend their money on
entertainment. This is akin to the concept of time-share properties. Often times the
overall cost is greater than if the person/family would rent a hotel or condominium when
the need arises. The psychology is that the time-share "forces" the time-share owner to

take a vacation/holiday. The approach is to pay ahead to ensure that one has fun and to
make life easier. The same is true with prepaid mobile entertainment, only the
payments are not for time-shares.
Individual spontaneous expenditures on entertainment will not be large. Instead, they

will be micro-payments. The important issue is the prepay customer must recharge his
account so as to allow numerous micro-payments on entertainment.
Another less honorable advantage to the mobile prepay customer is anonymity. The
head of household who is spending money on gambling and other adult entertainment
does not want his/her spouse to know where the money is going !
MOBILE MESSAGING
While there is not yet as much prepaid messaging service history to review for analysis,
preliminary studies have indicated that mobile prepay messaging customers actually a
substantial amount more than post-paid customers on things such as basis SMS
messaging. The theory is behind this is two-fold. First, a different target market is
involved. Being a very strong target market for prepaid, and a very strong market for
non-voice services, the youth market heavily favors strong sales for prepaid messaging.
The second reason is once again psychology. If the mobile operator makes basic
messaging very cheap, and the customer has already paid in advance, the customer will
be less adapt to count up the cost of the hundreds of messages placed/received per
month.
More advanced messaging services will be enabled by additional technologies such as

location position equipment, location middle-ware applications such as tracking,
Bluetooth, intelligent agent and profiling technology, and more efficient mobile data
bearers such as GPRS and 3G technologies.
While it remains to be seen how successful these more advanced features and services
shall be, one should be confident that they will be embraced by the same users who
using basic messaging and games today.
REVERSE PREPAID
What is reverse prepaid? Traditional prepay involves the customer paying for airtime and
then using it. Reverse prepaid involves advertiser and merchant paying for airtime and
then the customer using it immediately.
Scenario
§ Advertisers list feature codes and phone number that, when called, initiate an
advertisement or promotion of some type. The call or feature code itself is free.
Once the caller listens to the advertising, she may place another call of a certain
duration for free. The caller may remember the phone number or feature code
for future use. However, many advertisers would want this type of arrangement

to be location based for better target marketing. For example, one may listen to
an advertisement for casinos only while in the city zone of Las Vegas.
The advertiser and/or merchant support reverse prepaid themselves. Accordingly, the
fee for the free call made by the mobile customer is paid/debited by the advertiser to the
mobile operator in advance of the mobile customer placing the free call. We also
discussed earlier the notion of advertisers/merchants crediting the mobile prepay
customers universal account for discounts and free goods and services. This is also a
form of reverse prepaid.
The catch is that most mobile operators will not want prepay accounts to be credited
with airtime to be used later. Even if the mobile operator is getting paid a portion of the
advertising money per a new business model, the operator still has a core business to
run that depends on managing capacity of the network. Accordingly, business
arrangements of this type will involve the need for the mobile customer to place a free
call immediately after the promotion. The promoter may alternatively offer a credit for
their own goods and services.
BUSINESS ISSUES
In the first part of this report, we discussed certain basic prepay business issues
including cost of acquisition, roaming, rates, churn and replenishment, services and
differentiation. We will now discuss some additional business issues affecting the
success of offering mobile prepay communications services.
VALUATION OF MOBILE OPERATOR COMPANIES

Interesting, one of the issues that drives how wireless carriers approach prepay has to
do with how their value is determined in the marketplace. Industry financial analysts
that place a high value on average revenue per unit and churn have made it difficult for
some mobile operators prepay efforts.
In an effort to keep revenue per unit higher and reduce churn, some wireless carriers
have initiated the misguided practice of cutting prepay customers too soon. For
example, some operators may deactivate customer accounts after only 60 days of
inactivity (non-replenishment). This represents as much as 95 percent of all churn for
prepay accounts. This practice continues for some mobile operators despite the fact that
often customers replenish after a few months.
MARKETING DICTATES CUSTOMER PERCEPTION

The way that a mobile operator positions a prepay offering dictates the way its
customers perceive its value. While this seems like a simple concept, if is very profound
in its implications. This has proven itself in the United States wherein must people
consider prepay to be a poor person's service. Prepay should be positioned as a valuable
payment alternative. One of the areas for value realization is in the area of universal

prepay account usage. We will discuss this concept in the Business Strategies for
Profitable Business section.
CALLING PARTY PAYS

The lack of calling party pays (CPP) in the United States is arguably a major inhibitor of
prepay service, especially for the cost control and credit challenged segments. These
prepay customers would leave their phone power-on more frequently as a result of CPP.
Consequently, the mobile user could receive short messages and other means of
notification to recharge when necessary.
In other parts of the world where CPP is the norm, prepay customers leave their phones
power-on more. This allows the mobile operator to recognize revenue for additional
mobile-to-mobile calls. Additionally, the implementation of location based technology
may allow the mobile operator to alert the prepay customer when approaching a
recharge location such as a retail outlet or ATM. This is potentially a powerful tool again
churn when coupled with predictive churn algorithms and loyalty programs.
FREEPHONE (TOLL-FREE WIRELESS CALLING)

This is another area in which a service capability can stimulate additional prepay service
implementation and usage. The United States does not yet have Freephone - the ability
to make completely free (airtime and long distance) calls - capability, but will soon with
the implementation of Wireless Intelligent Network capabilities. Freephone will enable
mobile users to place calls without decrementing the prepay account. Service providers
make money from the reverse charging effect of Freephone and from the indirect result
of customers utilizing their phones more. The more they use it, the more they are apt to
place chargeable calls and subsequently recharge the account.
BUSINESS CASE ISSUES FOR PREPAY

THE ORIGINAL BUSINESS CASE: SERVING AND UNMET NEED
In the United States, 30-40% of potential mobile communications customers is rejected
due to unsatisfactory credit history. While this is mainly a United States issue, it is
important to note that many people throughout the world do not have good credit. One
of the most important reasons for mobile operators to offer prepay is to capture this
market. While a good source for revenue, prepay customers often do not add unit
profits.
NEW SOURCE FOR REVENUE

While a good source for revenue, prepay customers often do not add unit profits. It is
therefore important to look for additional sources of revenue from prepay customers that
do not involve high expense to support. This is one of the arguments for establishing
alliances with third parties to provide additional value such as Internet based content
and services.

CANNIBALIZATION
It is difficult to quantify the effect of cannibalization of post-paid by prepay, but it
appears that prepay actually expands the addressable market, with no substantive
adverse effect on revenue from existing customers. Still, it is not recommended to
encourage post-paid customers to become prepay. The converse is also true. Prepay
customers should not be coerced to become post-paid customers. This would only dilute
the important message that being a prepay customer is a valuable proposition.
FRAUD
It is important to identity the potential for fraud. Some presumed customers never
intend to pay. Sometimes these people skip from one service provider to another, or
13
use fake names, or engage in true-name fraud . We discuss fraud in greater detail in
Part 4: Operational Issues.
THE FINANCIAL GOAL OF PREPAY: SELF-MANAGED SERVICES WITH MINIMAL

OVERHEAD
This is one of the most important goals of offering prepay service. Prepay customers
may not be as loyal, but they should be less costly to serve, and hopefully no more
costly to keep if the automatic recharge and loyalty programs are functioning as
planned.
Prepay service should be as simple as possible, triggering few questions for customer
care. Customer care should also be as automated as possible, with almost every
question or concern handled on a Web page or through a voice response unit.
Customers should be able to view their accounts on-line and recharge with automated
tools.
FINANCIAL ANALYSIS - ILLUSTRATIVE BUSINESS CASE EXAMPLE

The below business case information is provided for illustration and discussion of the
issues only. Actual results will vary based on the specific situation.
13
Assume the identity of another.

