Posted: 06/1999

Straight Talk – Part Three
Resellers on Carrier Billing Practices

PHONE+ recently hosted an editorial roundtable with several vocal telecommunications
resellers–switchless and facilities-based–covering issues of concern from selling to
billing and from products to personnel. Their candid discussion offers a glimpse into the
real challenges faced by resellers today. We are publishing the transcript of their
conversation in segments. In April’s issue, we shared their thoughts on building and
supporting sales channels–direct and indirect. Last month, we heard some straight talk
about reselling local service. And, this month, we’ll find out what they really
think about carrier billing.

Bob Titsch Jr.: In the agent roundtable we recently published, agents talked
a lot about a degradation in service. What kind of service are you getting from your
underlying carriers?

Bob George: It’s like anything else we deal with in this business. You have to
keep them on their toes. For example, you have to review the CDRs (call detail records)
they send and make sure they’re where they should be. With every carrier I’ve got, I get
the information on a BBS (bulletin board system) and I get it on paper. If my cards are
played right, what comes down on paper is less than what came down on the BBS because
they’ve given me more minutes than they’ve billed me for. But if it’s the other way
around, then I’ve got a major problem and I’m on the phone to get it straightened out.

Titsch: Anybody else?

Jack Burk: There’s always some discrepancy. We get daily downloads. We bill. And
until about eight months ago, we didn’t have the ability to check that what I’m billing my
customers matches up with my carrier. We’re usually off between 1 [percent] and 2 percent
every month, and once you present this to them, it makes for a nice credit.

Titsch: You can do this now because of an action you took or because of
something your provider did?

Burk: Because of something we changed in our billing system.

George: When you say you’re off 1 [percent] or 2 percent, you mean to your
favor, right?

Burk: Yes.

Titsch:What did you do to change things and give yourself that capability?

Burk: We didn’t have the ability to run a cost analysis or cost figure on the
calls that we billed our customers until we upgraded our software.

Gene "Skip" Lane: We all have auditors interior and exterior to our
companies. We’ve gotten to the point where we use so many different vendors for different
services. … In one vendor’s case–one of the larger ones–we have numerous different
products, which is very laborious and taxing on our staff, but well worth the money to
check those bills and make sure the CDRs are being billed at switchless. Is it sub-CIC
(carrier identification code)? Is it dedicated? Is it carrier? What is it, because all too
often, one way or another, the minutes get put in a different bucket, which are rated
differently. And the bigger you get, obviously, the bigger the number each month.

Does it cost you? It costs you because you cannot afford not to have people who do
nothing but auditing. We’re facilities-based now, but coming from the sub-CIC environment,
we’ve always paid CABS (carrier access billing system) bills, and they were never right.
And now we’re dealing with CABS bills from 30 different LECs (local exchange carriers). If
you’re selling in a couple of different states, you’re getting bills from independent
telcos you never knew existed. And trying to audit those bills, or finding someone on your
staff who can figure out what the bill should be, is next to impossible. But you’re
talking about a lot of money. When you look at the cost of your network, it’s in access
and egress, not in the transport piece. One of the carriers we’ve worked with for years
has a product that bills us a little for access, a little for transport and a little for
egress. We’ve never been able to audit the bills since day one. Never.

Burk: We’re small but we’re editing our data bill monthly, because it’s always
wrong. Consequently, it doesn’t really reflect exactly what happened for the month at all.
Every month, we have to audit it 100 percent.

Lane: You’re talking about private lines?

Burk: Yes.

Rob Mocas: Auditing these bills is a cost of doing business. Sometimes there’s a
return to it. Sometimes there are diminishing returns. Sometimes it costs you money to
have it done. But you still have to do it.

Philip Bethune: I’m running into problems with auditing PICC (preferred
interexchange carrier charge) fees.

George: Who isn’t? That’s a major problem.

Bethune: I look at my carrier bill and I’m seeing 3 cents on my cost for PICC
fees. If you calculate the extra margin into your underlying carrier agreement …

George: Oh yeah, you know it’s there. We’re all seeing it. Intrastate PICCs in
Michigan were what, $2.40? I know it changed recently, but one customer’s business line is
$5.15. And you get these bills … whoa … some of these carriers are doing averages and
different things like that. Some of these things that have been implemented are not
supposed to be revenue generators, but they are. (Enthusiastic nods of agreement from
everybody).

I’ll tell you who’s really making out are the carriers themselves.

Burk: They’re not being billed by the LECs …

George: Exactly.

Lane: They’re being billed by the LEC at the true cost…

George: … of .53 cents or something, and they’re charging the customer $2.75
…

Lane: … and saying, "Well you didn’t tell me the difference."

George: Umhuh.

