Opcenter: Wholesale Billing Turns on a Dime

Posted: 05/2000

Wholesale Billing
Turns on a Dime
By Peter Lambert

Patent leather may do the trick on the dance floor, but it won’t cut it for the sprints, sudden stops, leaps and
pivots required on the basketball court.

So it is for carriers’ carriers of data and telephony who find themselves fashioning staid retail billing systems into the right tools for keeping up with the sudden and unpredictable shifts in an increasingly cutthroat commodity wholesale business.

Thanks to global deregulation, the number of competitors has exploded during the past few years among long-distance wholesalers and resellers, Internet telephony arbitrage players, data backbone providers and local access providers. More than ever, the PSTN and the Internet have become networks of networks, bringing about constant rate wars and ever more complex provider-to-provider selling and buying relationships.

In the face of such change, wholesalers are struggling to keep up in the back office as well as the front office and often find little in the form of off-the-shelf products to do so.

“As we evolve, we’re doing more billing development in-house,” says David
Parrack, director of network accounting services for global carrier Williams Communications Group Inc.
(www.williamscommunications.com), whose business plan is wholesale only.

“There’s more recognition of wholesale needs among billing vendors than there was two years ago because of the emergence of next-generation carriers like us,” Parrack says. “But most billing systems’ original genesis was in retail, and sometimes critical functions are missing or lacking.”

In general, the primary goal of billing systems for retail carriers is to generate a high number of invoices that accommodates service bundles, discounts and marketing materials, he notes.

In contrast, even the largest wholesaler may have to generate only a few score invoices.

Parrack says, “In wholesale, a lot of the processing instead must be devoted to millions or hundreds of millions of call data records processed for a limited number of customers. The main job is not invoicing but rather rating.”

Although billing server hardware costs continue to roll down the microprocessor improvement curve, achieving speed and scale in the processing of call records still presents other challenges.

“The issue is how efficiently and quickly I get information on and off of disk space,” says Parrack, who notes that most of Williams’ in-house billing system development has been devoted to rate administration. “A lot of reads and writes to and from disk space slows you down, so we’ve sought to minimize that with methods for what you store in memory and what you store in hardware.”

Because rate matrices are too complex for GUI representation, Williams sets up tables and uploads them to an Oracle Corp.
(www.oracle.com) relational database running the rating system.

Newer wholesale billing systems like EDS Corp.’s
(www.eds.com) Carrier Trans-port system are being designed to support such table-driven, contract-specific rating.

Rapid Entry

In addition to requiring speed in call data record (CDR) processing, wholesale billing systems need to accommodate dynamic and rapid entry of changes in the rates themselves. This requirement has become extremely urgent in international long distance.

In that environment, each wholesaler must track a high volume of CDRs, the constantly changing costs of access to each country and the sudden shifts in competitor rates.

“If one of my competitors in Germany lowers his rates, I can’t sit and watch,” says Bob
Deily, executive vice president of finance and management information systems for Swisscom North America
(www.swisscom-na.com), a subsidiary of Bern, Switzerland-based international wholesaler Swisscom AG.

Graphic: A Question of Balance

“You can have just a few destinations or customers creating a huge impact on your total traffic, so speed is what’s critical, because if you don’t respond quickly, you’re exposed,” Deily says.

The tit-for-tat rating game runs both ways.

“If my rate goes down, all of a sudden all our customers start to send all their traffic our way, so you really need to plan for peaks,” Deily says. “We’ve seen volume double or half in a day’s time, and that certainly has an impact on disk space for CDRs, processing speed and other elements of daily processing of bills.”

Swisscom sells transport over its own network across 300 international destinations, but to complete links from caller to the one receiving the call, it also buys wholesale capacity and services at the egress and ingress points of its networks.

“You’re buying from someone else in a lot of those spaces,” Deily says.

In other words, wholesalers are challenged to gather and analyze constant intelligence on the cost of every route in their networks and to reconcile those costs with the rates they charge. All those factors are moving targets, particularly in data services, which involve more complex interconnections than are required to complete a circuit telephony call.

“In telephony, it has been mainly an event volume challenge,” says Becky
Dancy, director of solutions consultants for Swisscom’s billing supplier Intertech Management Group Inc.
(www.billingsoftware.com).

“However, in a private data service, I may be selling some of it on my own network, plus I’m buying destination network ports,” she says. “With wholesale, I need to tie together all the bit pieces to find out if I’m making money.”

Moving Targets

If these bit pieces remained static, a wholesaler’s life would be easier than it is.

Yet, because other carriers often control such factors as the wholesale of long distance or local switching, ATM or frame relay circuits or DSL access, or for 800-number, operator, caller name delivery or other higher level services, anything is subject to change.

“At the retail level, you may have many plans and discount methodologies, but the rating algorithms are relatively straightforward, amounting to cents per minute, and a monthly cycle,” Parrack says. “In contrast, we have to de-couple access charges and egress charges from the transport charges on our own network, so the algorithms are complex. Add that complexity to the sheer volume of calls to process, and you need a very robust rating system.”

Tying the bit pieces together is necessary to assess cost-revenue equations and to rate each internetwork call.

