Usage-based pricing is all about aligning revenue with customer value. However, without proper control, it can easily lead to bill shock, which will inevitably erode trust.
In the areas of connectivity, cloud and API-based services, we see the same thing: unlimited usage, limited or latent usage visibility, delayed billing cycles and pricing models that customers can’t comprehend. Problems are only identified at the end of the month, when it’s already too late to do anything about it. Revenue leakage happens, and churn isn’t far behind.
The answer isn’t to reject usage-based pricing altogether. It’s to do usage-based pricing right.
That involves low-latency metering, visibility and controls, as well as prepaid credit and seamless integration between network operations and billing or finance. When customers have visibility into usage in near real-time, and when hard caps are in place to protect both sides, trust builds.
This is where MSB Micro Systems policy control function (PCF) comes into play.
Policy meets predictability
As a software as a service offering in a B2B2B business model, MSB’s PCF delivers policy enforcement at the edge of the corporate access point name. It integrates authentication, authorisation and accounting (AAA) with voucher-based wallets to deliver usage limits in near real-time.
The benefits are spend control, automatic suspension at limit and instant reactivation upon new voucher activation.
For resellers and their business customers, this means:
- Usage and billing transparency as a growth enabler;
- Lower churn and improved service commitments;
- Overrun rates of less than 0.5%;
- A guardrail against deviated and/or excessive data spend per subscriber or group;
- Fully automated operations with low integration complexity;
- Launch from signing the contract to first service in as little as six weeks; and
- Predictability as a competitive differentiator.
Why bill shock happens and how PCF prevents it
Bill shock usually arises from four underlying causes. First, unlimited consumption, where APIs, compute and data traffic operate without any limits or technical constraints. Second, a lack of visibility, where customers do not have access to accelerated information about their consumption and associated costs.
Third, the billing cycle is delayed (usually monthly), which means that issues are not visible until the bill is sent. Lastly, complex pricing rules and misinterpretations of cost structures lead to confusion, which results in disputed bills.
Preventing bill shock means that there has to be a structured approach, with near-real-time metering and analysis. Notifications at 60%, 80% and 90% of budgeted amounts allow enterprises and users to manage their behaviour before hitting the limits.
Hard limits or prepaid credits prevent runaway spending, and seamless integration between network data, billing and finance systems ensure that the business is in sync. Usage profiles have to stay transparent and in sync with customer value.
Enforcing these is what PCF brings to the table. While resellers configure notifications and business rules, PCF is what enforces hard limits on the network’s edge. Once a voucher expires, access is automatically revoked.
No surprises, or uncontrolled overruns.
How PCF works
At its core, PCF follows a simple but powerful flow:
- Authorise: Each subscriber session is authenticated and linked to a wallet and voucher.
- Account: Usage is metered continuously. Data consumption is associated with the correct wallet in near-real time.
- Enforce: When the voucher’s data allocation is depleted or expires, PCF automatically suspends the subscriber.
- Reinstate: Once a new voucher is issued, access is restored immediately.
The system is operator- and network-agnostic, resembling a sophisticated prepaid model.
Clean rules, clean accounting
PCF supports multiple wallets per subscriber:
- Anytime wallet: standard daytime usage
- Night-time wallet: discounted off-peak usage
- Promotional wallet: time-bound incentives (for example, “happy hour” from 5pm to 6pm)
Each voucher is linked to a wallet, with valid vouchers stored in a subscriber-linked wallet. Vouchers have a lifespan (one, two, three or six months, as set by the reseller) and are used in the order they were created.
Resellers buy bulk data from network operators and assign it to each subscriber. As per network usage patterns, daytime data costs more; nighttime data costs less. PCF does not prescribe pricing, which is left to the reseller’s discretion, but it maintains enforcement integrity.
When a voucher is depleted, the subscriber is suspended. They can also be moved to a “walled garden” (also known as the “deadpool”), where they can only access certain services until reactivation. All transactions are recorded. All transactions are auditable.
Outcomes that matter
In usage-based environments, overruns (data consumed beyond allocated bundles) represent financial risk. Networks charge for all traffic, whether it was provisioned against a subscriber voucher.
With MSB-SMP PCF in operation, total monthly overruns are less than 1% of total usage, which is below the industry standard of 1%. In reality, they are statistically insignificant and do not carry any financial risk.
Performance metrics also support this. The system is capable of processing an average of around 400 transactions per second, which is the scale needed in high-volume scenarios. The transaction lag (time taken to process and reflect usage events) is typically below 10 seconds, which is in line with the near real-time standard.
Lag, the time taken to process usage events, is constantly being monitored. Even during transitions in loads, enforcement integrity is maintained. The system is designed to be robust.
The system is constantly checking performance thresholds. Alerts are triggered when lag crosses 60 seconds, and critical alerts are set at 120 seconds. During some transition phases, like wallet transitions from night-time to anytime packages, there may be temporary peaks, with lag going up to 300 seconds. Even in such cases, there is no compromise on monitoring and control.
This translates into reliable service levels and genuine billing accuracy for resellers.
Flexible policies, structured operations
Reseller policies differ according to enterprise customer needs. PCF is intended to handle this diversity. Business organisations can assign data to cost centres or departments, monitoring consumption per assignment unit. Consumer mobile internet service providers manage data packages for each subscriber during specified billing cycles. Marketing campaigns can be introduced without upsetting the system.
When problems arise, corrective actions are structured, predictable and flexible, while regular reports provide clear visibility into performance. The MSB-SMP system integrates seamlessly with the reseller’s operational systems, enabling costs to be managed proactively rather than becoming an end-of-period issue.
Predictable spend, stronger relationships
Usage-based pricing need not be so volatile. With near-real-time accounting, wallets and vouchers, and hard-cap enforcement at the network edge, PCF translates policy into financial prudence. Customers know where they stand, resellers maintain their margins, and businesses gain insight and control.
Less surprise means more predictability and trust. Trust builds retention and growth.
In a market where complexity tends to erode confidence, PCF provides a welcome respite: a refreshingly straightforward and sustainable model.