Roaming for EV charging - telecom based payments

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1 SERVICE REPORT 1 (13) Roaming for EV charging - telecom based payments Abstract / Summary As part of the research study Roaming for Electric Vehicle Charging coordinated by RISE Viktoria and funded by the Swedish Energy Agency, Ericsson has provided an overview of current trends and concepts within telecom based payments. Within telecom based payments three large groups exist: - Payments for telecom services and communications (e.g. subscription fee) o o Consumers pay for the consumption of telecom products and other services. (example a bundle of minutes and MB per month) Operators settle between each other based on own subscriber s consumption in partner networks such as Roaming and Interconnect fees these fees are to a large degree hidden form the end consumer - Non-telecom payments utilizing mobile communication and devices for payments (e.g. Samsung Wallet, Mobile Wallet, Apple Pay) - Payment for utilizations of other operators network between mobile operators a k a Roaming & Interconnect Interconnection refers to cross charging between operators for sharing their infrastructures, allowing customers of operators to enjoy undisrupted services when travelling outside of their service provider network. The benefits to interconnect services are many, one of which is co-petition whereby an operator may cooperate with a competitor to remain competitive. Operators are now able to make additional revenue by sharing their infrastructure. Interconnect allows operators to extend their services when they have limited or no coverage. To the consumer, they get to enjoy uninterrupted services. There is another element of charging in telecoms that might also apply to the case of electric vehicle charging. When a customer or vehicle has changed service provider, there needs to be an element of updating the charging grid and infrastructure, to ensure that the charging services are provided are not disrupted. In telephony, this phenomenon is referred to mobile number portability (MNP).

2 SERVICE REPORT 2 (13) Content 1 Definitions Telecom billing / payments Telecom based payments Mobile financial services Different payment models Mobile financial services, Mobile commerce Subscriber to Operator Inter Operator Billing Key industry characteristics for payments Trends and future development in telecom based payment Discussion, implications for EV charging Service and Infrastructure Ownership Customer Ownership & Care Prepaid EV Charging Postpaid EV Charging Recommendations for further exploration Sources and references... 13

3 SERVICE REPORT 3 (13) 1 Definitions This section outlines key concepts and definitions for key terms in telecom related payments area. 1.1 Telecom billing / payments Telecom billing / payments describes the all-encompassing business process, systems and methods that collect information about calls and other services (e.g. mobile broadband, data consumption) to be billed to the subscriber / user. Telecom services have moved from a metered type of price plan price per minute and into an all-inclusive value bundle free domestic minutes at a certain price. This is due to cost for domestic minutes have been reduced continuously over the past years. Consolidated billing is also becoming more popular as consumers are seeking for simplicity and convenience. Even though prepaid services are considered as not related to billing or payment in the telecoms world, unified customer services have given rise to the consolidated billing use case. It is quite common to have multiple services and subscription to be billed in a single invoice. Prepaid services are becoming more prevalent whereby a consumer would like to pay in advance prior to enjoying the services. Such payment options are popular among those who are budget conscious as it allows them more control over their spending. To minimize their exposure, telecom operators are spending more on solutions to track and control usage within a threshold. An example of prepaid use cases would be the statement of prepaid account top-up and usage summary or history to be included in a single invoice when the owner of the parent account. In this case, a customer may choose to pre-pay for some services or subscription where control or rigor of spending habits are required. For instance, roaming or data subscription services, or telephony services for members of the family. 1.2 Telecom based payments Telecom based payments describes the broader term covering all payments provided through or for telecom services / applications. Over the years, operators had extended their service offering above and beyond traditional communications services such as voice, data and messaging. Through partnership with value-added services, content providers and over-the-top (OTT) players, a telecom operator can set themselves apart from their competition. Examples of those services would be online gaming, ringtone providers and media streaming services such as Netflix or Spotify. Partnership with cloud-based service providers such as storage and applications are also becoming common. Through this partnership, a subscriber can choose to unify the payment of these services into their telecom invoices and therefore simplify their periodic invoice payment.

