Subscription billing in the telecom sector

Telecom tug-of-war for simplified billing in the digital age

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Monali Supramanyam, Global Director, Product Marketing, Monetization suite


18 Mar 2024

Subscription billing in the telecom sector

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An attempt to shift towards an all-out subscription model reflects a broader industry trend of catering to customers' needs for a simplified flat-rate per-product billing model that meets their specific needs.

Subscription billing, initially popularized by digital giants like AWS, Amazon Prime, Netflix, and Spotify for its predictable revenue and simple transactions, found its way into the telecom sector with a bang. With the advent of emerging services like digital streaming, Cloud, and IoT, it especially felt like a wave of fresh breath promising to replace the complex telecom billing and its incessant prorations with a simplified approach and straightforward monetization. However, this transition comes at the cost of customer experience, introducing market differentiation challenges and inflexibility, underscoring the need for innovative solutions and exceptional service delivery to navigate the competitive landscape effectively.

In general, subscription billing involves customers paying a flat recurring fee at regular intervals (monthly, quarterly, annually, etc.) to access a product or service. The flat rate is product-specific and does not vary by usage or time.

Subscription billing in the telecom sector, however, is slightly different. In a recent survey of telecom end users, while most respondents preferred a subscription model for reduced billing errors, 54% wanted their first bill to be prorated to align the billing cycles for all their subscription services. It creates a unique billing paradox in consumer expectations, where consumers demand the best of both worlds. Telecoms must offer a straightforward flat-rate subscription and also accommodate first-month proration, which is counterintuitive to the simplicity and error reduction benefits initially sought with subscription billing.

In addition, the telecom sector must also combine usage-based products with emerging flat-rate products, adhere to regulatory compliance involving complex data management, processes, and contractual elements to generate service invoices and balance varying customer expectations with changing technology demands.
Despite various challenges, the telecom sector is poised to vigorously embrace the world of subscription billing.

Tier 3 and smaller Communication Service Providers (CSPs) were the first to jump on the bandwagon, initiating the use of a one-size-fits-all subscription monetization model for comprehensive bundles. This initial strategy simplified the billing process across various services, making it an attractive option for providers focusing on a more niche customer base or those with more limited service offerings. However, the landscape has significantly shifted over the past few years, with CSPs of all sizes, including top-tier providers and mainstream telcos, integrating subscription billing into their frameworks.

This shift was particularly evident in streaming/OTT (Over-The-Top) services, unlimited data plans, and cloud services, mirroring the growing consumer preference for continuous access and predictable billing. And with this shift came the creative bundles. A few examples where mainstream telecom companies are leveraging subscription billing to offer a variety of services, including unlimited data plans, streaming content/OTT services, and cloud services, catering to the evolving needs of consumers include:

  1. T-Mobile Go5G plans offer inclusive Netflix subscriptions, either Basic or Standard, at no extra cost, aiming for comprehensive service. Upon signing up, users must link their Netflix to their T-Mobile account for direct billing by T-Mobile. The plan's billing encompasses the Netflix subscription cost within the bundle, with additional charges for higher-tier plans appearing as separate items. Netflix access continues until the billing cycle's end, even after cancellation. The charges are on-bill with a single aligned bill cycle, ensuring a straightforward user experience from activation to potential cancellation.
  2. South Korea Tel's T-Universe
    South Korea Tel's T-Universe is an integrated service platform offering a mix of services under a unified ecosystem, enhancing customer experience through flexibility and customization. Users can access various services and content through a single account, enjoying exclusive content, special offers, and premium services. The platform incorporates digital wallet functionality for easy payments and employs a subscription model with a base fee plus additional charges for premium or tiered services. Billing consolidates all charges into a single statement, with automatic renewal and detailed billing for transparency. Cancellation policies allow access until the end of the payment period, with specific terms for reactivation.
  3. Entertainment Bundle Subscription & BOBO Options From Verizon
    Verizon's Entertainment Bundle Subscription and BOBO (Buy One, Get One) Options offer subscriptions to services like Apple Music, Disney+, and YouTube TV, which can be bundled with Verizon plans. They often come with an initial discount, then renew at the standard rate. Activation is done through the Verizon account, where the subscription date is set, which renews monthly. The cost is included in the Verizon bill. For cancellations, access continues until the end of the payment period, with options to pause service. Resubscribing sets a new subscription date, as does resuming after a pause. Billing is not prorated but is tax-inclusive, and autopay is available.

These examples underscore the telecom industry's shift towards subscription-based models, catering to the increasing demand for digital content and seamless connectivity but also reflecting the industry's adaptation to changing consumer preferences and the growing importance of value-added services.


Expansion into Traditional Services

Encouraged by the success of the subscription billing model in streaming apps and bundles, telecom operators began experimenting with subscription models for traditional services. The aim was to simplify the monetization of these services and enhance customer engagement by offering comprehensive solutions under one recurring payment.

