Least Cost Terminating Traffic: Automation Is Key

In a wireless environment, the costs of terminating traffic vary greatly depending on how and where it is terminated. In most cases, the most cost-effective ways to terminate traffic are available within the low-cost facilities of a carrier’s MTA (major trading area), where calls incur local charges. The cost of calls terminated beyond the MTA’s boundary via long-distance carriers, however, can be as much as 30 times higher. In some cases, where setting up local facilities to terminate calls is cost-prohibitive, it may make more sense to pay long-distance rates for terminating calls. However, many carriers don’t realize they are paying unnecessarily high costs for terminating calls because their switch translations are inaccurate, incomplete or missing.

The Cost of Faulty Switch Translations

In the narrow, traditional sense, least cost routing is a matter of choosing the least expensive long-distance carrier based on quoted per-minute rates. As long-distance providers’ rates change over time, a carrier may need to revise its selection and update its switch translations accordingly to reflect the new least cost route. But determining the most cost-effective route to terminate calls is not always as easy as choosing one long-distance carrier over another based on rates. In other words, deciding which carrier will charge the least is sometimes not the same as determining which route is the most cost-effective.

For example, even the least expensive long-distance carrier costs too much, if the originating carrier could be terminating the same calls locally via its intra-MTA facilities. The question then is not which long-distance carrier will charge the least, but rather what available route really costs the least.

Both TDM and VoIP providers attempt to validate and maintain efficient routing to ensure that traffic is delivered at the lowest cost available. But, unfortunately, they are often unaware of routing errors that cause avoidable expenses. Consider the following scenarios:

• Provider A used to route calls from, say San Jose, Calif., to San Francisco via a long-distance carrier, but then implemented intra-MTA facilities between those cities that opened a new, much cheaper route. What went undetected is that the switch translations were never updated accordingly, and calls have been handed off to the long-distance carrier unnecessarily for months or years.

• Although it has direct end-office trunking in place, carrier B routes calls through a tandem unnecessarily due to inaccurate switch translations.

• Although wireless carrier C has direct facilities to wireless carrier D, it is paying higher costs to route calls via a LEC tandem because of missing switch translations.

• Carrier E, which has a large long-distance presence, incurs substantial tandem facility charges because its inaccurate switch translations fail to terminate the traffic through direct facilities available to some end offices.

• Carrier F has recently negotiated wholesale termination rates with provider G, but the interconnection agreement has not been made available to operations. As a result, switches have not been provisioned to reflect the new, more cost-effective routing schemes.

The bottom line is that incorrect and incomplete switch translations increase cost and reduce revenues. In some instances, the problem may be temporary: it is simply a matter of time until technicians get around to updating switch translations to reflect new intra-MTA facilities or agreements reached with other carriers. However, in most cases, problems with switch translations happen and go undetected because the provisioning of switches is a manual process.

Automating Detection and Correction

Since any manual process is prone to mistakes, using software to automatically validate and correct processes can reduce errors. Such software can perform three functions automatically:

1. Analysis and detection. Software analyzes carriers’ switch translations and identifies inefficiencies. Are calls being sent to a long-distance carrier that could be terminated intra-MTA? Do switches really reflect all the interconnection agreements reached with other carriers? Software can detect in minutes what technicians might take months to accomplish.

2. Correction. Once discrepancies identified by the software have been verified and the recommended changes are approved by the carrier, the program automatically creates new translations and applies them to the switches without the need for manual labor. For example, if an intra-MTA route is available but not reflected in the translations, routing is automatically switched to reduce the carrier’s cost immediately, not in a few months when technicians can get around to correcting the problem. The entire process is designed to eliminate the delays and errors that occur in manual tasks associated with switch maintenance, thereby reducing the cost of ownership for both legacy and next-generation networks.

3. Audit trail. The Sarbanes-Oxley Act requires that carriers have controls in place to verify that their stated costs are true costs. Automated detection and correction of inefficiencies leave an audit trail of the actions taken to remedy the discrepancies identified. Time-stamped transactions and referenced business rules are readily available as proof of corrective action taken.

