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September 2010

Cost Assurance: Dealing with Rating Variety in Wholesale Bills

Cost Assurance: Dealing with Rating Variety in Wholesale Bills

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.

Copyright 2010 Black Swan Telecom Journal

David West

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

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