XO Communications tracks every transaction (text message, e-mail, etc.) made by its customers, which are mostly small and medium businesses. Nonetheless, as the industry has skyrocketed in complexity, the carrier found itself in a long-distance profitability crisis borne out of legacy data analytic software that made it impossible to keep up with rate changes.
“The telecom business is very data intensive,” said Rob Geller, CIO at XO. “We are one of the industries that tracks things at a very finite level; we track every call, every data session. It’s akin to a hardware store tracking every nail.” XO adds about 2.5 billion CDRs per month to the storage facility, as an example.
The biggest issue was the 80-terabyte data warehouse — or rather, the traditional technology for analysis and reporting that XO was using to tap the information stored there. The LEC was using that information to make big decisions about operational processes, but there was a gap between the analytical reporting it was getting and the ability to determine the profitability of various call types. That’s because a single report query would run for eight or 12 hours.
“And you’re not asking just one question,” said Geller. “That one question leads to four more and then four more. It’s an iterative process, so it was taking us much longer to make changes to the business in response to market changes than it should have, so we couldn’t effectively do least-cost routing and so on.”
Hitting a Wall
The inability to appropriately perform an analysis of profitability for calls and routes brought XO to “kind of a crisis around May of last year,” said Gellar. To wit, the long-distance business went from being profitable to "losing a couple million a month."
XO realized that it needed to analyze and uncover the problem, market by market. The carrier needed to figure out how to get the visibility to route calls differently or change pricing as needed. And that was a need that was a bit more critical given XO’s place in the market.
“We don’t consider ourselves a CLEC,” said Geller. “We’re a smaller version of an ILEC so to speak. When you’re as broad as an ILEC and not as deep as an ILEC, you don’t have the volumes to balance out underperforming parts of the business, and the margins are razor thin. The big guys have more room for imprecision because of how much volume the have.”
And, unlike the AT&Ts of the world, XO still pays 40 cents per dollar for last-mile access. “We’re an interesting business,” Geller continued. “We’ve transformed in a couple of ways over the last two or three years, going from relying on a traditional voice business to carrying 95 percent VoIP and data. But we need to sell it correctly and route it correctly and then feed those records back into the system so we have an intelligent operational process.”
That snapshot, Gellar said, just scratches the surface. Sheer complexity is also a factor. “Everybody has automation around optimization of their telecom situation,” he explained. “So once upon a time pricing changes were implemented by actual people every six months. Now, those changes are automated and happen every month or so. When there’s a fluctuation in pricing on one route, it affects how you route those calls, as well as others, and it can cause a significant impact in the business more quickly than ever before.”
