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October 2011
Least cost routing (LCR) is supposed to be one of telecom’s greatest cost-saving innovations. Yet our independent research suggests that many U.S. carriers with LCR programs in place are actually losing millions of dollars because the rates in their LCR databases do not reflect where traffic actually terminates.
Here’s the issue: Local number portability (LNP) has drastically changed the telecom landscape. Our analysis of 2 billion CDRs in the past 3 months shows that 35 percent of all domestic LD phone calls are replaced with a ported number or Local Routing Number (LRN). In fact, the impact of LNP is so huge that any LCR or cost management program that fails to take LNP into account is at best highly inaccurate — and at worst, a money loser because it’s sending traffic to high cost routes!
We get lots of questions and comments on this issue. Here are some of the most common ones and my answers. . .
I thought the LERG (Local Exchange Routing Guide) database was the gold standard for call routing. |
I wouldn’t say the LERG is extinct, but it is certainly not complete. You can no longer look at the LERG tables and say, “My traffic terminated to such and such NPA-NXX, which belongs to company Z so a certain rate applies.” The LERG must be combined with local number portability to truly make sense of who and what is happening in your network. The only way to be accurate anymore is to do an LNP dip for every individual call to get the true termination location.
You say 35 percent of LD Calls are ported to an LRN, but that numbers sounds way too high. |
I agree: It does sounds high, but not when you consider the effect of number pooling.
Number pooling began when we started running out of phone numbers. When a carrier launched into a new market, the code administer used to issue it a block of 10,000 numbers, such as the prefix 703-433 in local Virginia.
But these days, the administrator is liable to come back and say, “I am going to take back some numbers from you and give it to another carrier to achieve code efficiency.” The administrator then assigns LRNs to the codes being assigned to the new carrier. Pooling can also be used intra-company to support network and technical migrations.
Looking at the LERG, you may think a block of numbers is owned by a particular carrier and routing to a specific switch, but you’ll never know for sure unless you dip that called number to a full 10-digit level.
So why are carriers not applying post-LNP rates to their LCR and cost management audits? |
Many are just not aware of the severity of the problem. But beyond that, a post-LNP look is hard to audit. Every month the number of records to check goes into the hundreds of millions or billions, and it requires that you independently dip every call against the Neustar LRN database, which is over 300 million records. Then you need to feed that data back into your LCR solution or Cost Management Solution and do it in near real-time.
Many of our clients don‘t have the tools or they lack the ability to do that analysis to answer the question: “Am I being billed correctly?”
Another issue is an ability to go back in time. In our netCLARUS system, we maintain LNP version control and in that way we can go back to a year ago and tell you the LRN a particular dialed number returned back then.
How does LNP affect the rating of Interconnect Bills and how widespread are LNP errors in the industry as a whole? |
Our industry and client data suggests the problem is very widespread. In fact, LNP not only affects engineering and LCR, it also impacts telco billing and audits.
We analyzed a wireless client’s interconnect bills and found that an LRN was being applied in only 1 percent of their LD calls! So comparing their 1 percent with the industry average 35 percent, we knew they had a problem.
Sure enough, the LD provider was not dipping its calls properly on the bill and was misrepresenting where the traffic truly terminated. With our analysis, we calculated 7 percent more MOUs were actually ported and terminating to the cheapest rate category — wireless. The net result was a 5 percent monthly overbilling, which represented millions of dollars on an annual basis.
In this case, we ran the client through our Rate Audit process to ensure their negotiated rates were applied to the bills received by third-party vendors (e.g. LD providers). By performing a simple look-up against the rate tables, they could see how LNP affected their billing. We then gave them the data they needed to dispute their bills. And because the data was so well-documented, the LD carrier could not dispute the findings.
To reiterate, the inability to reconcile called numbers with LRNs is costing operators many millions of dollars in LD overbilling. And though most of our customers are wireless operators, the problem is not wireless-specific but applies to any operator who routes traffic and is billed based on terminating rate schedules.
So here are some action items that carriers who face LRN-related billing issues should consider:
This article first appeared in Billing and OSS World.
Copyright 2011 Black Swan Telecom Journal