One of the most innovative features of today's CM&B systems is to turn the back-office billing system into a front-office, customer-facing selling system. The old-world model (i.e., the batch model) is relatively simple. After a network transaction (e.g., a voice call) three steps occur:

• The network element generates a usage record (CDR) and forwards it to the rating server.
• When there is sufficient volume or on a regularly scheduled basis, the CDR transactions are loaded and each transaction is rated.
• Rated events are then sent to a billing system and posted to the customer account.

The information flows in a single direction—from the network element to the billing system—and is the outgrowth of decades of 30-day billing cycles. No matter how much the batch process is speeded up, latency problems still exist.

In an article titled Batch Systems for Internet Billing? Think Real Time! in the January 1999 issue of Billing World, the authors (Dr. Matthew Lucas, consultant, and Dave Labuda, chief technical officer and vice president of engineering for Portal) pointed out that "When billing for Internet services, it is critical that the billing system is closely synchronized with network activity. This is the fundamental limitation with the batch model."

Revenue leakage is a common problem with batch billing systems, as subscriber usage is not rated immediately, and when rating later occurs, problems are uncovered. For instance, with a batch system, providers will detect missing call start times only when billing is run, which may be several weeks after an event occurred. Revenue recovery procedures are costly and cumbersome.

With batch billing systems, the provider cannot tell what the subscriber is doing at any given point in time. Effective target marketing, which calls for making an offer based on the most recent activity of the subscriber, is very difficult in this environment. In addition, preventing fraud is practically impossible with a batch system. While batch systems can detect fraud—for instance, determining that multiple people used the same user identification—batch systems can only react to the fraud once the fraud has occurred. Batch systems are incapable of actively preventing duplicate log-ins, as real time data is not available.

Batch systems cannot track a subscriber's real time balance, a fact that may disadvantage both the subscriber and the provider. Subscribers cannot obtain real time account balances and must instead wait until a billing cycle has been run. The account balance becomes outdated as soon as another usage event, such as a CDR, is generated. Providers suffer because they are unable to detect if a subscriber has reached a credit limit. Overextending credit to unworthy customers increases a provider's bad debt expenses.

Companies are finding that traditional billing systems are ineffective for the Internet. Real time CM&B systems are replacing older batch systems that lack the real time capabilities and flexibility required by Internet services. By turning the CM&B system into a customer-facing application, the provider's management can make decisions based on real time data.