4 SERVICE REPORT 4 (13) These services can be offered as a pay-as-you-go (PAYG) service. Alternatively, operator is also able to bundle these services into a package subscription. Regardless, there exist an opportunity for the operator to extend their business model by monetizing the relationship with their partners. Examples of this is the cross-charging of commissions and remuneration or revenue sharing that aims to encourage a profitable and competitive positioning of both operators and partners. 1.3 Mobile financial services Mobile financial services = Payments and commerce capabilities delivered on or through mobile devices / communication. In large parts of the world, the banking systems are often limited to certain members of the population either because their socio-economic standing or limitations introduced by regulation or financial service providers. Financial services are often excluding the less affluent or geographically inaccessible members of the community. Financial exclusion has a detrimental effect on the social economic development of a society as it would limit their growth in conducting trades and providing services. In lieu of financial services offered by banks, mobile operators have taken the role to be the account holder and financial service provider. Users of these services can store their money using Stored Value Accounts that are managed and operated by the operators. This m-wallet allows the users the users to pay for food, water and other products. In doing so, more and more people who do not have access to bank accounts are now able to digital transaction and improve their ways of trading, payment and quality of life. For societies who have access to bank accounts, mobile financial services have allowed them to perform transaction over their mobile devices. Banks are offering mobile services, which allow their customers to make payment by linking their bank accounts or credit cards on a mobile application. M-wallet services are offered by over-the-top players such as Google, Samsung and Apple have allowed their users to make cross border transactions. Other notable global companies with mobile financial services offering are PayPal and Amazon, which offers wallet facilities that makes it easy to do digital transaction. With networked and connected society, payments and transactions is also evolving towards digitalization and cashless. 2 Different payment models This section discusses characteristics of different key telecom related payments, learnings and pros / cons. 2.1 Mobile financial services, Mobile commerce Sending, spending and receiving money with a mobile phone or device is fast becoming an essential part of life for billions of people. And these types of mobile financial services represent a great business opportunity for banks, mobile operators, industries and governments.

5 SERVICE REPORT 5 (13) According to Visa Europe, the number of mobile payment transactions has tripled since 2015 with 54% Europeans are regularly using mobile payments. It is estimated that alternative non-cash payment methods such as mobile payment will account between 18-26B of European transactions in Mobile financial services and mobile commerce already today offer multiple different payment solutions and models for multiple different use cases. Some notable: Mobile money transfer. Use case: Money transfer between users through mobile phones. Mobile ticketing. Use case: Mobile phones used as tickets, tickets sent immediately to mobile device. Mobile vouchers, coupons and loyalty cards. Use case: Mobile ticketing functionality used for vouchers etc. Content purchase and delivery. Use case: Purchase of e.g. mobile ring-tones through mobile subscription or similar. Location-based services. Use case: Utilizing location for verification or information during a transaction. Mobile banking. Use case: Accessing and operating online bank functions / services through mobile device. Mobile brokerage. Use case: Similar to mobile banking, accessing stock market services through mobile devices. 2.2 Subscriber to Operator Pre-Paid / Pay in advance Customers adds value to his/hers stored value account a account dedicated to services provided by the operator. Services are then allocating and deducting amounts from this account in real time to avoid credit risk. Post Paid The operators will run a credit check on the customer and lets the customer consume telecom services and send out an invoice towards the end of the month or other agreed interval. 2.3 Inter Operator Billing Roaming

6 SERVICE REPORT 6 (13) Roaming are the fees generated by customer from operator A in operator B network (travelling) Operator B will send an invoice and the related data records to operator A who will validate the records and forward the charges (rerated or not) to the customer who generated the charges. Interconnect Interconnect is charges between operators when Customer in Operator A calls a customer in Operator B network. 2.4 Key industry characteristics for payments Through the development of payments for telecom services, open standards have been a fundamental key. Mobile communications are through industry organs and standards bodies developed in 3GPP. 3GPP drives standardization of communications and hereby ensures interoperability, compatibility and customer usage. Payments for telecom services follow same logic and have over time been developed with open standards. Open standards allow for usage and correct billing and payments while using other operators mobile networks, hence allowing user to use services in other markets and other networks Picture / text of how telecom payments work Describe key characteristics for payment models what is needed. E.g. Payments for telecom services open standards key for telecom services payments. Payment in telecoms can be categorized between the consumers of the services and the inter-operability charges between service providers. Consumers of services can be individuals or enterprises. Service providers include the operator themselves, and their partners such as their roaming partners, interconnect partners, value-added service providers, and over-the-top players such as Netflix and Spotify. In the more advanced model, an operator may also partner with device providers, as in the case for IoT for sensors or RFID tags, hardware infrastructure for their cloud offering and software service provider such as for apps and service offering such as productivity tools. For consumers, payment for telecom services can be made either prepaid or postpaid. To enjoy prepaid services, advance payment must be made before services are made available Prepaid Prepaid services are popular as it minimizes the risk of to both consumer and service providers. A consumer who are more budget conscious would prefer prepaid services as it offers them better control of their spending. The risk of bad debt or non-payment is also reduced for the service provider. To enable prepaid services, the demand for real-time charging, monitoring and control is necessary.