Basic Financials (annualized)
Expenses Exp/cust Rev/cust
Acquisition $ 300.00
Point of Sale Support $ 25.00
Distribution (including cards) $ 10.00
Customer Care & Replenish $ 50.00
Advertising/Marketing $ 25.00
$ 420.00
$ 410.00 $ 420.00
Expanded Revenue Opportunities (annualized)
Additional VAS 3rd party mobile commerce

MOU $'s content
$ 42.00 $ 60.00 $ 18.00 $ 21.00
Total extra revenue $ 141.00
Grand total revenue $ 561.00
The above analysis consists of a basic view of costs and revenue and an expanded view
of revenue. Both views are annualized and assumed accurate for the first year of
operation. Assuming the prepay customer remains a customer of the original provider
14
after the first year, the acquisition cost for that customer goes to virtually zero.
However, some customers will require phone upgrades, driving this figure up to a high
percentage of its original number.
The basic view shows us that, if a customer stays a customer for one year, break even
15
occur regarding direct costs . If the prepay service user remains a customer after the
14
Cost of acquisition includes warehousing phones, distribution of phones, commissions to agents and/or
employees, and other handling fees.

first year, the service provider can begin to enjoy marginal returns on the service
investment. This underscores the importance of reducing churn to a minimum.
The fact of the matter is that churn is prevalent for many service providers. Ideally, the
service provider must put into place programs to reduce churn as well as stimulate
additional revenue per unit. It the analysis above, we show this with the expanded
revenue opportunities.
Additional revenue can be generated from the following areas:
§ Stimulating additional and/or faster recharge of the customer account can

generate additional MOU
§ Delivery of value-added services (VAS) to the prepay customer
§ Delivery of third party content to the prepay customer
§ Delivery of mobile commerce services to the prepay customer
RECHARGE
While marketing, advertising, and promotion will certainly help with recharge, the area
of focus that we recommend is automation and reward. Simply put, we recommend that
the service provider:
§ Make it as easy as possible to recharge
Provide the user as many (simple) tools as possible to recharge.
Do not force them to use a call center for recharge.
Provide them with recharge tools that they are accustomed to using for other purposes
such as SMS and WAP.
Provide a Web site for recharge so they can replenish on-line.
Establish high quality, highly available merchant and banking relationships for recharge.
Use of an ATM for recharge is a great convenience for the user.
§ Remind the user in an unobtrusive manner with appropriate timing based on

events
15
Direct costs do not include cost of prepay infrastructure, a major fixed cost for the mobile operator. If this
analysis were from the reseller's perspective, the cost for buying minutes of use (MOU) from the mobile
operator would be shown as a direct cost to the reseller.

§ Use SDR analysis to predict churn or slow recharge
Alert the user with appropriate periodicity and urgency. As a courtesy, remind the
customer immediately when they have depleted his account. Remind him again at
programmatic intervals based on SDR analysis. Do not harass the user. If he has not
recharged after the certain period of time, there is likely good reason. Wait until a
predetermined period of time prior to making special recharge offers based on a loyalty
program. Send a message to the customer (via SMS, WAP, or voice message); recharge
now at "XYZ" merchant to receive a 20% discount on airtime. Provide the customer a
personalized e-coupon serial number and use location technology to direct the customer
to the closest location. The customer will think it is a special promotion for that time and
location (and they are right), but it is directed at them alone, based on the SDR analysis
and the loyalty program.
§ Reward the user for recharging
Let the customer know that there is a loyalty program to encourage prompt recharge.
Provide additional rewards for frequent recharge such as free use of randomly selected
services such as three-way calling. These services could be made available for sale at a
discount after the free period.
Effect of recharge: 10% increase in MOU revenue = $3.50 per/month ($42/yr.)
VALUE-ADDED SERVICES
16
By definition, value-added services are services that :
1. Not a form of basic service but rather adds value total service offering
2. Stands alone in terms of profitability and/or stimulates incremental demand for

core service(s)
3. Can sometimes stand alone operationally
4. Does not cannibalize basic service unless clearly favorable
5. Can be an add-on to basic service, and as such, may be sold at a premium price
6. May provide operational and/or administrative synergy between or among other

services – not merely for diversification
It is safe to say that it makes sense to provide VAS to any customers, but it is critically
important to provide VAS to prepay customers, as they are more prone to churn.
16
Used with permission from Value-added Service white paper by Gerry Christensen  1999

Through their differentiating characteristic, VAS can engender loyalty while driving
additional revenue. An excellent example of a VAS is location sensitive billing.
Effect of VAS: $5/month ($60/yr.) combined MOU and service revenue
THIRD PARTY CONTENT

The service provider can deliver third party content to the customer. Content can
include personalized information such as news, weather, sports, driving directions,
information about sales items, scheduling, and other lifestyle management. It is
assumed that third parties are the best source (at least initially) for this information as
they have a business focus in this area.
Effect of third party content: $1.50/month ($18/yr.)
MOBILE COMMERCE
The service provider can cooperate with financial institutions to provide various mobile
commerce services, many of which would be provided on a prepay basis.
Effect of mobile commerce: $1.75/month ($21/yr.)
BUSINESS STRATEGIES FOR PROFITABLE BUSINESS

In the first part of this report, we discussed certain basic prepay offering strategies
including loyalty programs, account vs. debit systems, segment strategies, and
distribution strategies such as resale of service. In this publication, we shall discuss
additional strategies for capitalizing on business opportunities.
PREPAY AS AN ALTERNATIVE TO TRADITIONAL BILLING

The traditional practice of creating, delivering, and collecting payment of bill is expensive
and provides little value other than reminding the post-paid user who provides his
service. Even worse, it may remind him how much he is spending, forcing him to
perhaps reconsider how the amount he pays for ancillary services.
Some customers, perhaps most, prefer the convenience of a monthly bill as opposed to
prepay customers who must remember or be alerted to recharge. Therefore,
prepayment as an alternative to traditional billing is not for everyone, but it is a viable
alternative to many who want to simultaneously control spending while establishing
access to goods and services that would be unattainable with traditional mobile operator
billing.
EBPP AS AN ALTERNATIVE TO TRADITIONAL BILLING OR PREPAY

It is important to note that, if the goal is simply to offer a non-traditional billing method
as a means to reduce the cost of billing (which can be quite high), there is another
alternative - electronic billing presentation and payment (EBPP). EBPP entails the
issuance of a bill electronically, whether by email or on-line, reducing the cost of

producing and distributing paper bills. EBPP as an introduction and technical solution is
in its infancy and is currently only a niche solution for some operators who seek early
adopter post-paid customers. However, one should keep an eye on this solution as it
provides a lot of the convenience and control of prepay when coupled with other
technologies such as the Internet for customer care.
One unique use for a variation of EBPP would be to use it in conjunction with mobile
prepay simply as a means of electronic notification and recharge. The prepay customer
could receive an email notification indicating a low-balance and/or an opportunity to
recharge at a preferential rate. The customer may have both prepay and post-paid
account with the mobile operator, allowing the customer to authorize payment via EBPP
from the post-paid account to the prepay account for purposes of recharging the
customer's daughter away from home attending college.
ACCOUNT SPENDING LIMIT

