For a long time, “interconnects” have been a dominant consideration for those in the telecom business. Interconnects allow telecom and mobile network operators worldwide to bring together and share networks so their customers could continue their communication without worrying about the network boundaries. Interconnects are relevant for fixed, mobile, and internet services.
While sharing networks in this manner, telecom operators follow different ways of billing. Some of the common ones included:
- Revenue sharing
- Price sharing
- Fixed and variable charges
Many more approaches exist, driven by specific needs and prevalent conditions!
A typical interconnect billing process involves raising an interconnect invoice where the incoming interconnect call detail records (CDRs) are sent to the interconnect partner. The billing is settled between the network operators involved in carrying calls and is finally reconciled by exchanging the CDRs with each other. This is big business too as telecom operators were able to generate 50% of revenue from such arrangement.
This arrangement has largely been working well for a while now. However, the landscape has now started changing with new players entering the space due to low barriers and low-profit margins. Additionally, the industry is undergoing a major transformation with many carriers moving to next-generation IP networks for reduced technology costs and the ability to introduce new products frequently.
The technology transformation and increasing competition have brought in several complexities that interconnect billing solutions must solve.
Challenges That Interconnect Billing Solutions Must Solve
Let’s look at some of the common challenges that telecom operators and partners face and what they can do to fix them.
- Competitive pricing
Typically, operators sign an interconnection agreement that discusses the settlement fees, schemes, and schedules of payment based on call source, destination, duration, etc. The operators would abide by the agreement and be able to earn fairly predictable revenues. However, new entrants have threatened this system by offering cheaper routes and re-negotiating offers and rates frequently.
Solution: The operators and their partners can use a good interconnect billing solution to re-rate their revenues accurately and achieve settlement on time.
- Billing inaccuracy
Revenue leakage is one of the primary concerns of telecom operators. Inaccurate rating calculations and errors in classifying traffic are major reasons due to which operators face a tough time during the settlement process. It leads to unnecessary disputes, issues and delays in revenue realization, and cash flow problems.
Solution: By using a good interconnect billing solution, the operators and their partners can prevent revenue leakage and ensure that billing is accurate. The solution should be able to ensure there are no disputes in settling. This encourages the partners to pay on time.
- Mismanaged costs
Another problem that operators face is to do with overcharged invoices. Very frequently the partner bills carry overcharged pricing. Sometimes their invoices have low-level errors that go unnoticed. However, when there are many invoices and when these invoices carry hundreds of lines, it’s almost impossible to check each of them for accuracy. This leads to the operators unduly paying large sums to the partner.
Solution: Operators and their partners must use an end-to-end fully automated interconnect billing solution to spot errors in invoices immediately and fix them to manage costs efficiently. They can also create customizable invoices for every provider based on the agreement.
- Operational inefficiency
Interconnects are multi-functional as they cover aspects of product management, commercial negotiations, streamlining processes, and billing and finance. The operations can be inefficient if all these functions operate in silos.
Solution: The only way to solve this problem is by automating the entire interconnect billing system. This will encourage the different functions to collaborate and provide them the platform to do so. This will help update rates, reconcile efficiently, and improve operational efficiency. It will also enable the operators to create customized reports to analyze revenue and monitor traffic.
Additionally, while considering the “must-have” features an interconnect billing solution must offer, operators should look at:
- Flexibility to include new products and offerings into the system for future billing
- Access to rich information that can be leveraged to make data-driven decisions about all aspects of interconnects and improve profitability
- Ability to monitor agreements in real-time and alert the operator immediately in case of violation. This will ensure that the relationship between the operator and the partner is not threatened in any way
- Ability to quickly verify invoices and reconcile them. It should also have a system to fix any discrepancies in the invoice to prevent any future discrepancies
- Ability to track margins and provide accurate information about the true value of an agreement by calculating the revenue or cost of traffic with and without considering the agreement rates
The complex nature of billing, shrinking margins, and cutthroat competition have made it necessary for operators to spend more time updating their billing systems and less time on innovation. To reduce unnecessary complexity, streamline their processes, and free up their bandwidth operators may want to consider outsourcing the interconnect billing process to a credible managing services provider.
So, while the managed services provider manages the billing process, the operators can focus on addressing challenges such as building stronger relationships with their interconnect partners and earning better revenue and margins by fixing the best rates and best routes.
At Globe Teleservices, we offer managed services to help telecom companies operate all aspects of their telecom business smoothly. From billing to accounting to fraud control, we manage all of it with an SLA commitment of 99.999%. Our deep experience in the telecom industry helps us understand our clients’ needs and implement different solutions across geographies and cultures. That’s essential to understand the interconnect solution.