7 SERVICE REPORT 7 (13) Systems would have to validate the available balance and constantly update it against usage. To minimize the risk of revenue leakage, all systems must rate and charge all services during the time of consumption so that the services can be interrupted when the user run out of balance. Prepaid services would also cost operators more as they need to invest in systems that allows for the tracking of services in real-time. When adding new services to the offering, all impacted systems would need to cater for real-time charging. In the telecom services, prepaid services would require operators to invest in balance management systems, real-time and accurate notification services, ability to accept balance update and top-up, and real-time provisioning and mediation. As top-ups can be done using vouchers, operators would also need to invest in voucher management system, which can be complex and costly. Voucher handling extends above and beyond inventory management as it also covers the distribution to partners or retailers. To avoid fraudulent or outdated vouchers, operators would have to incorporate voucher handling into their business processes. Vouchers are also complicating financial reporting as they are not recognized as revenues at the time of sales and need to be deferred to the time of consumption of those vouchers. It is not surprising that operators are moving away from vouchers and heading towards e-top up capabilities. E-top ups can be done at POS or top ups from another account such as a postpaid, prepaid or bank account Postpaid Postpaid services require a service provider to trust a consumer by providing services before accepting payment. The obvious risk of postpaid is an increased exposure on the service provider as a consumer may not pay in case of dispute or financial troubles. Even though postpaid services do not necessarily need to be rated in real time, there is an ongoing trend to send notification when a spending threshold has been reached. This is often regulatory requirements to protect consumer s rights and giving consumer control over their spending. International roaming services would pose the highest risk for postpaid customers and operators. However, charging and billing systems are now becoming sophisticated enough to prevent bill shock related to high amount of charges due to roaming. Most operators would switch their customer profile to a prepaid one when they are roaming, that could reduce the exposure. With CAMEL roaming agreement, roaming usage can be rated and charged online, allowing for real-time usage control to prevent over-spending. Customers will be sent notification, or having their services temporarily barred until they contact their operators to resume their services while they are roaming. When there are no CAMEL agreements in place, bill shock becomes a real problem as data records are not processed in real-time. To prevent the issue of bill-shock, operators often require more rigorous credit checks on their postpaid customers as well as requiring deposit to enable roaming services. Dunning and collections systems are also required as operators will need to recover some, if not all the unpaid amounts from consumers who had not paid in time. This often require legal services and outsourcing the collection process to an agency. That said, the cost of operation and investment into infrastructure for postpaid services are still less costly in comparison to prepaid services.

8 SERVICE REPORT 8 (13) Hybrid and other forms of payment Commonly found are hybrid payment which allows a consumer to pick and mix their payment plans. For example, a consumer may choose to prepay for their roaming charges to avoid bill-shock and keep their consumptions postpaid to enjoy cheaper bulk rates when making phone calls. 3 Trends and future development in telecom based payment This section discusses emerging trends and future key considerations in telecom related payments. Telecom is moving from a single service to a multiservice business where in the copper days it was only minutes and a rate per minute. Today, it is possible to pay for non-telecom services under a unified billing such as device payment plan, insurance on the device, on top of the traditional communication services billing. Telecom billing systems are more and more service agnostic, enable quick launching of new products, new partnerships and retire old price plans and products not used. Figure 1: Next Generation prepaid components

