Email a colleague    

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

 

About the Expert

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

Related Stories

  • 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 Jim Buttafuoco — 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.

Related Articles

  • Webinar: From Wholesale Settlement  to Global Partner Management by Dan Baker — A 40 minute webinar providing a sweeping view of the challenges and opportunities service providers face as they try to manage a far more complex wholesale and partnering scene.
  • 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.
  • Network Asset Choreography: Subex Teaches Analytics to Dance with Discovery & Life Cycle Management interview with John Brooks — Network provisioning and asset life cycle management is a foreign world to most business assurance professionals because it’s a domain that lives outside the order-to-cash stream.  This article explains how new analytics and network discovery techniques are enabling operators to better track assets, plan capacity, and pave the way for strategic network deployments and decommissioning.
  • Atlanta-lytics: New Telecom Conference Features Revenue and Customer Analytics by Dan Baker — A new telecom conference on analytics in Atlanta (January 29 — 31) is shaping up to be a key event for people who want to stay abreast of this fast moving field.  Black Swan is hosting a half-day, pre-conference workshop entitled, “Financial and Revenue Analytics” featuring seven speakers, many of whom are contributors to this magazine.  Detailed program guide is enclosed.
  • Big Data Financial Analytics: Creating Business Value for Tier 1 Telecoms interview with John Devolites & Atul Jain — What exactly is an analytics company?  This interview with executives at TEOCO helps defines this new breed of telecom solution vendor — a cross between software, consulting, and assurance supplier.  Along with a few Tier 1 case studies, the interview discusses: big-data vs. sampling, analytics project management, and the importance of data access.
  • Margin Analysis: Bolting Profit Assurance onto a Revenue Assurance Platform by Efrat Nissimov — Margin analysis is one of the hottest trends in business assurance.  But what’s all the excitement about?  This article explains the benefits, the market forces driving its adoption, and its advantages over Excel and heritage data warehouse approaches in terms of flexibility, data granularity and quicker time to access.  The author also touts major cost savings if margin analysis is deployed as a module within an existing revenue assurance suite.
  • Partner Settlement: The Adaptable Chameleon that Lives Between Wholesale and Retail Billing interview with Arun Kalavath — Partner settlement has been around a long time, but its profile is on the rise because wholesalers are offering new services and content services are bringing settlements into the retail sector.  In this article, you’ll learn about the market forces changing the wholesale business, the expanded portfolio of services that require settlement, and advice on how to pick a settlements solution vendor.
  • 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.
  • Partners in Carrier Management: The Success Story Behind T-Mobile’s Fiber Rollout in Wireless Backhaul interview with Bryan Fleming — Wireless backhaul is the unsung hero of the smartphone’s success.  This interview with T-Mobile’s carrier management architect for backhaul reveals the behind the scenes game plan for one of the most ambitious wireless interconnect programs ever.  You’ll learn about: the reasons for adopting a full-scale fiber strategy; the challenge of finding carrier partners; the clever techniques T-Mobile used to simplify and cut costs; advice on building great relationships with suppliers; and the key role that analytics, assurance, and visualization software played.
  • Will Apple Take a Bite Out of Carrier SMS Revenues?  Likely. by Brian Silvestri — Text messaging generates $20 billion of revenue each year for U.S. carriers alone.  But Apple’s lastest iPhones come with iMessage, a free embedded messaging service.  But while the long term threat to SMS revenue is clear, what strategies should operators be following today?  This article discusses the many factors operators need to consider, offering advice on how mobile operators can keep SMS profits rolling in as long as possible.
  • 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.
  • Least Cost Routing and Rate Audits Not Delivering the Savings You Expected?  Here’s Maybe Why by Brian Silvestri — Least cost routing (LCR) is supposed to be one of telecom’s greatest cost-saving innovations.  Yet Connectiv Solution’s research suggests that the LCR programs at many U.S. carriers are losing millions of dollars.  The story explains the traffic analytics steps service providers must take to ensure profitable LCR and other cost assurance programs.
  • Wireless Backhaul: Preparing for the Cleanup When the Dust Settles by Charlie Thomas — Wireless backhaul represents perhaps the largest telecom build-out in the last decade.  This article lays out a strategy for operators as they sooner or later must groom, optimize and re-engineer their backhaul networks based on actual capacity needs, new pricing and improved supplier agreements.  The article lays out a 6-point plan for ensuring success.
  • Is Offering Free International LD on Your Horizon?  Follow These Checkpoints by Hulya Altinsoy — Free is a magic word for consumers.  So how about adding free international long distance (LD) to your list of services?  While free international LD serivce is fraught with risk, the article presents a  5-point checklist to help get your bearings before you make the leap.  The article also presents an analysis of billions of minutes in international LD calls by U.S. wireless carriers.
  • Real-Time Network Intelligence: The New Way to Read Telecom Tea Leaves by Suren Nathan — Real-time network intelligence is the key to deciding which products to launch, whose facilities to lease, and where to route traffic.  The article explains why telecoms — and especially enhanced service providers --  should ideally be equipped with both a fine-grained margin analysis solution and a SaaS platform, offering an upgrade path that requires no internat IT support.
  • International Call Routing: A Challenging Area to Master, But Payoffs Can Be Big interview with John Fitzpatrick — International call routing offers a completely different set of challenges than the common practices found in North America.  This article explains the many issues faced in international LCR from imprecise routing and number portability headaches to dispute problems and the flood of wholesaler rate sheets that must be rapidly made sense of and implemented in the routing plan.
  • Dynamic Call Routing: The Market Enabler that Allows VoIP to Improve with Age interview with Neal Axelrad — Least cost routing (LCR) has matured greatly in recent years.  Today’s routing is far more dynamic because of new real-time capabilities.  This article explains technology advances that instaneously re-routie calls based on real-time intellgence gathering from the network.  Also discussed are template-driven rate addendums, SaaS delivery, and the economics of LCR.
  • Network Inventory Integrity: Taking Cost Management to a Higher Level interview with Suren Nathan — Recovering stranded assets and capacity is essential for minimizing CAPEX and leasing costs.  This article makes the case for reconciling network inventory through the many ordering, billing, and other systems that interact with that inventory.
  • An Automated Self-Audit Approach to Telecom Cost Assurance interview with Jim Buttafuoco — 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.
  • Meet Your New Cost Management Solution: A Tandem Hub Carrier interview with Surendra Saboo — In the telco interconnect game, frustrations are many: high tolls, jurisdiction scams, and the expense of connecting to a partner.  This article explains how tandem or aggregation carriers are making life easier and saving operators a boatload of money.  Learn the difference between peering and a “tandem hub” and why this trend is becoming increasingly global.
  • 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.