This is largely because U.S. carriers no longer deal with a single dominant carrier in another country; deregulation, or “liberalization” as it’s known abroad, has created a more competitive international neighborhood. Telarix, which develops software to let carriers keep up with rates, tariffs and changes in routing, estimates that the number of carriers delivering international traffic grew from 471 in 1996 to 4,726 in 2000.
And, according to Alan Healey, vice president of Intec Telecom Systems, most large carriers have agreements with more than 300 operators around the world.
Healey says profit margins for international carriers are continuing to shrink, following a process that began several years ago. “Calling volume is going up, and the profit is getting tighter,” he says. “Wholesale prices are declining.” Healey says a confluence of technology continues to lower the cost of overseas calling (for some ways to cut losses due to interconnect agreements, see “Tips for the International Interconnect Game”). Digital switching, undersea fiber optic cable routes (thanks to Global Crossing and others) and an increase in the use of IP technology have lowered network operation and maintenance costs but complicated the configuration process. “With the growth of a variety of types of carriers around the world, there’s a much higher level of sophistication when routing and managing traffic,” Healey says.
The biggest challenges in international traffic continue to be the inability to keep up with moment-by-moment changes in routing, tracking corresponding rates and their fluctuations and the shifting mix of mobile and wireline traffic. Also, some countries, especially developing nations, lack the understanding of global networks, which poses a challenge because these countries lack the sophistication to properly route traffic or properly manage their dial codes.
50,000 Routing Changes Per Hour
“We have to be able to ‘route down’ to the single phone line and deal with tens of thousands of codes, up to 50,000 routing changes per hour,” says Russ Fordyce, product marketing manager for ITXC.
The VoIP carrier is the largest “carrier’s carrier,” handling wholesale traffic for large carriers. Teleglobe, another wholesale carrier, announced plans to acquire ITXC in November 2003. Fordyce says the merger will make ITXC number 3 in international call volume. AT&T and Sprint remain at the top, but their businesses focus on the retail side.
iBasis, a close competitor to ITXC, also matches its clients with the best routes and rates. For more on iBasis and how it overcame interconnect challenges, see “How One Carrier Improved its Margins”.
Though ITXC routes traffic for carriers, it’s up to the originating carrier to know the terminating codes used by the carrier that terminates its call. The world’s phone lines are identified by codes that determine their location. Those line codes also indicate whether the call is to terminate on a mobile network, which is more expensive than wireline termination. The codes change constantly—for example, when new subscribers sign up for service or when the rate a carrier charges for a route changes—and everything relies on codes to indicate the location, type of line and routing of the call. As some routes become too crowded, a carrier may seek a less crowded route to send the traffic. When the routes change, the codes change; the changes are constant, unstoppable and difficult to keep up with. Most code changes are sent to partner carriers once a month—sometimes more often.
Coding Mistakes Top the List
According to Fordyce, simple coding mistakes are the most prevalent problem facing international interconnection players. “They’re probably not up to date on codes,” Fordyce says of carriers. “They don’t know the code for a specific destination and don’t know that a mobile code is no longer a mobile code.” Terminating carriers also can’t keep up with changes in their own code, or they may fail to alert carriers of the change. For international carriers, who are handling more traffic but seeing their profit margin shrink, confusion about codes, rates and routes means they’ve lost another opportunity to bill properly for those calls.
Dial codes not only define the world’s networks for carriers, they also drive the cost and define routing table configuration and the operation of the billing systems. “That’s why it’s so unfortunate that a dialing code standard doesn’t exist,” says an international carrier representative who doesn’t want to be identified. “New markets, numbering plans and changes in jurisdiction make those codes infinitely difficult to follow. The carrier with the best understanding of the codes has the best chance of collecting revenue properly for each call.”
The International Telecommunications Union (ITU) maintains a database of dial codes, but they are inherently outdated and don’t reflect the reality of the transactions.
Routing tables and dialing code regimes have become so complex that several vendors have created code management databases to peddle to carriers handling international traffic. Universal Access, Telcordia, Southern New England Telecom, Intrado, Intec, Telarix, and others have international city/country code/routing databases and various functionality to help carriers manage their international traffic intelligently.
As an example of the complexity of such databases, Telcordia says its Global Dialing Code Directory manages mobile number assignments along with provider and technology type; country name as well as corresponding E.164 country code. E.164 is an ITU-T recommendation that defines the international public telecommunications numbering plan used in the PSTN and some other data networks.
The Telcordia code directory also includes national destination codes (NDCs) as well as city/place names and International Standards Organization (ISO) 2 and ISO 3 identifiers. The database also contains Universal Coordinated Time, stated as +/- variance from Greenwich Mean Time (GMT); Daylight Savings Time, including begin and end dates; and numbering plan data such as minimum and maximum number of digits in each field.