Although the billing system requirements don’t add up to “rocket science,” keeping track of a single user across network boundaries amounts to a unique and critical system function, Dancy says.

“If I have to buy circuits on both ends of a call, I may have Ameritech on one end with its circuit ID, Bell Atlantic on the other end with its circuit ID, and I and my customer each have our circuit IDs,” she continues.

“In the end, I have to resolve those and provide information to my customer in a form that he can reconcile with his own accounting system,” Dancy says. “The question is ‘How do I figure out whom I charge this record to?’ and the answer has to include how that user is guided through the appropriate rate.”

This complexity is intensified by the need for wholesalers to offensively or defensively change those rates two, three, six or even more times per billing cycle. At the same time, the biller must be able to document the changes to a small but sophisticated set of customers watching their costs.

“There are disputes, especially because rates change so rapidly,” says Swisscom’s Deily. “Generally, we’ll get the supplier invoice, then pull from the database on the same date range, and occasionally, we need to drill down to the individual CDR.”

At the wholesale level, few disputes can be described as piffling.

“When operators are not happy with each other, a single dispute can add up to lots of money,” says Daniel Hunter, business consultancy director for EHPT Inc.
(www.ehpt.com and www.ehptus.com).

EHPT responded to deregulation, particularly in Europe, by introducing its first separate wholesale billing product in 1998.

“Our system is very heavy on auditing. There are instances where carriers have pushed quite hard on other carrier charges, and if the other carrier can’t document them, it can be a loss of millions of dollars,” Hunter says. “To keep their customers happy, retailers may just write off a percentage of disputes as small losses, but for wholesalers, the ability to track what was rated for whom and how has to be exact.”

Making It Dicey

For IP telephony wholesalers, the reconciliation challenges can become dicey since such carriers also must document service performance, which remains a point of contention in IP.

Earlier this year, IP carrier iBasis Inc.
(www.ibasis.net) introduced SLAs with guarantees of network availability, delay and other factors that go into IP transmission quality on behalf of their retail
customers.

To make good on those guarantees, iBasis monitors those parameters from its central network operations center and compiles call completion ratio and other records.

“Older billing systems have been geared to a billing cycle, but going forward, there is a need for tracking IP transactions on a more near real-time basis,” says Phil Mutooni, iBasis product manager responsible for back-office development.

For
nontime-sensitive applications like e-mail and web browsing, ISPs traditionally have undertaken peering arrangements with one another that involve no exchange of dollars–only agreements to pass each other’s traffic reciprocally.

“But with voice over IP and other
quality-of-service-based applications, if we can’t bill, there’s no point in exchanging traffic among carriers,” Mutooni says. “With voice over IP, if there’s congestion where we peer, there has to be accountability on both sides, and you can’t wait for the end of a flat-rate billing cycle to resolve that.”

While iBasis has gotten along with a relatively simple, spread sheet-based rate management system developed in-house, he says, the carrier recently selected Danish billing supplier Belle Systems
(www.bellesystems.com) as a strategic partner to help develop a system robust enough
to manage the launch of more ser- vices, such as prepaid cards and unified communications.

“We were looking for a strategic partner, rather than simply a vendor, that would work closely with us in developing billing services down the line,” Mutooni says. “For us, the billing system is a service creation platform that allows us to deliver new services that others cannot.”

Swisscom anticipates similar growth and challenge in IP wholesaling.

“In IP, we have our own network in Europe, and then we have dollar-free peering deals in the U.S. and elsewhere,” says Deily. “But upstream IP is coming: where somebody can’t take IP traffic coming in from us, but needs us to get into Europe, we’ll develop transit deals. For now, the bread and butter is international long distance, but it won’t be the growth business that it has been.”

Business to Business

In a wholesale environment, creating such services will have to integrate some measure of supply-chain management, and in the Internet world, that amounts to business-to-business commerce, says Read Ziegler, chief marketing officer for outsourced billing supplier Derivion Corp.
(www.derivion.com).

A DSL carrier, for example, might partner with building owners that own and operate their own access equipment and provide broadband access as an amenity to tenants.

Each party’s billing system has to become an extension of the other’s.

“In business-to-business, bills are longer and more complex, and they include the need to break down by cost centers, as well as to break down levels of authority to access the system,” Ziegler says.

In a world of alternate routes over an increasingly dense matrix of inter-networks, that analysis must extend to route-by-route costing–a requirement that stretches the functions of traditional billing systems.

“Generally a wholesale database holds a lot of information on networks and where calls are routed, to help the carrier understand where he’s making money, and to help determine the most profitable path through his network,” Hunter says.

“There is a point at which a lowered rate will create losses, so a carrier needs to know where this point is today, since constant changes in how much of a cut someone else is taking from each call, a factor that causes that loss point to change constantly. “You just don’t have that challenge in retail,” he says.

Dancy adds, “In retail, the biggest challenge is presenting an accurate, timely, easy-to-read bill with promotional material, but wholesalers are not interested in pretty marketing messages, or even in simplicity. They need financial information on paper and in file format that they can use for both reconciliation and for analysis of their business operations and costs.”

Peter Lambert is features editor
for PHONE+.