In the second part of this report, we discussed account spending limit (ASL), the concept
of allowing the mobile service customer to limit spending (control costs) without the
requirement for prepay service. In other words, a post-paid customer can enjoy the
benefits of cost containment without prepayment. This may afford lower calling rates
and/or the ability to consolidate billing and calling plans, while still benefiting from the
cost control aspect of prepayment.
This is a viable service offering for those customers that require cost control, but for
whatever reason, really do want a traditional post-paid bill. The beauty of this service is
17
that, while it has certain near-term limitations , this service can be offered immediately
to all customers on a trial basis. In fact, it is often useful to offer this service to select
customers initially as a limited introduction. Interested retail customers would pay $1-2
for this service and corporate customers would pay $2-5 per mobile unit for cost control.
UNIVERSAL PREPAY ACCOUNT

As discussed earlier, prepayment allows the customer to establish an account from which
many the fees for a variety of goods and services may be debited. This concept is best
implemented in conjunction with an account card or smart card based prepayment
system. The account card is a permanent card, used just like a debit card. The account
is initiated and recharged as needed. The customer uses the card to buy goods and
services such as telecommunications equipment, long distance, local, mobile, and
Internet service. The account is also decremented any time the customer engages in
financial transactions or any other form of mobile commerce. The prepay service
provider may make money of the provision of the services as well as the handling of the
monies.
17
See Advanced Prepay Concepts and Applications part of this report for descriptions of interdependencies with
mobile IN and roaming issues

DEVELOP NEW BUSINESS MODELS
We discussed quite extensively the value of the universal account for mobile commerce,
the need for financial clearing, and the supporting technologies. However, it is important
to understand that there is a need to develop new business models to support emerging
commercial exchange issues such as advertiser payments, referral services, and content
syndication.
One need only look to the NTT DoCoMo model as an example of what can be successful.
DoCoMo charges every content/application provider 9% of their receipts for
content/services delivered over DoCoMo's iMode service. This provides an incremental
revenue stream for DoCoMo, which is above and beyond the charge the levy to their
customer on a per-packet basis for basic iMode service.
Mobile operators must begin to figure out these new business models NOW. This is
especially critical for prepay service as there will be many advertisers and referral
agencies who will jump at the opportunity to offer potential customers free, prepaid
vouchers for them to try goods and services.
FOCUS ON MARKETING AND REPLENISHMENT

One central focus to this publication is the need to concentrate on marketing and
account replenishment, as churn is the biggest adversary of the prepay service provider.
Accordingly, the service provider must consider creative approaches to encourage
recharge.
Affinity programs that include co-branded prepay cards and benefits to the supporting
organization can be effective. For example, non-profit groups can distribute phones and
cards at a discount, with the discount value benefiting the charity.
Marketing and sales alliances are another area of consideration. For example, computer
manufacturers, Internet service providers, and prepay service providers could team to
offer a combined package of ISP and mobile service as part of the initial PC purchase.
Additional on-line and airtime could be purchased on-line at a reduced rate.
OFFER VALUE-ADDED SERVICES

This is one of the most important areas as the margins for prepay service can often be
thin. The example provided earlier of the campus phone is a perfect illustration VAS
deployment that can enable greater penetration and unit margins.
It is important to recognize, however, that deployment of VAS often entails investment

in enabling technologies. Thankfully, the same investment can often be used for post-
paid and prepay services.

LEVERAGE A CONVERGED SERVICE OPPORTUNITY
In the United States, where fixed network access to the Internet is in great demand,
there is an opportunity for mobile operators to offer a converged service that includes
mobile minutes as well as Internet access - both paid in advance.
In cooperation with an ISP, the mobile operator could offer a prepaid Internet account
and mobile prepay service as a combined package. The Internet account would come
with an email address that allows for forwarding and/or alerting to the mobile phone.
The idea is to create customer stickiness. Additionally, the customer would be allowed
to keep the email address so long as the overall account is recharged every month.
SUMMARY
PREPAY POSITION IN THE MARKETPLACE
With numerous market segment (and some virtually untapped such as cost control)
opportunities, prepay is sure to grow in consumer acceptance and become an even more
critical part of the mobile operators service portfolio. As a critical element, wireless
providers must provide service to prepay customers that is at least as good as that
provided to post-paid customers. In fact, a strong argument could be made to provide
prepay customer better service and value-added features, as they may be more prone to
easy churn than post-paid customers. Providing value-added services will be possible
through various technology improvements that are underway.
IMPROVEMENTS TO PREPAY UNDERWAY

The most significant improvements will come as a result of mobile IN implementation.
WIN and CAMEL deployment will allow the following:
Better customer segmentation – cost control customer call processing and rate plans will
reflect their unique needs
Additional service on a prepay basis such as SMS, abbreviated dialing, etc.
Value-added services such as location sensitive billing
Feature enhancements such as directing the prepay user to the closest point for account
replenishment
Improved operational efficiencies as fewer trunks will be required with WIN/CAMEL vs.
point solutions or ISUP loop-back
Broaden reseller opportunities with no more direct connections
Increased flexibility in terms of customer phone number administration, allowing a

prepay customer to switch to post-paid (and vice versa) without changing his phone
number.

FUTURE OF PREPAY
In conclusion, we will leave you with a few predictions and the recommendation to learn
more about mobile IN for prepay. We predict:
§ More emphasis on loyalty programs to retain prepay customers
§ Use of Service Detail Records (SDR) and integration of SDRs with other systems
to support loyalty programs
§ Increased emphasis on value-added services to differentiate prepay service

offerings
§ Ubiquitous deployment of WIN for prepay in three to five years
§ Ubiquitous deployment of CAMEL for prepay in two to three years (standard has a
head-start on WIN)
§ Point and CDR based solutions will fade away as WIN and CAMEL become
ubiquitous. Smart card based solutions will take on more of the role as a vehicle
for mobile commerce
§ Increasing deployment of digital phones for prepay service, allowing feature

enhancements such as constant account balance updates to the mobile phone via
SMS
§ Use of prepay for other services including wireless data and some emerging
categories including mobile IP services for Internet communications, information
services, and e-commerce
§ Significantly lower pricing for prepay as WIN and CAMEL become ubiquitous,
although overall market forces are the main driver here
§ As the price for prepay service drops further, and zone billing (based on location
technology) becomes available, prepay service will become an increasing
attractive alternative to fixed line service, especially for the credit challenged or
low-end user segment

PART FOUR
DEPLOYMENT AND
OPERATIONAL ISSUES
This part of the report provides a review of the major deployment and operational issues
facing the mobile prepay service provider. We raise these general deployment and
operational issues so as to help prepare the mobile prepay communications service
provider to avoid potential pitfalls and complications.
DEPLOYMENT ISSUES
In deploying a prepay system/service, one must consider many of the issues discussed
earlier in this report - issues such as target market, deployment strategy, and
technology selection. In this section we will discuss some of the commonly overlooked
or glossed over deployment issues.
ESTABLISHING MARKETING AND DISTRIBUTION CHANNELS

