The COO and CFO of a large telecoms carrier are concerned by falling voice margins and more specifically the ability for the firm’s wholesale business to maximise sales and curb revenue loss. They agree to conduct an operational review to get some answers. The discussion covers areas such as managing the financial risks of trading decisions, using capacity to improve profitability, measuring and controlling traffic through the network, ensuring quality of service commitments, and identifying different types of revenue leakage. As the discussion ranges from the impact of converged and next generation services to the rapid growth in the number of partner agreements, the scale of the task becomes apparent.

This is a situation in which many carriers find themselves. Inter-carrier billing represents a significant cost of providing service to customers and equates to a large percentage of revenues. It is essential that service providers adopt best practices in interconnect billing and wholesale business management to future-proof operations, especially as all the challenges of managing revenue are greatly compounded by the complex nature and increasing volumes involved in inter-carrier billing, particularly in the new world of IP-enabled services and digital content.

The COO and CFO need to find the answers and solve the issue of optimising their wholesale operation. The ideal approach would be to gain insight from their management team as to what the relationships between supplier agreements, revenue management, billing integrity and process efficiencies are before getting into the technicalities about the flow of CDR information from network elements through OSS and BSS. ‘Revenue Assurance’ process audits and business process re-engineering are common responses. Such approaches are time consuming, but do cover a vast range of a telecoms company’s operation, from product design and credit checks through ordering, provisioning, mediation, billing and settlement, etc. This requires database audits, statistical analysis, file analysis and monitoring of business critical processes. While revenue assurance audits and BPRE initiatives are worthwhile activities, they are a waste of time if the end result does not improve wholesale business processes, ensuring that they work optimally and provide a strategic edge.

A New Approach to Improve Operational Flexibility is required

Dramatic changes in the telecoms industry require a new approach to process control. The move to next generation networks and services represents not only a challenge but an opportunity to improve operational flexibility and revenue management. However, the telecom sector’s traditional approach to wholesale business management can make the challenge all the more problematic. In response to competitive threats, carriers have rushed to respond to opportunities found in new technology advances and customer requirements. Many carriers are still using discrete applications (even spreadsheets) to manage the wholesale process silos of buying, routing, provisioning, pricing, selling, billing and partner relationship management. This has left them with a mixture of legacy infrastructure and poorly designed business processes and systems. So what’s the impact?

Let us return to the dilemma faced by our imaginary COO and CFO. After an in-depth, cross-functional review of wholesale business operations, the COO documents his findings:

The key business issues:

1. Limited up-to-date analysis of business operations or visibility of route cost and margin, resulting in unprofitable interconnect agreements, inadequate comparison and selection of supplying carriers, and traffic being carried over loss making destinations.
2. Complicated systems and discrete business processes are resulting in inefficiencies (backlog of rate information; lengthy billing cycles; out-of-date business information; not meeting sales goals and difficulty in measuring profitability).
3. The existing interconnect billing system cannot deal with emerging accounting and revenue share models. This includes handling the differences between IP-based and traditional services and effectively managing, rating and billing for a wide range of multi-party settlement models.
4. Legacy business practices are not able to manage the increasing number of interconnect and content partners. This includes the implementation of new carrier and content provider agreements, value chain complexity, and rising costs in managing agreements.

The collective result, based on the COO’s analysis, also demonstrates that the impact of these issues flows throughout the entire wholesale business organisation:

• Buying – High-risk exposure and lead times largely caused by the time required to process supplier’s rate sheets and numbering plans, inaccurate data held in different computer systems, and the inability to manage rate changes and opportunities.
• Routing - Declining margins associated with routing decisions; because it takes too long to obtain data and tailor routing parameters, capacity is constrained by overflow on individual trunk groups and switches and it is too difficult to implement new and differentiated routing services.
• Routing Provisioning - Cost of termination on certain routes is excessive due to conflicts between commercial and technical routing decisions, high degree of manual intervention required to determine optimal carrier selection, and the limited transparency of routing orders and their status.
• Pricing – Low margins and low revenues as a result of not being able to accurately predict termination costs, limited visibility of margins on products, agreements and destinations, and an increasing amount of resources required to manage all the parameters for a growing product range.
• Selling – The sales team is not meeting its sales targets due to a lack of data to support negotiations and monitor sales process and margins, time involved in updating rate sheets and distributing new prices to customers, and the inability to access up-to-date information on customer profitability by destination or product.
• Interconnect Billing – A high percentage of revenue loss due to limited financial summarisation of traffic for detailed analysis, time required to manage discrepancies and disputes, and systems in effective at making changes in agreements and billing processes.
• Partner Relationship Management – Rising cost of managing partners due to an increasing number of partner relationships and requests for information, limited transparency of agreements and pricing structures, and unreliable partner information.

The Vision Perspective

The COO recommends an investigation of how to integrate discrete wholesale business processes and combine wholesale billing, settlement, trading, routing, and mediation pre-processing capabilities into a coherent process solution. This is well received by the entire management team, each of whom can perceive individual benefits associated with the recommendations:

1. VP Carrier Relations: "If when managing contracts, my team could remove unproductive and time consuming processes such as the loading of rates and dial codes, the management of contracts, and the definition of destinations and numbering plans so we can capitalise on data to monitor and improve business performance, then we can reduce our risk exposure and lead times."
2. Network Manager: "If when transforming commercial decisions into effective network activities, we can take into consideration load-balancing / load-sharing and capacity constraints, and if when provisioning, we can control the quality and transparency of the routing process so we can streamline processes and improve the ways we work, then we can increase our margins."
3. VP Sales: "If when calling customers, my salespeople could have access to up-to-the moment information to support negotiating, the monitoring of sell prices and margins and customer profitability so we can analyse opportunities per customer, destination and product, customise offers for customers and market segments, and make delivery commitments that we can honour, then we can achieve our sales goals."
4. Interconnect Billing Manager: "If when doing financial analysis, my staff could turn to their PC, select any summarised information, drill down into detailed data such as cost formulas, cross product / partner discounts, and performance indicators and trends so we can react quickly to financial opportunities and changing network conditions, then we can improve our revenue performance."

Simple, better controlled, more efficient processes can turn a carriers’ wholesale business operations into true profit centres, adding more value and improving margins. This in turn contributes to sustainable performance improvements. The challenge is to do this without a manually intensive, fragmented technical infrastructure, and to support a consistent and accurate view of the complete wholesale trading, routing, billing and partner management lifecycle.