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March 1, 2006
By Tara Seals
accounts for a large portion of expenses and revenue for traditional wholesale carriers, the game of keeping these systems up-to-date and reducing complexity is well-known and played often. But as voice margins decline, operators are looking to deploy IP data services, like interactive gaming, music and videos, making for more dynamic and complex partner relationships, and a diverse back office. For traditional wireline voice providers, this shifting playing field can mean: Do not pass Go, do not collect $200.
To make sure they end up on Boardwalk and Park Place instead of the low-rent district, carriers can plan for the new requirements and obstacles that rolling out new services will mean for their interconnect business. Among these challenges are integrating systems for centralized data management, ensuring resource allocation for bandwidth-intensive services, implementing new billing procedures, enabling end-to-end visibility in partnerships and keeping an eye on revenue assurance.
With wholesale voice in decline, this has led to competition, pressure and traffic growth along with razor-sharp margins. Thus, taking advantage of rate changes, trading minutes effectively and managing partnerships to take the cost out are the top priorities as it concerns legacy services. But these have little applicability when it comes to rich data services. Historically, managing interconnect has been relatively easy because its been tied to nailed-down circuits, says Sanjay Mewada, vice president of strategy at NetCracker Technology Corp., an inventory management vendor. But it gets uglier and uglier with things like VoIP and broadband wireless. Now, youre measuring packets as opposed to minutes, and packets get bounced around the network and across geographies. And while all that is happening, carriers must source content and rich-media services, which can change every day. So the new interconnect question becomes, how do you manage all this? Given the changing marketplace, sourcing services, content and connectivity translates into dealing with Layers 1 through 7, not just 1 through 4 anymore.
Thus, carriers now are looking at a broader range of functions to fulfill interconnect requirements, leading first and foremost to a need to integrate, says Hassan Iftikhar, vice president of product management at Intec Telecom Systems plc, which offers a range of solutions for wholesale trading, routing, mediation, measurement and billing. A lot of functions now necessary are already there, but managed by different systems and departments, he notes. There may even be an internal manual exchange of data. Integrating systems into a holistic wholesale solution to manage the next-generation business gives operators an advantage in rolling out new services faster. You must get the right data to the right people at the right time.
Although interconnect is potentially a big cost, its also an enormous revenue driver. But whoevers in charge of signing and adding new partners needs to look at the true costs and revenues. There seems to be a blind spot in adding new services in terms of the associated cost.
Integration can be tamed by consolidating to one interface instead of disparate ones for each component, says Kerbey Altmann, director of VoIP systems at service management company Sigma Systems. For operators wrestling with a new infrastructure, it becomes a looming issue, technically and operationally. But thats one of the things IMS and OSS standards are all about.
Also, one input and database to feed that range of OSS components is becoming a critical interconnect need. In an applications-oriented world, the subscriber becomes the account focus rather than siloed services tied to a phone number. This rise in complexity is potentially a giant obstacle for traditional carriers, but a centralized ID management strategy can give them a Get Out of Jail Free card. You typically have two-to-four individual access points in an account; phone numbers and IP addresses, says Mewada. And you now have content and data delivered across all of these from a variety of sources; carriers want to consolidate this information on one platform with one account point to track usage, but also licensing and intellectual property rights. You cant just think about circuits anymore.
Network inventory platforms also can address the need for a complete subscriber picture. When it comes to IP services, you need to track who is the subscriber, what are the devices involved, whats provisioned from who and whats billed, says Preston Gilmer, vice president of product marketing at Sigma Systems. A central repository for that data enables troubleshooting, diagnostics and optimization. If you dont have a subscriber-based service-to-network view, you dont stand a chance going forward.
End-to-end OSS automation is part of the challenge too. It takes deployment knowledge and experience along with management and consulting, says Gilmer. You have to get people to work together and map out processes. You can have the best software in the world, but if you dont have the operations down, thats meaningless. Especially when were talking about two-way broadband-enabled services nothing exposes operational weaknesses more than the inability to meet third-party requirements. You need to streamline those partner interactions more so than ever before.
Historically, managing interconnect has been relatively easy because its been tied to nailed-down circuits. But it gets uglier and uglier with things like VoIP and broadband wireless.
Aside from a need for automation, partnership management in the IP world goes beyond the traditional rate negotiation and tracking to include resource commitment, coordination and auditing. You must keep a close eye on the partner relationship, says Mewada. For one, you must ensure there are the underlying resources required to fill order requests to partners, and provide visibility to what youre contracted for and for how much. Its an emerging challenge. Its not a huge market now, but it will be going forward as bandwidth needs increase.
Then, of course, theres billing. Cycle times become critical as IP-related services and content continue to be rolled out. Users want real-time service delivery and account changes when it comes to applications and a carrier cannot afford for it to take weeks to register changes in the interconnect system. The problem is that carriers bill monthly, while content providers insist on weekly, and sometimes daily, payment.
All these new services mean there are apples and oranges in the accounts, says Nick Milner, CMO at revenue-assurance vendor Azure Solutions. Its very different when it comes to content and applications, where you settle with partners before you even get a retail bill out. You may have users consuming thousands of downloads, and the partner wants payment. Then there may be disputes, but youve already paid. So you need a true end-to-end picture. And ideally you would have the system running on dummy data before you turn up a new service.
Otherwise, interconnect charges can create a huge revenue hole. You must build an audit system around the use of resources, says Mewada. Have the physical infrastructure, but you should also have a logical soft process. Once Sarbanes-Oxley came around and revenue assurance became important, it turned out that interconnect is a big leakage bucket. If you are growing out of control, and thats 10 [percent] to 12 percent per year, be assured you are leaking revenue due to interconnect because of the lack of synchronization between the resources committed and the resources used. You must align processes and get the right OSS in place so you can fix it as it evolves to high-end services.
Visibility is another key to winning the new interconnect game. Although interconnect is potentially a big cost, its also an enormous revenue driver, says Milner. It is often the second-largest paycheck after retail-billing. But whoevers in charge of signing and adding new partners needs to look at the true costs and revenues. There seems to be a blind spot in adding new services in terms of the associated cost.
For example, a carrier launching domestic VoIP and charging a flat fee may not be prepared for users calling international numbers, even if its a domestic service. So the carrier gets stuck with termination charges, and meanwhile theyre charging the consumer a flat fee, says Milner. You also have to ensure that they have a full end-to-end picture to guarantee the margins. Thats always been true with calls, but content and other types of services, as we go forward into the next generation, will be more challenging.
For instance, SIP-based applications, like video conferencing, are on the rise, which the operators likely will not host on their own. Often youre layering on an application from a hosted provider and you need an interconnect gateway, says Gilmer, how do you ensure that provider knows what services go with each sub? And what if the ASP is servicing multiple service providers? You need a product-to-service matching of order information between the third party and the network operator.
Despite a plethora of coaching, the evolution to IP-based applications is likely to present a learning curve when it comes to interconnect playing field. Best practices in some ways are postmortem, says Mewada. When it comes to interconnection for the next generation, they are evolving now, and we dont yet have a body of knowledge to dissect. All we really know is that interconnect will get more complex, not easier.
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