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How Technology Firms See Pay-As-You-Go Billing

Fortnightly Magazine - January 15 1997

the UK alone.

Penz notes that point-of-sale terminal cards and smart cards were introduced to the U.S. public last summer with great success at the Atlanta Olympics. Powell adds that

similar, but more sophisticated "Key Pad" technology is widely used in South Africa.

"Our system [at Schlumberger] is unique," says Penz. It enables customers to buy natural gas at any outlet while providing two-way communications, such as debt recovery, standing charges, stepped tariffs, and many other features."

Powell adds: "We [Siemens] were involved with Peoples Gas initially and still keep contact. We are also working with two major gas companies in the U.S., with our Electronic Adpative 2000 domestic gas meter."

Credit or Debit?

When asked to explain what a "smart card" is, and the difference between it and a "debit card," such as a bank card that depositors use in automatic teller machines, Thomas emphasized interactivity. "A debit card will directly adjust a customer account, such as a checking account. It needs a direct and secure telecommunications link with some transaction clearing house in some other location. A smartcard is simply a card with a microprocessor chip and some memory, usually between 512 and 16,000 bytes.

"But you can do a lot with that data," says Thomas. Typically, he notes, a customer will take a smartcard to a vending site and add value to it. The customer then goes home to insert the card into the utility meter and debit value from the card itself (em not from the underlying account. To work like a true debit card, says Thomas, customers using prepay cards would need their own, high-tech, dedicated, secure telecommunications links to financial institutions (em something that is still easier to do from a remote vending site, such as a grocery store, than from the home.

Back in the UK, Powell notes that prices for cards and meters vary, depending upon quantities: "Generally in the UK the card would vary between £4-6 [$6.75 to about $10], and the meters would cost approximately three times that of a traditional credit meter. Vending (point-of-sale) units also vary in cost and to my knowledge would range between £600-1200 each [$1000 to $2000]."

Integration with AMR

Smartcards warrant attention in the way they change utility billing operations and the relationship between company and customer. CIC's Jon Thomas offers his take on the subject:

"What a pay-as-you-go system does is to change your internal systems. In fact, you eliminate the billing step entirely."

Of course, the real economies of scale come with system integration (em by linking the pay-as-you-go smartcard system with the utility's computerized customer information system, and perhaps with automated meter reading (AMR). That point raises questions: How does prepayment billing mesh with AMR? Which technology is better in cutting costs, and gathering information on customer usage profiles?

Schlumberger's Penz explains the relationship between smartcards and AMR:

"The traditional billing system requires meters to be read and a bill generated and mailed to the customer for payment. Numerous inroads have been made in AMR to make this process more efficient. The beauty