E-Billing Still in the Ether

When Klaus Werner grew tired of sifting through envelopes while organizing and paying his bills, he ventured online and tried e-billing.

"It took a couple of hours to change billing providers and to key in everything at once," says Werner, senior director of BellSouth Customer Markets.

Werner used an e-billing consolidator to pay his telephone, utilities and credit card bills. Before aggregating, he spent up to two hours each month dealing with invoices. Now, with a few clicks, it's over in 15 minutes.

Still, he admits some people will be turned off by the initial time investment of using an e-billing consolidator. "It's not something as easy as 1-2-3," he says.

The registration process at Verizon.com for e-billing also is rigorous, in order to maintain security. "If we made it more convenient, more customers would sign up, but fewer would feel secure," says Maria Malicka, director of consumer e-commerce at Verizon.

That lack of convenience may contribute to the fact that only 5% of U.S. households view and pay bills online, according to Jason Briggs, senior analyst with The Yankee Group. "Vendors who built e-billing platforms had hoped for 15% penetration by now," he says.

Potential for Payment

Analysts with the Internet Research Group say that by 2002, more than half of U.S. households will have the ability to access, view and pay three to four monthly bills online.

But will Americans make use of the opportunity?

In a December 2000 study, Gartner Group estimated that electronic bill presentment and payment (EBPP) would become a common activity to manage U.S. household finances for 40 million consumers by 2004.

As for the present, though, Werner admits that fewer than 100,000 BellSouth customers currently use e-billing to both view and pay bills online. The company's best hope lies in the increasing percentage of customers that continue to receive paper bills but opt to pay them electronically.

"In five years, we want 50% of Web-enabled customers paying bills online," Werner says. "The industry is ready."

Still, he acknowledges that it may take some time before e-billing really catches on with consumers. He sees 2001 as a growth year and 2002 as the year that significant numbers of customers sign on.

Verizon also holds high expectations for e-billing. Verizon East, which is part of the old Bell Atlantic territory, now has 130,000 customers registered and using online billing. As it launches e-billing across its entire region by the end of the year, Verizon expects 2% of all of its customers to use e-billing. Within five years, Verizon hopes that number will increase to 15% or 20%.

"If we have a major marketing initiative and drive enhancement, we should meet 15% within three years," Malicka says.

Verizon started offering e-billing in 1999 in the north, and has only recently launched online billing for other parts of the former Bell Atlantic territory. Malicka admits implementation hasn't been easy.

"The challenge is that we're dealing with five different billing systems, just on the former Bell Atlantic side," she says.

No Cash on Hand

According to the Gartner study, service providers are smart for instituting e-billing initiatives early — if they're prepared to wait a while for a return on investment.

The EBPP market is in what Gartner calls a trough of disillusionment — one from which it won't begin to emerge until sometime next year. At that time, Gartner predicts, the industry will begin to use off-the-shelf software to ease the development process for EBPP applications.

Until then, service providers are encouraged to look to e-billing as a way to improve customer service — something the telecom industry could stand to spend time on, considering the amount of churn that continues to plague it.

Additionally, e-billing gives service providers an outlet for marketing opportunities that can boost customer loyalty. Already, Verizon and BellSouth have experimented with such efforts to some success, and other service pro- viders likely will follow suit.

Obviously, service providers haven't lost sight of the ultimate goal of e-billing: cutting costs. For at least the next 12 to 18 months, however, it appears that they will have to settle for some secondary benefits that might not have such shabby results of their own.

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in The Net Economy.