Lane: You don’t have that audit going on, stipulating whether they’re
residential ANIs (automatic number identifications), single-line business ANIs and
multiline business ANIs, which all carry a different figure …

Mocas: Or Centrex …

Lane: Or Centrex. And then you can carry that whole subject matter over to
payphone surcharges. Same thing. One carrier charges a certain number because it wants to
qualify the fee as an administrative markup. Another one wants to carry it straight
through, or pass it through to customers. Another one won’t charge it on carrier services,
but will on switchless services.

As Rob says, you have to audit your bills. It’s a cost of business. If you don’t, it
could mean tens and hundreds of thousands of dollars.

Erik Mustad: Regarding PICCs, different carriers have different charts, too,
adding another dimension or complexity to what we do as far as auditing. Also, I don’t
think the carriers have a really good feel for what they’re charging us and how they’re
going to give us credit.

George: Darts. (LAUGHTER)

Lane: The bottom line is that the more carriers you have in your portfolio, the
harder your job is.

George: Absolutely.

Mustad: In your case (Lane’s company is facilities-based), you can pay yourself
quite well, can’t you?

Lane: Would you mind coming to my next board meeting? (LAUGHTER)

Mustad: Do we all know how many good, active ANIs we have in place this month?

Lane: What’s your definition of active? PIC’ed? Working?

Mustad: Well there’s a transition time of course …

George: Yeah, that’s where the gray area is …

Mustad: If I PIC an ANI this month, will it be an active ANI or will it be
transitioned into next month? And/or will I get all the ANIs with my BTNs (billing
telephone numbers) that I’m turning on? In other words, can they justify billing me PICCs
for all of my ANIs? That’s a timing issue and a hell of a mess.

George: There aren’t any guidelines.

Lane: What’s happening is the LECs–and we see this coming through on a sub-CIC
level–are actually doing prorating on PICCs. So if you’re reselling a carrier, you don’t
see that. The carrier just asks how many lines you have and charges you $2.75–whether the
ANI was there for two days or 30 days. He (Mustad) brings up a very good point. If an ANI
at the beginning of the month was on carrier A, but moved to carrier B a week later,
you’re probably going to get two PICC charges.

Mustad: And then you get the customer calling you up, saying, "You already
charged me and *$%#@!, I don’t want to do business with any of you." So, back to
AT&T [Corp.]. (LAUGHTER).

George: And then AT&T is doing the same thing with Universal Service. You’re
aware of that, right? I called AT&T and said, "Listen, I don’t have AT&T.
We’re a long distance company." But they’re charging me $1.85 per line? That is going
to be such a gold mine for AT&T. You talk about found cash. They’re going to make so
much money off of residential business. People are going to see AT&T, $1.85, Universal
Service fee, and even though they don’t have AT&T, they’ll say, "Oh, it’s the
phone company." That money is going to add up so quick.

Titsch:It’ll be just one fee out of 12 …

George: Oh my God, yes.

Bethune: I had that billed on my personal phone bill, so I called AT&T and
told them I hadn’t had their service forever …

George: Well first you have to listen to their recording explaining why you’re
being charged. Then if you want to go past that, then you go to the next stage.

Bethune: And then they just credit it back. It seems to me they just
bill their entire database.

George: Oh yeah. Anybody that has ever had an AT&T line.

Burk: Are all the carriers billing for a database-only entry PICC?

George: A database and they’re charging you a PICC?

Burk: One of my carriers did, yes.

Lane: Well it shouldn’t happen. The carrier is not incurring any cost
whatsoever. PICCs are supposed to be passed through. Some of the carriers are saying
they’re going to pass it through, plus a small token administrative fee …

Burk: One of my carriers has tried to get away with that and I’ve been meaning
to holler at them.

Mocas: For example, if there was no PIC on a line, the Bell company would still
bill the PIC.

George: Yep. They’ll charge you. How about payphone compensation with the
different carriers and what they’re charging?

Lane: It’s all over the map.

George: I have a question: Have many of you had a long distance customer change
to one of the local CLECs and all of a sudden their long distance was changed to that
carrier too? I had a customer that told the CLEC he did not want to leave Discount Long
Distance, but it happened. I told the state of Tennessee they can call it what they want
but that’s slamming.

Burk: Brooks is famous for that.

George: Oh yeah, big time.

Burk: I run across this 10 or 20 times a day and it’s Brooks Fiber every time.

Mocas: Yes, it happens, there’s no doubt about it.

Mustad: Actually, I’ve seen some of the reverse of that, because of WorldCom’s
acquisition of Brooks, and now the MCI integration. We’ve had former customers come back
to us because they were PIC’ed back over.

George: Yeah, we recently had that happen with a customer we hadn’t serviced for
five years. You can bill it and they’ll pay it, though. Is this a great country or what?
(LAUGHTER).