9 SERVICE REPORT 9 (13) Some operators are offering direct carrier billing services which allow their customers to charge their digital purchases to their telecom invoices. As this service simplifies the purchase of apps, in-app purchases, ringtones for over-the-top providers, operators are often having a revenue share business model with their customer. Direct carrier billing is very popular in countries where access to banking financial services are scarce. For those with good banking financial services, direct carrier billing finds its niche as it simplifies the check-out and payment process. As customers can use their telecom billing profile to make payment, they no longer need to share sensitive financial information with any other digital service providers. GSMA predicts that there will be over 5B unique mobile subscriptions by the end of the year, which is about 70% of the world population. This indicates that a mobile network operator would have the biggest outreach to the global population. According to Visa Europe, IoT commerce is becoming a reality. With RFID and security verification technology, any device would be able to transact autonomously. Blockchain technology as part of the IoT verification process would increase security in autonomous financial transaction processing. Increasing customer confidence should increase the rate of technology adoption. Providing a mobile payment solution requires security that meets the highest standard which meets regulatory compliance. Most devices are already capable of biometrics such as finger printing, face and voice recognition to authenticate device unlock. By extending the use cases of device technology, additional security can be provided to authenticate and process transactions. The latest Ericsson Consumer Trends report reveal that artificial intelligence and virtual reality is real and is set to change the way we live, work and play. With AI, high availability of open APIs, 5G and analytics, applications and devices will become more intelligent and become more autonomous. Smart home automation and smart digital assistance such as Amazon s Alexa and Google Home are now capable of placing purchase orders at our request. Today, we already have the technology to place purchase orders or instructions automatically all it needs is to be enabled. With IOT, vehicles will be able to act as a mobile payment POS. In Dubai, UAE, motorists can get an RFID tag called Vehicle Identification Pass (VIP), that is attached on their windscreen. The VIP pass can be topped up with cash value or linked to a credit card, allowing motorists to fuel up and go. Share economy or social economy is a form of collaborative consumption where resources can be shared for consumption. In mobility, the need of peer-to-peer car rental users may also need to find easy ways to pay for services and charging vehicles. Another use case for the future could be blockchain or cryptocurrency. With sustainable energy, consumers are also producers of energy, giving rise to the term prosumers. Instead of selling back unused energy to the grid, energy producers can get rewarded with a cryptocurrency, which can later be traded or exchanged for use by the producer when they are using energy outside of their network. The cryptocurrency value can fluctuate depending on the supply and demand of the area where the energy is produced or consumed. Use cases such as this will encourage and further motivate sustainable and clean energy living.

10 SERVICE REPORT 10 (13) 4 Discussion, implications for EV charging This section discusses conclusions and implications on EV charging area based on experiences in telecom related payments. Some conclusions on what EV charging industry can learn from telco / mobile payments like answering the question if standards are necessary? There are various similarities between telecom or mobile payments to EV charging. Like telecoms payment, EV charging and payment can be split into 2 major categories, namely prepaid and postpaid. Unlike telecom however, EV charging are not as well-regulated or standardized which poses a challenge to inter-operability of charging, payment and settlement. Similar to the telecom payments use case, EV charging payment could take the form of postpaid, prepaid or hybrid. The concept of roaming would also apply in EV charging as drivers of EVs will be driving and charging outside of their existing utility provider network coverage. 4.1 Service and Infrastructure Ownership Like telecoms, charging stations would require physical facilities infrastructure, with electricity instead of telecoms services. What is different is that telecoms operator usual own the infrastructure on which to offer their services on. With energy, grid owners are not necessarily the ones who would provide utilities. This setup is like the concept of Mobile Virtual Network Operator (MVNO) in telecommunications. As grid owners are not necessarily the electricity or energy provider, there needs to be a means to manage the settlement and charges between energy providers and grid owners. In the more advanced market, consumers can sometimes be energy producers as they can sell the excess energy they generate back to the grid. Again, this brings the needs to identify who are the consumers, producers and energy owners, so that they can be compensated and charged accordingly. To encourage the uptake of EV, infrastructure needs to anticipate growing market needs by providing adequate charging facilities, Wide coverage of public charging infrastructure might also convert non-ev owners who are inhibited town EVs due to EV driving range anxiety. This responsibility should not be left to the responsibility of federal or local government as the may not necessarily have the funds to do so. To encourage public ownership and operations of such facilities, there must exist some form of facility to handle different business models or needs that allows for faster return of investment. In addition to providing financial investment, partnership business models that facilitate franchising, rental, revenue share, wholesale settlement and remuneration. 4.2 Customer Ownership & Care In telecom the home network owns the customer relationship and the visiting network has limited knowledge on the customer it only needs to know where the home network is and then it will get relevant information (e.g. services allowed) from the home network.