Perhaps the single most important aspect of deployment is establishing the right
business arrangements regarding marketing and distribution. Technology does not sell
phones - marketing and distribution does. It is therefore important to cultivate the right
relationships with third parties to optimize the relationship for both businesses. A "win-
win" relationship is important as the mobile prepay provider should strive to develop
long-term relationships with channel partners. Over time, customers will grow to
associate the channel with the service provider. Pleasant experiences for the customer
and mutual profitability for the businesses will lead to long-term success.
TECHNOLOGY PERVASIVENESS
We discussed the need for ubiquitous technology during our discussion about mobile IN
technologies. The need for technology pervasiveness is, however, not restricted to any
one technology. It is important for service providers to consider the availability of
subscriber and network equipment prior to making technology selection. Those
technologies that are not widely available will inhibit important aspects of deployment
such as roaming capability.
ROAMING
Services should ideally work in the same manner while roaming as they do at home.
Customers of all types increasing expect to have service availability everywhere. There
is often a careful balance that must be made between advanced features (which may be
available in the home only) versus fully functional basic services (and preferable

advanced ones too) while roaming. The mobile prepay service provider must understand
and consider technology pervasiveness, business arrangements with roaming partners
(other mobile operators), and market segment needs of the customer base before
making any technology decision.
TECHNOLOGY OBSOLESCENCE
It is important to consider the possibility of technology obsolescence in planning and
deploying a mobile prepay solution. While all technologies will eventually be supplanted,
a safe bet is to go with standards-based technologies and/or those that are widely
deployed. The last thing that a service provider wants is to be stuck with "throw-away"
technology. Therefore, careful business case analysis most be employed, especially
when the system in question involves even a portion of proprietary technology.
MOBILE PREPAY AND MVNO'S

Mobile Virtual Network Operators (MVNO) are picking up additional momentum in Europe
and may eventually catch-on in the United States and other parts of the world. Mobile
prepay is a less risky market entry strategy for many MVNO's. Incumbent mobile
network operators enjoy the benefits of selling wholesale minutes of airtime to MVNO's,
which in turn sell to their own customers.
PREPAY AND POST-PAID SERVICE INTEGRATION

As we discussed earlier, prepay customers do not want to be special cases - they want to
be special. They want to have all of the services (or more than) post-paid customers
enjoy. While the implementation of mobile IN technologies enables many services to be
extensible to prepay that were previously only available to post-paid customers, mobile
operators should have a strategy to provide these features even before this evolution
occurs.
Some services, such as caller ID, voice mail, and SMS, may be provided on a flat-fee,
all-you-can-eat basis. Other services (that require system interaction) may be
prohibited by certain types of prepay systems.
Other services may truly be provided on a post-paid basis to prepay customers. This
market segment includes those that want to control costs for certain services but not
others. An example would be as stated earlier in which a father has a daughter in
college. The father may want the daughter to have prepay as a means of managing
expenses but yet maintain a post-paid account for the main mobile usage.
Regardless of the specific situation, integration of post-paid and prepay services will
require close coordination between billing systems and prepay systems used by the
mobile operator. Leveraging of the Internet and EBPP technologies can make
management of associated post-paid/prepay services much easier.

PREPAY AND INTERNET SERVICE INTEGRATION
Everyone knows about mobile Internet, which is using a mobile phone with special
capabilities such as WAP and/or GPRS for wireless data applications. We talked earlier
about the importance of offering these non-voice services via prepay. We also talked
about the evolution of prepay to incorporate various aspects of mobile commerce. What
will also occur is integration of mobile services and Internet based commerce. One good
early example is what Cincinnati Bell Wireless (www.cbwireless.com) is trialing in 1Q
2001 called i-wireless. Cincinnati Bell Wireless offers it prepay customers the ability to
purchase various items on the i-wireless web page (www.i-ontheweb.com) .
Exploiting the Internet as a means of allowing prepay customers to make purchases (via
an ISP connection) on the web with funds from their prepay accounts is one of the first
logical steps towards true prepay mobile commerce, which is making transactions while
mobile with funds debited from the prepay account.
PATENT ISSUES
It is important to bear in mind that all legal issues relative to mobile prepay deployment,
not the least of which are patent issues. Below we briefly discuss a few examples of
some patent infringement cases.
Freedom Wireless
It remains to be seen what will come of a legal battle between mobile prepay providers
and Freedom Wireless, a privately held Phoenix, Arizona, USA-based wireless technology
company that was granted US patents for completing prepaid wireless phone calls.
Litigation in the Freedom Wireless case has been engaged with the potential implications
and outcome inconclusive at this point in time. We shall monitor this situation and
provide progress in the next revision of this report.
A. Katz Technology Licensing L.P.

In another patent case, A. Katz Technology Licensing L.P. has prevailed in patent
disputes with several companies, most recently with AT&T. Katz maintains a patent
portfolio for which it intends to offer licensing as it has done so with quite a few
companies already.
Telemac
In July 2000, Topp Telecom settled a patent infringement action commenced by
Telemac, which ended in Topp licensing Telemac's technology.
In May 1999, Telemac sued USIntellicom, now a wholly-owned subsidiary of Pre-Cell

Solutions Inc. for infringing Telemac's patent. Telemac's lawsuit against USI continues
in Federal Court in Oakland.

Telemac recently commenced a patent infringement lawsuit against USI, Pre-Cell and
Prepaid Solutions, for infringing Telemac's new '915 patent. Among the remedies sought
by Telemac is an injunction to deactivate all infringing software, including software in
phones serviced by USI's licensees.
Telemac's new patents cover a network-independent billing system for prepaid

wireless services and makes the following claims in terms of functionality:
§ There is no requirement for the use of automatic over-the-air means for

activation.
§ There is no clock chip claim element.
§ There is no requirement that the phone be capable of international dialing. All

that is required is that the phone be capable of classifying calls into a plurality of
categories.
§ There is no requirement that the phone use specific monetary values, rather than
units or any other representation of prepaid funds.
OPERATIONAL ISSUES
Once deployed, there are many issues to address in supporting the operation of a prepay
system and/or service offering. We will discuss some of the more important operational
issues in this section.
FRAUD
The three primary types of fraud that can affect prepay service operations are credit
fraud, subscription fraud, and prepay card inventory fraud.
Credit Card Fraud