If each carrier has between 40 and 100 partners, those code changes accumulate quickly—perhaps 40,000 to 300,000 code changes per month.
Grabbing Opportunities to Sell
If carriers have the right business platforms and a good handle on the codes and processes, they can actually get into the resale side of international traffic and make a little extra money while they’re at it, Healey says. The first goal the carrier has is to fill its network with all the traffic it can while maintaining a committed level of quality of service. Once the network transmission capacity is filled, the carrier then has to find another carrier to route its overflow traffic. At that point, the carrier has to receive quotes, or rate offers, from other carriers willing to take that traffic, and take the best rate on the best available route (bearing in mind that some routes are inexpensive because they’re not dependable).
Intec’s InterconnecT Optimized Routing system is an automated trading platform designed to let carriers meet the opportunities that pop up during any given day on the international market. It performs several functions so carriers can make the right market decisions, Healey says. The trading platform has to be fast and accurate in its assessments.
Among the other functions the platform could provide:
• Least-cost routing and optimized routing to find the best route at the best price. Least cost is not always the best due to quality issues.
• Purchasing platform that allows the carrier to take—in digital form—the quotes and offers in the marketplace from other carriers.
• Selling platform for understanding the capacity the carrier possesses and has purchased for resale, and presents to the staff the target sell prices and the structure of the offers (per-minute, times of availability, commitment thresholds, etc.) for the minutes the carrier wants to sell to its wholesale customers.
• Buying platform, which compiles the information on the price, capacity, and terms and conditions that other operators are offering to the carrier.
• An algorithm-based analytical engine that feeds offers to the seller, including buy criteria from the buyer. It considers demand, capacity, available routes, prices, volume commitments, QoS requirements and other factors in determining optimized routing instructions. It includes a switch routing table activation application that implements the parameters surrounding the routing of traffic, and automatically loads it onto one or more switches for routing those minutes by way of and to the desired carrier.
Once the transaction is complete and the minutes are on their way, the carrier should check the switches to ensure that the traffic is routing the way it’s supposed to be routing, Healey says.
Healey adds that carriers have to adapt to a growing spot market. “Cable & Wireless might offer me 10 million minutes to Hong Kong on Monday at a good rate, because they have a gap and they want to fill it up. I can use 5 million minutes of it for my calls, so I buy it and I offer [the other] 5 million minutes to other carriers, and add a little mark-up.”
Another important aspect is to continually monitor service level agreements (SLAs) because one of the operators a carrier is relying on may experience difficulties and end up compromising the QoS. When this happens the carrier must take immediate corrective action and re-route traffic away from that network.
It’s not that carriers have no idea what to expect on any given day. Network managers have a good feel for what to expect from studying calling patterns and coming up with daily averages for traffic. For instance, a carrier realizes that on an average business day, wireless calls make up 25 percent of its traffic to Paris. Network managers also know that their heaviest London traffic corresponds with the end of the business day in the UK. While such calling patterns are a good starting point to make routing decisions, they fall far short of real network planning.
VoIP Traffic Still Rising
The number of VoIP calls transiting international routes has literally exploded and continues to grow, according to analyst group TeleGeography, which is now owned by Primetica. VoIP accounted for about 150 million minutes in international calls in 1998 and about 19 billion minutes in 2002—about 11 percent of the world’s international traffic.
iBasis takes TDM traffic as well as VoIP traffic from its carrier clients and converts it for carriage over its international VoIP backbone. The carrier’s financial health depends on getting the correct route coding and finding the best routes at the lowest cost for its customers. VoIP technology allows for faster configuration (fewer steps) and is more responsive to tweaking and code changes. VoIP softswitches aren’t tied to a central office location; access can be created anywhere. For instance, ITXC recently installed a “switchless” hub in Hong Kong. “It’s all VoIP equipment; instead of a switch, it goes right into the back of the VoIP gateway. All that overhead for a switch, all the cost of maintenance for a switch—is gone,” Fordyce says.
VoIP is helping in an unintended, yet valuable way. International carriers, once held hostage by termination rates in less-developed countries, can bypass them using the VoIP architecture. “VoIP is exploiting a balance of high rates,” says Stephan Beckert, research director at TeleGeography. “They found a way around the international [TDM] gateways and avoided the operators charging the high rates. You route it elsewhere and you pay a lot less money.” Beckert says VoIP traffic growth has to slow, because “it’s tough to double 19 billion minutes.”
Dedicated Circuits Create Headaches
There is another international customer that isn’t often discussed in the wholesale sector: the “elite” circuit customer, usually a bank or other large enterprise that needs a T-1 for a few days a month to transmit volumes of business data across the ocean. The fat circuits are used for a few days by a specific enterprise for a short time for sending data and making phone calls, and then another company gets to use it for its time allotment.
“These unique contracts are more common now than not,” says Daniel Kenyon, vice president of communications industry solutions for PeopleSoft.