Two specific examples, both limited to the continent down under, include Telstra's SIM Only & Bundle Plans provide post-paid mobile phone services, offering access to their 3G, 4G/4GX, and 5G networks with speed caps based on the plan. Customers can bring their own devices or purchase one. Services can be canceled at any time, but without a refund for any money paid and with the requirement to pay out any remaining device or accessory amounts. Billing is on-bill with immediate service start, recurring billing cycles, and auto-pay setup. New services added for existing customers will have their first payment aligned with the next scheduled auto-pay date, applying a prorated charge.

SIM Only plan from Optus: Optus offers a post-paid SIM-only plan that grants users access to its 5G network at no additional cost, subject to the availability of the network. The speed is capped based on the chosen plan, and users can enjoy additional discounts on streaming bundles. Customers have the flexibility to cancel at any time, retaining service access until the end of the current billing cycle. However, any fees paid are non-refundable, and immediate disconnection is possible if a user requests number porting. Billing is off-bill, meaning it is managed separately from other services, with the ability to pool data on a single account when adding new users.
An attempt to shift towards an all-out subscription model reflects a broader industry trend of catering to customers' needs for a simplified flat-rate per-product billing model that meets their specific needs.

However, this transition comes at the cost of customer experience, introducing market differentiation challenges and inflexibility, underscoring the need for innovative solutions and exceptional service delivery to navigate the competitive landscape effectively.

Pros and Cons

A quick comparison of the pros and cons of subscription billing will unveil the nuanced impacts this model has within the telecom sector, from enhanced customer engagement to potential billing complexities.


  • Opens New Revenue Streams: Subscription billing enables telecoms to diversify their offerings and tap into new markets like streaming services and 3rd party content, providing additional revenue opportunities through various digital and value-added services.
  • Simplified Billing: Customers appreciate the simplicity of paying a fixed amount for a bundle of services, improving their overall satisfaction.
  • Customer Retention: Straightforward billing removes proration-driven customer frustration, decreases bill-related call volume and customer frustration, and potentially reduces churn.
  • Predictable Revenue Streams: Subscription models offer CSPs steady and predictable revenue, facilitating better financial planning and investment in infrastructure and innovation.


Loss of Paid Amounts and Rigid Cancellation Terms: Rigid cancellation terms in subscription billing, where customers risk losing pre-paid fees and lack the freedom to cancel at any point, can lead to dissatisfaction and negative perceptions of the CSP. In a recent survey, Billing Best Practices, 57% of consumer respondents and 72% of business customers indicated they would leave their service provider if not offered the flexibility to choose their billing options. Download the full report for more detailed insights and statistics.

  • Lack of Flexibility: Not all services lend themselves well to a subscription model. Some offerings, especially those subject to fluctuating demand or inherently usage-based, do not fit neatly into this framework. The subscription model doesn't work well for services people use differently each time or change a lot.
  • Service Experience Impact: The push towards uniformity in subscription packages might dilute the personalized service experience.
  • Business Segment Resistance: Certain business customers, especially those with variable service needs, may resist the shift to subscription billing, preferring more traditional, usage-based models.
  • Decreased Customer Loyalty: The ease of switching between service providers makes loyalty more volatile, with users swiftly adopting a churn-and-return approach.
  • Market Saturation Risks: As more companies adopt subscription models, differentiating services in a crowded market becomes challenging, potentially leading to increased marketing costs and pressure on pricing strategies.

A recent global data report elaborates on the dynamics of subscription billing in the telecom sector and offers comprehensive insights into market trends, consumer behavior, and CSPs' strategic responses. Download the full report to gain a deeper understanding of how subscription models are reshaping the telecommunications landscape and get invaluable perspectives for industry stakeholders aiming to navigate the complexities of this pivotal shift and capitalize on the opportunities it presents. The transition to an all-out subscription billing model in the telecom industry presents a mix of opportunities and challenges. This approach, increasingly favored for its alignment with contemporary consumer expectations and digital transformation strategies, has been detailed extensively in a recent GlobalData report. Here are some key pros and cons to consider: Conclusion

So, while the adoption of a subscription model by CSPs is indeed a testament to the sector's dynamic response to evolving market demands, heralding a new era of digital telecommunications, a hybrid approach catering to unique customer preferences may broaden the service spectrum, enhancing customer engagement through tailored experiences and opening new revenue channels for CSPs, amidst the commoditization of conventional telecom services. While subscription billing offers numerous advantages, including revenue predictability and simplified customer transactions, it is not a one-size-fits-all solution. The telecom sector, with its diverse range of services and customer needs, may find a hybrid approach that best meets its needs-combining subscription models with traditional billing practices. This strategy allows telecom companies to capitalize on the benefits of subscription billing while retaining the flexibility to cater to all customer segments.

Amdocs, a leading provider of software and services to communications and media companies, has recently conducted an end-user survey on this topic. The insights drawn from the report underscore the complexity and dynamism of this transition, providing valuable guidance for CSPs navigating these changes. As the industry continues to evolve, the ability to adapt to and capitalize on the subscription model will likely distinguish the leaders in the digital telecommunications arena.

Download the full report for a deeper dive into these trends and strategic recommendations.


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