Credit fraud arises from individuals who pay for their prepay airtime with credit, but
never intend to pay their credit card bill. Depending on the prepay service providers
arrangement with the credit card merchant, either the service provider or the merchant
must bear the bad debt. Even if the arrangement is such that the merchant pays, the
prepay service provider must be diligent to prevent this form of fraud or risk losing good
standing with the merchant.
The Federal Trade Commission of the United States claims that physical credit cards are
not present in up to 54% of all fraud involving credit cards. Most of this type of fraud is
based on "social engineering". For example, a customer may convince a mobile
operator's customer service representative that the replenishment process
malfunctioned. In these cases, the mobile operator does not have the time to follow up

to see if a valid credit card was actually used. Sources of fraudulent use of valid cards
include discarded receipts, stolen mail, and duplicate or cloned cards.
Subscription Fraud
There are many types of subscription fraud, but they all involve an intent to never pay
the service provider. With the percentage of "technical" fraud to other types of fraud at
roughly 40%/60% and growing, many prepay providers are either eliminating (not a
good option as this is a unique market segment) anonymous accounts for prepay and/or
setting up special programs to deal with this problem. However, some nations do not
have the credit bureaus and other means to screen applicants.
Furthermore, a special type of fraud called "true name" fraud makes the battle against
subscription fraud especially difficult, with crooks alluding the best attempts of providers
to perform background checks. With false identities are easy to obtain, true name fraud
arises when an individual falsely represents their identity, never intending to pay for
prepay service. This is an increasingly common form of fraud with post-pay service as
mobile operators (through anti-fraud technology) have beaten other forms of fraud. This
form of fraud is on the up-rise, and along with credit card fraud, is the one of the biggest
forms of revenue leakage for mobile operators. True name fraud can be reduced by
careful identification and background checks.
While subscription fraud by itself is a direct problem for post-paid service, it is enabler of
other types of fraud for prepay such as credit card fraud. The subscription fraud crook
can easily use fraudulent credit cards, vouchers, and/or other means to credit the prepay
account with almost total impunity to prosecution.
Prepay Card/Voucher Fraud

The final form of fraud is very common among those providers who have prepay cards
as part of their distribution strategy, but do not have adequate controls in place at the
point-of-sale. This form of fraud is due to point-of-sale employee pilferage of prepay
cards for personal use and/or gifts or unauthorized sales to others. This form of fraud
can be best stopped at the point-of-sale. Those merchants that do not crack down on
this form of fraud will likely not remain distributors for the mobile prepay service
provider.
Other types of card/voucher fraud include:
§ Unauthorized generation/activation of PINs
§ Card/voucher manufacturing fraud - duplicate cards/vouchers made at the factory
§ Transaction inflation fraud - merchant/distributor inflates prepay transaction to

get higher commission

Whether committed directly or through facilitation to help another commit fraud, all of
the aforementioned activities are illegal acts that a mobile operator must be cognizant of
in order place prevention procedures/policies in place.
Mobile operators should ask themselves questions such as:
§ Are controls in place to safeguard data files for PIN manufacture and retention?
§ Is a settlement process in place to verify merchants' receipts versus inventory of

cards/vouchers?
§ Do vouchers/cards have physical safeguards such as lock boxes?
§ What controls are in place to ensure safe delivery of cards from manufacturer
and/or warehouse to merchant locations?
However, try as they might, mobile operators will always experience a certain
percentage of fraud, even with prepay fraud controls in place.
Below are some illustrative figures that may be used as a benchmark for how much
fraud is "too much":
BELOW
INDEX POOR AVERAGE GOOD
AVGERAGE
Fraud as a % of bad debt 45-60% 30-45% 15-30% 10-15%
Fraud as a % of revenue 5-15% 3-5% 1-3% <1%

Actual loss as a % of uncollected +
100% 85-100% 70-85% 50-70%
fraud revenue
CRIMINALS USING PREPAY TO AVOID SURVEILANCE

Prepay can be an easy means of criminals conducting activities to avoid surveillance.
Accordingly, mobile operators need to be prepared to cooperate with officials to help
track down and catch crooks. As a case in point, a few rather high-profile criminal cases
in 2000 involving prepaid phones in Japan urged the government to force operators to
require prepay customers to show identification upon initiating service.
In the United States, work is underway to institute lawful monitoring of calls by police in
order to catch criminals. As prepay becomes more mainstream in the US, it is likely that
additional measures will be taken such as criminal profiling at the point of sale and
location based tracking of a suspected criminal phone numbers. However, privacy and
protection of human rights are a big issue here, so these are also likely to be very sticky
issues.

SURVEILLANCE AND MONITORING OF THE SYSTEM
Little thought is often put into the issue of system surveillance and monitoring.
However, these are two of the most important operational issues. Ideally, prepay
systems should be deployed with automatic monitoring systems so that "live people" do
not have to provide surveillance all the time. However, even the best automatic trouble
report systems are not infallible. Therefore, it is recommended that live people provide
surveillance at least to some extent during known peak calling dates/times but even
more so in conjunction with planned system upgrades and maintenance. This allows for
immediate intervention should a problem arise that could otherwise go on discovered
within an acceptable period of time.
MAINTENANCE
Most mature systems will run without any problems, unless something is done to change
the system equilibrium such as a software upgrade. One form of maintenance is
therefore to perform routine system backups of subscriber and system data. Another
common form of maintenance is simply to perform maintenance servicing and
replacement of mechanical parts such as cooling systems for hardware. It is important
to plan for necessary maintenance and personnel to attend to such matters.
MOBILE NUMBER PORTABILITY

The effect of mobile number portability (MNP) on mobile prepay can be critical as it
allows customers to change service almost at will to try other mobile operator's prepay
plans. While not yet in force in all countries such as the United States, MNP is a threat
and an opportunity in places it is in force such as the United Kingdom. Many operators
see MNP as the opportunity to gain market share through more aggressive marketing to
competitor's existing customers.
Tactics to capture new customers from the competition include:
§ Allowing the prepay customer to transfer their existing balance to the new plan
and/or a free amount of minutes on the new plan
§ Offering free services such as SMS for a month
§ Offering a phone upgrade at low cost to qualified customers
Tactics to keep customers from going to the competition include:
§ Offering a low-cost one-number service, allowing calls to be routed to the mobile

or fixed location. This type of service typically requires special intelligent network
infrastructure and application. If the competition can not support such a service,
the customer will be less apt to change service providers.

§ Provide valuable feature add-on's as discussed earlier. Various forms of mobile
entertainment such as jokes and horoscopes could be sold at low-cost. Once
again, if the competition doesn't have it, customers that are "hooked" to the
entertainment will be less apt to leave.
§ Provide superior customer service. This is always a good idea.
While the above general suggestions should apply to most every mobile operator, there
will be specific and overall exceptions. One overall exception will be when MNP is
available in the United States where calling party pays (CPP) is not in place. On one
hand, you could say that there is currently no barrier to changing providers today
because few people give out their mobile number. On the other hand, for those that do
receive a lot of calls on their mobile, MNP will be a big benefit. However, prepaid
customers in the US do not tend to give out their mobile very much because of lack of
CPP.
THE EFFECT OF MNP ON DIFFERENT PREPAY TECHNOLOGIES

It is important to note that MNP has a different impact that depends on the system type.
For example, point solutions that utilize service node technology are typically engineered
such that they require dedicated phone numbers (mobile directory number [MDN] for
ANSI-41 and MSISDN for GSM) to function. In contrast, handset based (including SIM
based), INAP, CAMEL, and WIN based systems can utilize any number.
This means that customers may easily port to a different prepay provider, keep their
MDN/MSISDN, despite the fact that MNP requires a change in the customer's MIN/IMSI
on non-point solutions. This is a key point in the comparison between point solutions for
prepay vs. others:
§ A customer may port from a mobile operator that has a point solution to a mobile
operator that has a non-point solution
§ A customer may not easily port from a mobile operator that has a non-point
solution to a mobile operator that has a point solution. Since point solutions
require dedicated phone numbers, mobile operators typically want to manage
prepay customer numbers in contiguous line ranges due to the fact that support
of single numbers would drive up the cost of administration and switch
translations.
CUSTOMER CARE
Even in this evolving world of automation, a mobile prepay provider can not overlook the
need for well-trained and equipped customer care personnel. While many subscribers
will be handled by automated systems such as VRUs, others will want the personal touch
or assistance of a human customer care person. Mobile prepay customers have unique

needs. It is therefore recommended that a sub-set of the customer care organization
receives specialized training and tools to satisfy mobile prepay customer needs.
DEALING WITH INTERMEDIARIES

