September 2010

Cost Assurance: Dealing with Rating Variety in Wholesale Bills

by David West

In carrier-to-carrier billing, invoice validation can be accomplished by comparing actual switch usage to bills received from wholesale carrier vendors — switch-to-vendor reconciliation.

Sounds fairly simple and “standard” right? Well, actually it’s not so easy, plus there’s more than one way to attack the problem.

The Complexity of Wholesale Bills

The process begins when the retail carrier receives a monthly invoice for all the calls they send to a wholesale vendor for termination. These invoices show the details of the calls, including rounded duration, jurisdiction, and rate. Now in the past, the retail carrier would often pay the bills if the totals were in line with previous months.

But times have changed. Margins are extremely thin these days, plus legislation such as Sarbanes-Oxley has put a greater burden on CEOs to ensure their fiduciary responsibility to stockholders. Carriers today require a more proactive approach to validating wholesale invoices.

Switch-to-vendor validation requires you to compare the received invoice with what actually took place on your switch. Doing so requires a replication of the wholesaler’s rate structure, rating increments, rounding, and jurisdiction assignments, then validation that they are applied correctly. It might sound simple, but as I’ll explain, this process is anything but cookie cutter.

Wholesale Vendor A’s rate sheet may be calculated based on NPA-NXX and billed one rate for the first 30 seconds, and then use a lower rate for each incremental 6 seconds. Vendor B, on the other hand, may have a rate sheet broken down by LATA and OCN, with a timing interval based on the first 10 seconds then another rate for each subsequent 10 seconds.

It’s not uncommon for every wholesale vendor to use different rate structures, different jurisdictional definitions and different timing rules. What’s more, they probably have different rounding rules. Is your head spinning yet? The rating is complex, and the rating process will vary from one vendor to the next. Carriers can also choose among multiple approaches for comparing the data, from a simple, summary-level approach, to a detailed call-by-call approach.

Wireless Customer Case Study

For one wireless customer of ours, we deployed TeleLink, our core mediation and reporting platform, and built a custom solution. All of their usage data was put into a database, enriched with reference data from the LERG to determine jurisdiction for each call, as well as trunk group data to determine which carrier terminated each call. We also imported and normalized the rate sheets from each of their carriers and applied each carrier’s rates to the calls.

Now, when this carrier receives bills from their wholesalers, they can quickly run a report summarizing actual usage (both minutes and dollars) by day, destination, etc. They then compare this summary to what the vendor billed them. If there’s a variance they can drill down to investigate and gather details to support a dispute. In the first few months, they successfully disputed and received $60,000 from just one vendor based on rounding errors in their invoices.

In this case, our customer was satisfied to compare at a summary level — they got the assurance they needed and minimized their cost. Other carriers, however, want to compare at the individual call level. Of course, going to that greater detail is a more expensive option because it requires call-by-call matching. But, here’s the beauty of the build-to-suit approach I talked about in my previous blog: If getting detailed CDR-level analysis doesn‘t warrant the cost, you don’t have to buy it!

In either case, a build-to-suit solution based around a core reporting engine will provide access to a full data warehouse of usage — enriched with jurisdiction and rate information. This is an invaluable resource for carriers, allowing them to produce any sort of report — which benefits marketing, engineering, the NOC — and makes the ROI even more compelling.

This is just one an example of the complexities you find in revenue assurance problems and how a build-to-suit vendor can address that complexity — and do so economically.

Final Buying Recommendation

If you’re a tier 2 or 3 carrier with an urge to buy a revenue assurance solution, my first advice is get very specific about what you need. Revenue assurance is an awfully big category, so you need to narrow down and prioritize your requirements, and then work with your software vendor to determine the optimal approach. They should be prepared to present options so you can determine the optimal cost-benefit trade-off.

For most Tier 2 and smaller carriers, the best option is to work with a vendor that is willing and able to build a custom revenue-assurance solution to meet your needs. This approach, however, should not require the software vendor to start from scratch each time. Most vendors serving smaller carriers will have a collection of software modules for mediation, rating, enriching, and matching usage and invoice data. This approach allows them to combine different modules with custom development to quickly deploy a custom solution built on a foundation of time-tested, market proven components.

In the end, you’ll face the question of which kind of solution to select: a full course meal of RA tools or � la carte selection of custom built solutions. Since budgets are tight, and resources limited, often the best choice is to build up based on a customized solution, adding functionality based on your needs and priorities, rather than having to pare down a big solution to get what you can afford and risk paying for things you don’t need.

This article first appeared in Billing and OSS World.

David West

David West is executive vice president of Equinox Information Systems, responsible for developing and implementing the company’s long-term strategic plan, including product design and marketing.