A big carrier such as France Telecom (FT) provides the T-1 on the European side, and an access carrier provides the connection from France Telecom to the United States. The CLEC is the one billing the end user, but FT bills the CLEC weeks after the CLEC bills its enterprise clients—and FT’s bill isn’t broken down by enterprise customer.
The CLEC gets a spreadsheet with a bunch of numbers but has no idea which calls belonged to which client at the end of the month.
Too often the CLEC realizes that it’s not going to make money off that contract because it hasn’t figured off-net charges, ancillary to the CDR-generated charges. “When you’re talking about off-net charges, it’s a whole different market for reconciliation products, much different than switch-to-bill reconciliation,” Kenyon says. He suggests CLECs create a score card on customer use as well as hidden costs to determine what they should be charging. “Most of the service you provide is on net and profitable,” Kenyon says. “You might not be including off net for international calls, access that’s not on your network. You have to collect that detail, normalize it so you can develop a score card on each customer that must include additional access charges. There are three costs to consider: Network costs, sales and marketing costs and access costs, and there are problems.”
For instance, Kenyon says, an American carrier might have one format for billing while FT has another. “FT will send something over on nine fields,” Kenyon says, and the U.S. carrier might be using 17 fields to collect billing data. You have to take those two bills and break them out,” he says.
Imagine a big U.S. carrier with dozens of such dedicated international circuits to decipher every month.
It Will Never Be Correct
There is absolutely no way that any carrier is going to bill all its international traffic correctly on any given day. International calling margins are flat and unresponsive. Carriers that don’t get a handle on their international billing are going to go away; that’s been proved repeatedly. Teleglobe, a powerhouse in international traffic got humbled in just such a way. “The largest operators are beginning to say to themselves ‘If I don’t get smart about this, I’ll be left out in the cold,’” a telecom expert says.
“Teleglobe got blasted,” Healey says. “It’s interesting to observe that Teleglobe is basically embracing an operator [ITXC] using the [trading platform] process.”
“A major industry challenge is that there is no standard for international numbering plans,” Telarix states in a company document. “Niche international markets evolve seemingly overnight.”
Warren Saunders, business manager for Anite Group’s telecoms business, says it best: “Interconnect used to be a cash cow,” he says. “Now you’re fighting for one tenth of a penny. One particular carrier might be cheaper, but do you want to pass all your traffic through a carrier that won’t be here next week?”
How One Carrier Improved its Margins iBasis—like every international carrier—has felt financial pain as a result of poorly configured traffic. “A year and a half ago we paid out close to 1 percent in the form of credits for rate, code or minute-related disputes. We viewed that as unacceptable,” says Brad Guth, senior director of financial operations at iBasis. iBasis sought to raise awareness of the crucial role billing and accounts payable functions play. Margin Assurance is a formal function in the finance organization, and the staff now gives regular updates on the condition and activity of the billing and accounts receivable functions to the CEO and CFO. “Issue resolutions should not become exercises in assigning blame; rather, they should be treated as case studies, driven to root cause, yielding action and redirection,” Guth says. At iBasis, disputes and other margin impacting events are given trouble tickets that are worked just as any operational issue affecting the network. Regular reviews take place to ensure that root causes are identified and corrective actions are taken. The team continues to categorize the various underlying causes for disputes and ensures that processes and systems work to mitigate risks of reoccurrence. The team created a flow chart that tracks the kind of complaints that lead to the loss of disputes. The chart lists possible issues with billing increments, configuration, hung ports and dead air. It also indicates when an employee gives the wrong code out to a carrier customer intending to terminate in a certain country. It also lists “code list mismatch” and “customer not alerted to code change” mistakes common to carriers all over the world. Other missteps are listed in the flow chart, such as “incorrect currency” or “customer never received rate or received it in the wrong format.” The idea was to identify the root cause of disputes and to correct them. Tracking Critical Metrics iBasis team members also decided to track and regularly discuss critical metrics such as percent of revenue disputed and credited, aging schedule of dispute balances, and number of days it takes to issue invoices. The company then wanted to match, as perfectly as possible, support systems to maintain the margin assurance program. “When we recognized that minute disputes were the most challenging and protracted disputes to resolve,” Guth says, “we developed a proprietary call duration record comparison tool, allowing us to quickly isolate any source of discrepancy and communicate it to the other party in a clear, organized manner.” The team also realized that employees were making non-standard offers to customers outside the rate management system. To counter that, the team redesigned software applications with new flexibility to help sales teams make such offers. Improving Communications with Customers Finally, iBasis resolved to keep an open dialogue with its carrier customers—openly sharing data and processes—and received the same courtesy from their customers, Guth says. “The result was… greater understanding of how to minimize potential issues in the future.”
Comments
Similar Articles
Latest ArticlesGalleriesBuyer's GuideReportsfeatured links
HOT TOPICS
|
