The IT industry may think times are hard, but prospects look a lot worse for many internet and telecoms companies unless they can find ways to make more money.

In recent years, start-up carriers and internet service providers have invested heavily in acquiring customers and developing new business areas. That directly benefited the IT sector, as much of the investment went on new hardware and software.

But in these companies' desire for aggressive growth, profitability often took a back seat. Investors and creditors are now breathing down their necks and many start-up carriers and ISPs are having to learn how to make their business pay its way. Once again the IT industry, in the shape of the billing software sector, stands to benefit.

Sepro, an Irish billing software company, has published a timely report entitled "Ten ways for ISPs and telcos to Make Money from the Internet."

One of the first rules for making money, according to Sepro, is for operators to use their network to sell other things apart from a basic internet or telephone service.

"ISPs and telecommunications companies are very good at selling internet access and bandwidth - they are not so hot at providing airline tickets and stock quote services," says Sepro. Network operators will increasingly need content partners to provide products and services such as these, which can be sold on to the operator's own customers. But today's networks have not been designed with this in mind.

"As applications become more sophisticated, it's down to the network to make it easy for our content providers to connect to us," says Malcolm Dunn, IT manager for billing systems at Vodafone, the world's largest mobile phone operator.

"There is a whole raft of things that these content providers want to know and we as a network operator need to be in a position to handle these different partners from the billing point of view."

Billing software was once an unglamorous backwater of the software industry. But ISPs and telecoms companies are investing heavily in new billing systems to allow them to offer more sophisticated, revenue-generating services.

Vodafone, for example, has chosen Portal Software, a US billing software company, to supply the key billing platform for Vodafone's next-generation GPRS wireless network.

Portal has also supplied the billing software for America Online, the world's biggest ISP.

One of the problems common to both ISPs and telcos is that traditionally they have had little information on their customers beyond how much time they spend online. By signing up good content partners and collecting the billing data, ISPs and telcos can also use this information for their own marketing purposes.

In its report, Sepro gives the example of an airline ticket. If the customer buys a ticket to New York on the internet and the ISP has a partnership with a large hotel chain, it could e-mail the customer to offer him or her a special rate at a given hotel in New York. The customer gets a good deal on a hotel, the hotel fills a bed, while the ISP takes a cut and gets a happier customer.