Equinox Information Systems is one of the leading fraud and RA software vendors in the U.S. Contact David via

Black Swan Solution Guides & Papers

Expanding the Scope of Revenue Assurance Beyond Switch-to-Bill’s Vision — Araxxe — How Araxxe’s end-to-end revenue assurance complements switch-to-bill RA through telescope RA (external and partner data) and microscope RA (high-definition analysis of complex services like bundling and digital services).
Lanck Telecom FMS: Voice Fraud Management as a Network Service on Demand — Lanck Telecom — A Guide to a new and unique on-demand network service enabling fraud-risky international voice traffic to be monitored (and either alerted or blocked) as that traffic is routed through a wholesaler on its way to its final destinations.
SHAKEN / STIR Calling Number Verification & Fraud Alerting — iconectiv — SHAKEN/STIR is the telecom industry’s first step toward reviving trust in business telephony — and has recently launched in the U.S. market. This Solution Guide features commentary from technology leaders at iconetiv, a firm heavily involved in the development of SHAKEN.
Getting Accurate, Up-to-the-Minute Phone Number Porting History & Carrier-of-Record Data to Verify Identity & Mitigate Account Takeovers — iconectiv — Learn about a recently approved risk intelligence service to receive authoritative and real-time notices of numbers being ported and changes to the carrier-of-record for specific telephone numbers.
The Value of an Authoritative Database of Global Telephone Numbers — iconectiv — Learn about an authoritative database of allocated numbers and special number ranges in every country of the world. The expert explains how this database adds value to any FMS or fraud analyst team.
The IPRN Database and its Use in IRSF & Wangiri Fraud Control — Yates Fraud Consulting — The IPRN Database is a powerful new tool for helping control IRSF and Wangiri frauds. The pioneer of the category explains the value and use of the IPRN Database in this 14-page Black Swan Solution Guide.
A Real-Time Cloud Service to Protect the Enterprise PBX from IRSF Fraud — Oculeus — Learn how a new cloud-based solution developed by Oculeus, any enterprise can protect its PBX from IRSF fraud for as little as $5 a month.
How Regulators can Lead the Fight Against International Bypass Fraud — LATRO Services — As a regulator in a country infected by SIM box fraud, what can you do to improve the situation? A white paper explains the steps you can and should you take — at the national government level — to better protect your country’s tax revenue, quality of communications, and national infrastructure.
Telecom Identity Fraud 2020: A 36-Expert Analysis Report from TRI — TRI — TRI releases a new research report on telecom identity fraud and security. Black Swan readers can download a free Executive Summary of the Report.
The 2021 State of Communications-Related Fraud, Identity Theft & Consumer Protection in the USA — iconectiv — This 49-page free Report on communications-related fraud analyzes the FTC’s annual Sentinel consumer fraud statistics and provides a sweeping view of trends and problem areas. It also gives a cross-industry view of the practices and systems that enable fraud control, identity verification, and security in our “zero trust” digital world.

cSwans of a Feather

TEOCO Brings Bottom Line Savings & Efficiency to Inter-Carrier Billing and Accounting with Machine Learning & Contract Scanning — interview with Jacob Howell — Learn the challenges and benefits of developing of new Machine Learning and Computer Vision system for wholesale billing accounting and inter-carrier contract reading.
Special Report: Wholesale Systems for Advanced Services — by Dan Baker — Plenty of technology and market changes are disrupting the telecom wholesale market: advanced services, new kinds of partners,,and the need to monitor relationships and services more closely than was ever required in the circuit voice world. This article introduces a TRI special report discussing the kind of Wholesale Systems needed in this challenging marketplace.
Data Integrity Issues Go Global in the Telecom Wholesale Exchange — interview with Vic Bozzo — Wholesale systems enable operators to expand their global reach and work efficiently with partners in an increasingly interdependent telco business. In this article, you’ll learn about: how many subsystems work together in support of the global trading exchange, why data integrity has become critical, and how wholesale business trends are affecting wholesale systems at Tier 1 and mobile operators.
Carrier Usage Audits: Why Regular Checkups Are the Key to a CSP’s Bottom-Line Health — by Brian Silvestri — Many telecoms are wholly unaware of the risks of not having a solid usage auditing program for interconnect bills. Rather than a once-a-year or once-a-quarter audit, this article makes the case for regular monthly audits. Also discussed are: the different types of audits and organizations involved; the dangers of not auditing often; and factors to consider when selecting a cost-management vendor.
Invoice Audit Productivity: From 19th Century Textile Mill to SaaS — by Peter Yelle — When it comes to invoice reconciliation, are your processes and tools modern and efficient, or is your company stuck in a 19th century time warp? This article show how operators can vastly reduce their manual audit steps by automating via a SaaS solution. The detailed case study and diagram show which tasks were automated to achieve an 80%+ productivity gain.
An Automated Self-Audit Approach to Telecom Cost Assurance — interview with — What’s the value of an automated approach to invoice validation? This article explains the power of the SaaS model where the vendor supplies the data-processing expertise, relieves the operator of tedious manual work and boosts auditor productivity so more money is saved.
Cost Assurance: Dealing with Rating Variety in Wholesale Bills — by David West — Validation of intercarrier wholesale invoices seems like a fairly straight forward process. But regulatory rules and a variety of bill rating methods have made it very complex. This article details the challenge by walking through a wireless carrier case, then laying out the argument why operators should opt for a custom solution based on a core reporting engine.

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PCCW Global: On Leveraging Global IoT Connectivity to Create Mission Critical Use Cases for Enterprises — interview with Craig Price — A leading wholesale executive explains the business challenges of the current global IoT scene as it spans many spheres: technical, political, marketing, and enterprise customer value creation.
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