There are many different types of intermediaries to deal with in a mobile prepay
operation and they all have unique needs. Resellers have different requirements than a
point-of-sale merchant as do mobile phone providers. The successful mobile prepay
service provider will provide staff necessary to manage these various third party service
providers.
OBTAINING FEEDBACK ABOUT PRODUCTS/SERVICES AND CUSTOMER NEEDS

One of the most important issues is obtaining feedback, for without it, there is little basis
for improving services. There are many ways of receiving feedback. The methods range
from obtaining information through customer surveys to automatic reporting of mobile
prepay customer activities such as recharge and use of supplemental services. While
many improvements can and should be made on the basis of strategy and feature
development, it is important to take every opportunity possible to obtain direct feedback
from the customer. One example would be to offer a loyalty program that provides
extra minutes of use if the user provides feedback about the service. This may also be a
useful time to request demographic information - something that mobile prepay users
are reluctant, but sometimes willing to provide.
DOING BUSINESS ON THE WEB

As discussed in this report, one of the Internet is perhaps the most powerful technology
to leverage for various operational aspects including customer care, sales and
replenishment, and advertising. The recently signed Electronic Signatures in Global and
National Commerce Act (E-Sign Act) gives electronic contracts full effect under the law.
While the E-Sign Act will inevitably lead to greater exploitation of the Internet, it is
important to note that there are certain guidelines that should be followed when
conducting business over the Web as a means of protecting the prepay provider from
potential problems.
AGREEMENTS
Any agreement posted on the Web should disclaim implied warranties, limit liability,
disclaim responsibility material to hyper-linked sites, and any errors or omissions.
OPERATING POLICY
This should post the permissible and impermissible uses of the Web site.
PRIVACY POLICY
A privacy policy should be in effect to protect the users of the Web site. This policy
should be clearly posted to assure customers that their personal information shall be
properly handled.

INTELLECTUAL PROPERTY STATEMENT
This is intended to make it clear to all visitors that the Web site and its contents are
copyright of the prepay provider.
COST RECOVERY ISSUES

One significant cost recovery issue in the United States is relative to enhanced wireless
emergency services (wireless E-911 in the US). In the US, W-911 is rolling out as
mandated by the FCC. In order to pay for the high cost of the infrastructure and
systems required for W-911, the FCC has put agreed to allow for cost recovery
mechanisms to the operators.
While cost recovery plans are in place for mobile operators to charge fees to post-paid
customers (cost recovery is allocated to the jurisdiction associated with the billing
address), obtaining cost recovery from prepay customers is problematic at best.
Potential solutions include:
§ Charging/allocating the cost recovery fee based on customer's address. This will
problematic as many mobile prepay plans do not require the customer to provide
an address and some users prefer to remain anonymous.
§ Charging/allocating the cost recovery fee in conjunction with the location in which
the customer initially purchases the equipment/card(s) and subsequently where
recharge occurs. This method is also problematic as recharge location is very
difficult to determine due to the fact that replenishment may occur via remote
connection such as a VRU or Internet replenishment in contrast to physical
replenishment at a store or ATM.
§ Charging/allocating the cost recovery fee based on location when actually used.
While this is the most correct from an accounting perspective, it would be a costly
endeavor to monitor and allocate cost recovery monies based on every call
location.
There is no easy answer here. Other countries outside the US will also experience this
issue once similar emergency service initiatives are in place. Once this issue surfaces
outside the US, its magnitude will be even greater as a much large percentage of users
are prepay outside the US, thus making the issue of cost recovery from prepay users
significantly more important.
DISCLOSURE ISSUES
As a part of engaging in fair business practices, every prepay service provider should
provide information about service and charges prior to offering those services. The

International Prepaid Card Association (IPCA) offers the following disclosure guidelines
(not fully approved at the time of this writing) for its members.
IPCA PHONECARD DISCLOSURE GUIDELINES 18 ADOPTED BY THE

BOARD OF DIRECTORS - JUNE 5, 2000
A statement of policy: that the IPCA believes that consumers of phonecards should have
all information about charges and services prior to the purchase of such services, and,
further, that where there are potentially confusing charges or differing international
charges, the consumer should be informed that explanations or international rates can
be obtained via a toll-free customer service number.
SUMMARY OF DISCLOSURE GUIDELINES

The following information must be disclosed to the consumer and made available on the
phonecard and its packaging, materials distributed at point of sale, via the customer
service hotline, on the company’s website if cards can be purchased from the website, or
on a phonecard vending machine. The party responsible for disclosure is the card issuer,
also defined as the underlying carrier and/or the tariffed entity.
1. The rate per billing increment of domestic time
2. Rounding policy – if not stated, is assumed to be one-minute.
3. Rounding policy if more than one minute
4. Any domestic and international connection fee – only one connection fee may
be charged per call.
5. Any periodical maintenance fee – the amount and the period fully disclosed –
and, maintenance fee be levied no more than once per call.
6. Any “tax” surcharge or surcharges that would cover government-imposts

when imposed as an added charge
7. Any payphone use surcharges
8. The full underlying carrier name or DBA as registered with the governing state
regulatory agency
9. Customer service toll free number
10. No undisclosed charges should be applied; i.e. “Other charges may apply.”
18
These guidelines were reprinted by permission of the IPCA and are their copyright.

11. When the maximum number of minutes available on a card is advertised, the
circumstances under such usage may be available should be disclosed.
12. There should be a clear statement that all charges for international calls can
be obtained through Customer Service
I. Items disclosed on the card itself must include:

1. The customer service number
2. The access number
3. The PIN number (with or without security)
4. The value of the card in dollars or “units”
5. The name of the issuer, and
6. Expiration policy (which, if not stated, the card will be assumed to be live for
at least one year after purchased)
II. Rounding policies (the time increment used to decrement a card)

1. Rounding must be in minutes unless it is in seconds or groups of seconds.
2. Rounding policies should be limited to the same increment (a card should

not round for the first minute, and then round for two minutes
afterwards).
3. Only policies in excess of one minute must be disclosed
4. If billing increments are in excess of one minute, prices should be stated in

billing increments: “30 cents per three minutes”
5. Prices should be stated in rounded increments if in excess of one billing

increments: “30¢ per three minutes”
III. Specifications on POS posters or literature

Issuers should establish a plan to instruct distributions and retailers (including
vending machine operators) as to disclosure requirements, and, when notified
that such information is not being provided, have certain procedures in place to
remedy the situation, which may include disqualifying a non-compliant
distributor/retailer from carrying the issuer’s cards.