A major U.S. CLEC was able to save $7 million annually by automating the validating and correction process. The company had grown through acquisition and had accumulated over 120 switches, which led to inefficient routing schemes. For example, traffic was being terminated inefficiently through ILEC tandems despite the availability of direct trunking to end-office facilities. Software performed an automated routing analysis and detected the inefficiencies. Once the carrier accepted the changes, the software created new translations automatically and modified switches accordingly to reroute calls to terminate at end offices. The company realized savings of approximately 40 percent per minute of use. Since no manual labor was required, changes to 129 switches were completed within four months. Another provider in a major metropolitan area saved $1 million annually for three switches.

Some companies attempt to identify inefficient routing schemes by analyzing SS7 data (actual call records) to locate discrepancies in call routing. This analysis is a monumental task involving billions upon billions of calls, and it remains limited to the results of translations. Automated detection software, on the other hand, identifies the root cause of routing inefficiencies by examining the translations themselves and comparing them to the routes that calls should be traveling for optimum savings. This approach identifies where the problem lies so that it can be corrected automatically.

Least Cost Routing and Call Termination in the VoIP Environment

Automated life cycle management is equally critical for least cost routing and cost-efficient call termination in wireline, wireless and VoIP environments. VoIP providers may have peer-to-peer relationships based on agreed-upon rates or trading of traffic with both PSTN providers and other VoIP providers. Automation can facilitate analysis to determine which calls are supported by a provider’s own on-net facilities and which need to be handed off-net to another carrier, wire-line or wireless. The most cost-effective routes can then be programmed automatically to avoid the costs of mistake-prone manual labor.

However, in choosing a carrier, the rate is not the only consideration; service quality is another critical variable. If the least expensive carrier offers poor quality of service, it may be preferable to route calls via a more expensive alternative. This is because poor quality will ultimately raise costs, not only in terms of credits issued to customers, but in the form of extra staffing to deal with complaints, and technicians whose time is wasted on continually performing corrective action. In other words, which route costs the least is really a question of which carrier will terminate traffic most cost-effectively, not which one charges the lowest rates. Least cost routing software allows carriers to make decisions that weigh both rate and quality of service considerations by multiplying cost and service parameters to arrive at the least cost route.

What About Jobs?

It makes good business sense for carriers to automate tasks performed manually by highly paid technicians, but among the workforce, automation often raises the specter of lost jobs. If an automated platform not only can detect inefficiencies but also create translations to correct them automatically, what is there left to do for the employees who used to perform these tasks manually? One provider, upon identifying significant cost opportunities through automated analysis, chose to turn the process of correction over to its internal IT team a year ago. As of yet, the corrections have not been implemented. It was a short-sighted build-or-buy decision that resulted in losses of $2 million a month—$24 million a year, not to mention internal IT costs of about $2 million per year.

For carriers unwilling to cut jobs, a better solution is to first automate the TDM network, the more cost-intensive of the two, and move technical personnel to the VoIP network until it can also be automated. This lowers the cost of ownership in the TDM network while preserving jobs, at least temporarily. In reality, the only way to increase the cost-effectiveness of operating and maintaining networks is through increased automation. Automating the detection and correction of discrepancies among provisioning, network elements and billing systems drives out the excess costs of inefficient routing and translations. It means reduced costs, better service for customers and higher profits for the carrier, all of which add up to growth, which in turn stimulates job creation.

Automation Is a Necessity

The hard fact is that carriers must continue to lower service delivery costs and network maintenance—not just for competitive advantage, but mere survival. Eliminating discrepancies among provisioning, network elements and billing systems reduces the cost of routing from an origination and terminating perspective. At the same time, automation improves operational efficiencies, freeing up valuable technical expertise to perform functions other than identifying defects and manually updating switches with the required translation maintenance. It all adds up to reduced costs, greater customer satisfaction and a higher profit margin.

About the Author:

Robert Straw is VP, Telecom Solutions with Honovi Solutions, a provider of network integrity and automated provisioning solutions, error identification and automated correction. For further information, visit www.honovi.com or call 248 994-4700.