https://www.excelacom.com/resources/blog/evolution-from-interconnect-to-partner-management/

Aug 25, 2014

Evolution from Interconnect to Partner Management

By David Krhut

Interconnect-partner billing is often simplistically dismissed as “just invoicing between the partners,” so what’s so difficult about it?

I started my professional career on a team that solely developed this kind of billing product, so I have to admit that this theme is very dear to me. Let’s explore some of the background behind this interesting billing domain. (Please note that this article will stay clear of roaming—which is a different kind of partner business—and US-specific CABS billing—about which I personally know very little.)

Partner billing in the telecommunication space can take many forms, but the core idea is the invoicing of services consumed between different parties on a B2B level. These events (calls, data, etc.) are handed over from one network to another or from a content provider to the telecom operator (through which it is then re-sold to us).

In the “olden times” of telecom PTT leviathans swimming in the analog seas, there was little need for precise inter-partner billing. Those first involved in any inter-partner telecommunication agreements were members of a segregated “club” of state owned telecom operators that deployed the only available technology: analog switches. These switching boxes weren’t able to generate any records that could be used for rating & billing, so these PTT’s made some route, traffic and cost projections and then settled the bills on the basis of these estimates—once a year!

This way of doing business brought fixed and very high prices, cost ambiguity, and a very rigid environment.

In the “olden times” of telecom PTT leviathans swimming in the analog seas, there was little need for precise inter-partner billing.

It would be hard to estimate all the factors that contributed to the facilitation of next evolution stage of the interconnect business, but the main stepping stone was certainly digitalization of the network switch. Deployment of this type of network equipment finally allowed operators to measure how much money (both in revenues and costs) was in the international call business.

The newer network devices also allowed for increased flexibility in the routing of traffic between different partners, countries and continents. Higher availability of sub-ocean and satellite connectivity, combined with government deregulation, definitely helped as well.

When the first xDRs were finally electronically available, the fastest and cheapest way to process them was to apply some “quick and dirty” normalization scripts and load these “mediated” records into an easy to use database/sheet tool like Microsoft Access, MySQL or Excel. (These applications are still actively used for billing purposes in some smaller operations.)

The early interconnect billing pioneers could use these “crude” tools to summarize, (re)group and in the end roughly compute how much British Telecom (for example) should pay to France Telecom for calls between their networks.

At the beginning, the inter-partner agreements and services were usually fairly simple. If someone from the UK wanted to call someone in France, British Telecom routed the call directly to France Telecom. These big telcos also offered transit of the international call to other faraway destinations, so a call from the UK to China could transit through France or Germany and most probably also some additional “hops” on the way.

When the first xDRs were finally electronically available, the fastest and cheapest way to process them was to apply some “quick and dirty” normalization scripts and load these “mediated” records into an easy to use database/sheet tool like Microsoft Access, MySQL or Excel.

At that time there was still no need for any differentiation per various regional destinations or different national mobile/virtual operators and content providers. But with the enlargement of worldwide connectivity options (thanks to more interconnected telco networks and new cheaper lines) the number of reachable destinations and alternative routes became much bigger.

As a side effect, this destination increase and overall hunger for international and intercontinental connectivity brought a new kind of player into the telco arena: the pure transit operators. These “Carrier’s Carriers” with none of their own subscribers specialized in offering the best rates (and sometimes also “VIP” quality) for origination and termination of international events between other “standard” operators.

In the modern era, the pricelists that are exchanged between partners contain thousands of rates covering all possible worldwide destinations, routes and services. Depending on the business complexity of the offerings, the billing system must be able to import hundreds of these pricelists on a monthly basis from all different partners with whom there is an agreement.

Together with the volume of offered destinations, the amount of traffic that had to be processed grew significantly as well. This made the homemade VisualBasic/Excel-based solutions inadequate. They simply couldn’t cope with the more complex requirements and traffic volumes of increased interconnect trade.

The basic interconnect system had to be able to manage in automated fashion all the necessary reference data (partner info, network topology, services, destination numbers and their rates, etc.), rate the xDRs (and optionally re-rate or re-price already rated traffic) and produce hundreds of invoices as well as control invoices (that are used for reconciliation of invoices received from other parties).

In comparison to the retail billing “big brother,” partner billing generates many fewer invoices for fewer partners, but these invoices contain much higher amounts. It’s not uncommon for figures to be in the millions of dollars or euros.

Initially the allowed difference between internal control invoice and invoice received from the other partner was quite high, up to 7 percent of the whole sum. These days the expected precision of a partner billing system is much higher, from 0.5 percent to 0.1 percent. Notably, this can still represent a significant amount of money.

As expected, many software companies sprung to this challenge and delivered great products to cover the growing and later well-established interconnect billing business. In the meantime, government deregulation finally came to fruition and various MVNOs and MVNEs suddenly started to pop in the telco landscape. Thankfully usually only minor adjustments in those partner billing products were needed to accommodate the MVNO specifics requirements (mostly in the billing area) in order to handle all those different discounts and revenue share models.

As time passed, the market settled and it seemed there would be nothing truly new on the business side. There were always some new traffic types, adventurous discount schemes or special traffic reports, but these were just alterations of already implemented core logic.

But the “digital switch”, the box that allowed the initial primal rise of the interconnect business, would also cause its sidelining to new ways of dealing with partners.

The problem is that with the evolution of VoIP, mobile data, higher Internet penetration, brand new operator independent communication devices/means and opportunity (or threat) of over-the-top services (OTT), the operators need to deal with partners on different levels than just as interconnect providers.

The problem is that with the evolution of VoIP, mobile data, higher Internet penetration, brand new operator independent communication devices/means and opportunity (or threat) of over-the-top services (OTT), the operators need to deal with partners on different levels than just as interconnect providers.

Additionally different departments dealing with different partner business streams usually implemented disparate solutions for doing basically the same thing: invoicing the partner (albeit for different kind of services or revenue streams).

The initially one-purpose tool (billing for the international traffic between partners) must evolve and consolidate to be able to cover all possible partner-to-partner “telco” interactions under one software roof. It must be able to process not only interconnect and MVNO agreements, but also resellers, content providers, wholesalers and any possible combination of all these.

And what the future might bring next? Some expected the interconnect business would die a few years ago, but it is still alive and kicking, although those kicks are aimed at different opponents than before.

I would expect that, for example, VoIP will not fully kill the partner billing industry in the foreseeable future. The revenues from the inter-partner/international calls will be surely reduced, but the operators should be still able to monetize on the access to their subscriber base, together with additional services that can be offered to retail customers. Additionally, I would expect that some customers will be willing to pay higher rates for crystal clear sound and video, something that is still not fully achievable through the IP telephony.

I do not expect any significant revolution in the partner billing space, rather slow evolution towards simplification. The billing systems deployed for partner management should already be powerful enough to face future challenges the evolving technology and business ideas might bring.

Finally, as long as there are different networks in different geographical locations and various parties that need access to these networks, there will be always need for partner interactions and systems that calculate who owes what to whom. 

 
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