IV. Specifications on packaging (material attached to or inserted with a card)
Information on all disclosure should conform to the rule that there is sufficient
color contrast to provide for easiest possible reading.
V. For purposes of regulation, how should a “surcharge” be defined? Any fee

or cost decremented from a card in addition to a per-minute or billing increment
rate.
VI. Customer Service (a toll-free telephone service that provides certain

information/assistance to the consumer)
Live customer service should provide a minimum of 40-hours per week, during normal
business hours, with a recording system or an IVR system back up for off hours. When
the recording/IVR system is in use, and when customers request a return call, attempts
to return customer calls must be made by COB the following business day. Customer
service, when requested, should provide:
1. Remaining balance
2. International costs
3. All surcharges
4. Rounding policy
5. Recharge policy and costs
6. Name of issuing company
7. Expiration policy
8. Name and phone number of state regulatory agency.
VII. Surcharges – numbers and types

1. Surcharges should be allowed only when they are disclosed in specific “units”
or dollar costs or in percentages when related to costs of taxes or other
governmental fees that are levied in such a manner.
2. There should be no second connection fee added on a given call. However, if

disclosed a company may impose a second connection fee on a “#
reoriginated” call.
VIII. Connected and completed calls

1. A card can not be decremented for non-connected time
2. A card cannot be decremented for non-completed calls.
3. A completed call is a call to the called party.
4. A completed domestic call is a call that receives answering supervision

signal from the called number.

5. Determining when an international call is “completed to the called party”.
When an answering supervision signal is not received, most companies
consider a call complete after a period of time once the terminating
country dial tone is received and the called ANI is transmitted. ITA
believes that the industry standard should be sixty seconds. The card then
can be decremented for a completed call.
IX. Promotional Card standards (cards that are not sold, but given to the
consumer of the telecom services)
1. There should be no differential made as to full disclosure regarding

promotional cards, which should have clear disclosure that they are not for
resale.
2. Promotional cards should meet the following disclosure standards:
A. Clear disclosure that the card is “Not for Resale”

B. The number of domestic minutes provided in a given card and the billing
increment if more than one-minute.
C. Any payphone use surcharges
D. Clear indication if the card cannot be used for international calls
E. If the card can be used for international calls, there is clear indication of
higher rates or fewer minutes of time.
F. Rounding policy if greater than one minute (see above)
G. Any connection fees or added surcharges/decrementations.
X. Language - Cards providing marketing, POS materials or packaging in a given

language should also provide full disclosure of all information cited above and
prompts in that language.
XI. Refund - When an issuer offers a refund policy, it should be clearly disclosed
prior to sale.
XII. Public Utility Commission information - Customer Service should be able to

provide on request, a phone number for the telecommunications regulatory
agency in each state.
XIII. It is recommended that IPCA members comply with these standards within one
year after the Board of Directors adopts them.

SUMMARY
THE FUTURE FOR PREPAY
Prepaid mobile communications, in which people pay for their airtime in advance, have
over the past couple of years propelled the mobile communications industry to new highs
and into new customer groups in many but not all countries around the world. However,
the future of prepay looks very different:
§ Network operators are telling us that prepay users are mostly not profitable for
them- because prepay tariffs are no longer time related (necessitating regular
replenishment), network operators have little or no control over how much return
they will get from that user- who may not use their mobile phone much at all.
Mobile network operators feel compelled to keep pushing prepay to acquire
quantities of customers, even if the quality is not there.
§ Many prepay customers never register with their network operator- despite
inducements such as additional airtime credits for submitting their details. In
such cases, network operators have no customer data or relationships.
Anonymity, one of the advantages of prepay to the user, is proving to be a big
disadvantage to the operators.
§ Mobile terminals are getting more feature-rich as nonvoice services come to the
fore. Youth markets are a key driver for such nonvoice services- and a key
customer group for prepay- yet it is difficult for network operators to aggressively
subsidize sophisticated multimedia capable terminals such as the Casio Message-
Cam (see the Devices Zone on www.mobileMMS.com). Network operators are
generally willing to subsidize such devices when they are connected to post-pay
tariffs on a minimum contract term because they have some guaranteed
minimum revenues and because Average Revenue per User (ARPUs) tend to be
higher for users of such devices. In 3G markets, a substantially larger proportion
of terminals will be smart and multimedia enabled, necessitating post-paid tariffs.
§ Two of the biggest areas of revenues predicted for the 3G world are mobile
commerce and mobile location. Mobile commerce requires user authentication
which is inconsistent with anonymity, and mobile location requires user opt in and
opt out to services, witch is also inconsistent with the anonymity that prepay can
provide.
As such, we predict that prepay will account for a diminishing proportion of the total
mobile market and that the postpaid billing mechanism will become resurgent. Within a
couple of years, the two forms of payment are likely to be roughly equally used in the 3G
world, with application centric devices on postpaid tariffs and voice centric terminals
mainly on prepay tariffs. Thereafter, as network operators begin to focus more on the
quality of their users, prepay may fall away further.

PART 5
GLOSSARY
ACD - Automatic Call Delivery
ACM - Answer Complete Message
AMPS - Advanced Mobile Phone Service
ANSI - American National Standards Institute
ANSI-41 - Formerly Interim Standard (IS) 41
ASL - Account Spending Limit
ATM - Automatic Teller Machine
CAMEL - Customized Applications for Mobile Enhanced Logic
CAP - Capabilities Application Part
CDMA - Code Division Multiple Access
CDR - Call Detail Record
CPP - Calling Party Pays
CS - Capability Sets
D-AMPS - Digital AMPS
FISU - Fill-in Signal Unit
GPRS - General Packet Radio Service
GSM - Global System for Mobile communications
GSM MAP - GSM Mobile Application Part
GTT - Global Title Translations
HLR - Home Location Register
IAM - Initial Address Message
ID - Identification
IMSI - International Mobile Station Identifier
IN - Intelligent Network
INAP - Intelligent Network Application Part

INCM - Intelligent Network Conceptual Model
IP - Intelligent Peripheral or Internet Protocol
ISO - International Standards Organization
ISUP - ISDN User Part
IVRU - Interactive Voice Response Unit
LSB - Location Sensitive Billing
LSSU - Link Status Signal Units
MAP - Mobile Application Part
MDN - Mobile Directory Number
MF - Modified Feature
MOU - Minutes Of Use
MSC - Mobile Switching Center
MSISDN - Mobile Station ISDN
MSU - Message Signal Unit
MTP - Message Transfer Part
NMT - Nordic Mobile Telecommunications
PCS - Personal Communications Service
PDC - Personal Digital Cellular
PDE - Position Determination Equipment
PLR - Pseudo Location Register
PSTN - Public Switched Telecommunications Network
RBOC - Regional Bell Operating Companies
RegNot - Registration Notification
SCCP - Signaling Connection Control Part
SCP - Service Control Point
SDR - Service Detail Record
SIM - Subscriber Identity Module
SMS - Short Message Service
SMSC - Short Message Service Center

SN - Service Node
SONET - Synchronous Optical Network
SP - Switching Point
SS7 - Signaling System number Seven
SSN - Subsystem Numbers
SSP - Service Switching Point
STP - Signal Transfer Point
TACS - Total Access Communication System
TCAP - Transaction Capabilities Application Part
TCR - Transfer-Cluster-Restricted
TDMA - Time Division Multiple Access
TFP - Transfer-Prohibited
TUP - Telephone User Part (TUP)
UMTS - Universal Mobile Telephone System
USSD - Unstructured Supplementary Services Data
VAS - Value-Added Services
VLR - Visiting Location Register
VRU - Voice Response Units
WAP - Wireless Application Protocol
WIN - Wireless Intelligent Network