11 SERVICE REPORT 11 (13) The owner of the customer would be the entity who would have the ability to manage the customer contract, services and billing needs, customer service and most of all customer data. The ownership of customer is very important in the case of roaming charges as it determines which services are allowed to the customer while they are roaming, and who the roaming network operator should charge for the services rendered during roaming. When enabling the roaming of the charging customers there are two main entities who might take ownership of the customer The Car maker Tesla, Volvo etc or the home utility provider who already have a relationship with the customer. Whoever the owner of the customer should be responsible for providing a single point of customer care. One of the comment complaints for owners of EVs are the ability to view their charging accounts and their car information. Superior customer experience can be offered when an EV owner can have a single customer care UI that allows them to view telematics information of their vehicle and charging accounts. 4.3 Prepaid EV Charging Some EV producers provide free charging facilities to their customers, with a varying degree of network coverage for charging stations. In such instances, there exist a need to cater for those customers to ensure that they will not be out of charging coverage. Telecom customers sometimes secure a temporary local SIM card when they are travelling abroad or when they are outside of their service provider coverage. This can be extended to EV charging by way of providing charging on demand facilities that accept payments on the spot. In the case of prepaid for EV charging, service providers would need to have the ability to accept payment that allows other users to charge their EV after making a payment. Service providers would also need to be able to rate and charge for services in real-time, which is during the time of charging. Service providers would need to provide the infrastructure to allow for multiple format of charging output, suited to the different car models and manufacturing. The complexity for roaming would not apply in the case of prepaid EV charging. 4.4 Postpaid EV Charging In the telco world, network operators allow the customer of their roaming partners to use their network for a fee. Like telco, EV charging roaming agreements will be required to establish the nature of settlement. This will improve customer experience, to increase the adoption of EV for consumers who have EV driving range anxiety. Important in creating a network of EV charging networks is standards for how to exchange information of users, amount available, services available and procedures for settling between each other so that there is no power of bargain between the different networks where the larger exercises a leverage over the other. For postpaid EV charging, roaming could introduce complexity as it there need to be an existing agreement between charging service providers.

12 SERVICE REPORT 12 (13) For owners of EVs might with an existing contract with as charging provider, the telecoms roaming charges can still apply. In this case, the charging provider will need to establish a roaming agreement with potential partners that will allow their customers to charge seamlessly even if they are charging outside of their existing charging provider network. For owners who do not have an agreement with a charging provider, they would need to rely on prepaid charging capability. Similarly, if there are no existing roaming agreement with a local charging partner, consumers would rely heavily on the charging provider to handle or provide charging-on-demand payment method. 4.5 Recommendations for further exploration As EV public charging and payment may become more complex, there may be further complexity that need to be investigated and addressed. Examples of these use case would be: - Ability to determine home or roaming user - Ability to provision for new user who are not part of the network - Ability to incentivize partners - Ability to handle crypto currency - Fluctuated vs flat rate like stock market to balance supply and demand - To prioritize charging points for members of the network - Ability to show available charging points on app - Ability to show charging points on journey planner, along with charging rates and availability, and facility at the charging station i.e. restaurants, restrooms, rest areas, shopping areas, cinemas, hotels, ATM, payment accepted (cards, cash, teller), B&B etc. - Ability to show accommodation that has overnight charging facility - Partnership with manufacturer network to share their facilities i.e. Tesla SuperCharging Network - Standardization of charging points use regulatory pressure? - Collections & dunning - Dispute handling for repudiation - Fraud handling - Stolen or blacklisted vehicles or accounts - Security of charging facilities, especially for overnight charging

13 SERVICE REPORT 13 (13) 5 Sources and references Telcordia/Ericsson white paper: Prepaid Charging Is Graduating to a Starring Role in Interactive Services 028v2.pdf Plugged In: The Last Mile Who will build out and pay for electric vehicle public charging infrastructure? ( Charging infrastructure for electric vehicles (