ALSO PUBLISHED BY MOBILE LIFESTREAMS
Yes 2 Prepay – Gerald T. Christensen

Published: March 2001 (161 A4 pages)
Written by Mobile Lifestreams’ Prepaid expert, Gerry Christensen, this 161 page report
has been designed to help product and service providers and those investing in
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For more information visit: http://www.mobilePREPAY.com

Price: 495$US
ISBN: 192910541X
Messaging Metrics – Simon Buckingham

Published March 2001 (129 pages)
The intention of this report is to satisfy the large number of requests that Mobile
Lifestreams receives for detailed quantitative and qualitative information on the growth
of mobile messaging services such as text messaging (SMS), enhanced messaging (EMS)
and multimedia messaging (MMS)
For more information visit: http://www.mobilesms.com

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ISBN: 1929105371
Success 4 WAP – Simon Buckingham

Published: February 2001 (200 pages)
The Wireless Application Protocol (WAP) is a hot topic that has been widely hyped in the
mobile industry and outside of it. Mobile Lifestreams originally produced its first WAP
report, “Data on WAP”, in July 1999. Due to rapid changes and developments this report
was reissued as "Yes 2 WAP" in May 2000 and as “Success 4 WAP” in February 20001.
For more information visit: http://www.yes2WAP.com

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ISBN: 1929105215

YES 2 3G – Simon Buckingham
Published: February 2001 (283 pages)
"YES 2 3G" presents an optimistic look at tremendously exciting possibilities that Third
Generation/ UMTS technologies and applications enable. Timescales, profiles of all the
major infrastructure vendors including the Japanese vendors, every mobile multimedia
application, "At home with your futurephone"- mobile communications in the next few
years, 3G Talking Points, all the 3G contracts awarded, the standards, handset alliances
and partnership opportunities and much, much more are included in this report.
For more information visit: http://www.mobile3G.com

Price: 495$US
ISBN: 1929105150
Next Messaging: From SMS to EMS to MMS – Simon Buckingham

Published: December 2000 (275 pages)
Messaging is evolving beyond text to enhanced text and simple pictures to full
multimedia messages. This report plots this evolution path and is an essential resource
for those working with SMS who are looking to maintain their position in the future. The
transition from text messaging to multimedia messaging is as important for mobile
phones as the transition from DOS to Windows was for the PC.
For more information visit: http://www.NextMessaging.com

Price: 495$US
ISBN: 1929105258
Yes 2 GPRS – Simon Buckingham

Published: August 2000 (218 pages)
This report shows how to make mobile data a success by maximizing the use of, and
therefore the revenue from, the General Packet Radio Service (GPRS). Education is the
principle means of achieving this objective- by providing the first and only single source
for accurate and comprehensive information about the development and deployment of
GPRS around the world. “YES 2 GPRS” explains and interprets both the existing and
future aspects of GPRS. It provides both an explanation of these developments, and
analysis to help interpret them. The idea is to identify the critical success factors for the
General Packet Radio Service- now and in the future
For more information visit: http://www.mobileGPRS.com

Price: 495$US
ISBN: 1929105258

Mobile Positioning – Stephen M Dye and Dr Frank Baylin
Published: November 1999 (273 A4 pages)
"Mobile Positioning" is a report about mobile positioning systems- in particular, the

Global Positioning System (GPS), non-GPS location techniques and Cell Broadcast.
Although the report focuses primarily on the Global Positioning System (GPS),
appendixes cover other non-GPS location schemes and Cell Broadcast in considerable
detail.
For more information visit: http://www.MobilePositioning.com

Price: 250$US
ISBN: 1929105134
NOTE: To order any of the above publications, please visit our secure online ordering
form at https://www.mobilesms.com/ordering.asp

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Copyright  2000 - 2001 Gerry Christensen

Issue Date 1 August 2000, updated 1 March 2001

ISBN Hard Copy 192910541X

Copyright Gerald T. Christensen www.mobileprepay.com Page 1

Page 2 www.mobilelifestreams.com Copyright Gerald T. Christensen

Copyright Gerald T. Christensen www.mobileprepay.com Page 3

Page 4 www.mobilelifestreams.com Copyright Gerald T. Christensen

The author welcomes all comments, clarifications and discussions:

Other publications published by Mobile Lifestreams include “Success 4 SMS”, “Yes 2

Mobile Lifestreams maintains a related web site at www.mobileprepay.com to keep

Copyright Gerald T. Christensen www.mobileprepay.com Page 5

§ Information about how mobile prepay communications works, including the

§ Information about more advanced technology issues associated with mobile

§ Evaluation of the technical and business aspects of various technologies used in

Page 6 www.mobilelifestreams.com Copyright Gerald T. Christensen

I appreciate and welcome your comments and feedback.

Copyright Gerald T. Christensen www.mobileprepay.com Page 7

This report is divided into four sections as follows:

PART 1 - TECHNICAL INTRODUCTION

PART 2 - ADVANCED CONCEPTS AND APPLICATIONS

PART 3 - MARKETING AND BUSINESS ISSUES

PART 4 - DEPLOYMENT AND OPERATIONAL ISSUES

Page 8 www.mobilelifestreams.com Copyright Gerald T. Christensen

RADIO FREQUENCY TECHNOLOGIES

Copyright Gerald T. Christensen www.mobileprepay.com Page 9

MOBILE SWITCHING CENTER

HOME LOCATION REGISTER

VISITING LOCATION REGISTER

RegNot (Response with profile)

MSC/VLR SS7 Signaling Network MSC/VLR

Page 10 www.mobilelifestreams.com Copyright Gerald T. Christensen

It is not important to understand the details of these operations. However, it is

PREPAY BECOMES A MAINSTREAM SERVICE

Copyright Gerald T. Christensen www.mobileprepay.com Page 11

THE TECHNOLOGY BEHIND PREPAY

CALL CONTROL AND PROCESSING

Page 12 www.mobilelifestreams.com Copyright Gerald T. Christensen

In less robust systems, call control is accomplished by virtue of dedicated resources

In terms of account management, call rating, call management and administrative

§ Tracks the amount of airtime available in the customer account

§ Determines the appropriate rating (charges) for a given call attempt

Copyright Gerald T. Christensen www.mobileprepay.com Page 13

Architecturally speaking, these forms of signaling constitute an overlay data network,

Mobile Network Switch

SS7 Signaling Network

FIGURE 2: COMMON CHANNEL SIGNALING

Page 14 www.mobilelifestreams.com Copyright Gerald T. Christensen

These technologies foster inter-system signaling between network elements, enabling

SHORT MESSAGING AND OVER-THE-AIR ACTIVATION/REPLENISHMENT

SUBSCRIBER IDENTITY MODULE

Copyright Gerald T. Christensen www.mobileprepay.com Page 15

Page 16 www.mobilelifestreams.com Copyright Gerald T. Christensen

FUNCTIONAL CHARACTERISTICS OF A MOBILE PREPAY

§ A rating engine used to determine the rating of a call based on a combination of

§ A mechanism for decrementing the customer’s prepay account based on the

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PREPAY TECHNOLOGY SOLUTIONS

Prepay Point Solution

FIGURE 3: POINT SOLUTION

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SIM BASED SOLUTIONS

There are three different types of SIM-based prepay solutions:

NETWORK-BASED SIM SOLUTION