Deploying advanced number management analytic tools and sophisticated near real-time reports, iCONX announces upgraded protection for international carriers looking to combat ‘cherry-picking’.

International carriers face a daily dilemma – how to tame their master numbering plans and keep them to a size and complexity that’s manageable, yet still ensuring sufficient breakout granularity is in place to avoid being “cherry-picked” by trading partners.

Whilst all carriers have seen positive trading margins squeezed over time, the risk of an expensive and dramatic loss is still as acute as ever.

Now thanks to iCONX, enhanced protection is in place – but exactly what is cherry-picking?

Cherry-picking

At the very highest level cherry-picking simply means “being selected” or pinpointed by partners to route their traffic. Most of the time, to be selected is highly desirable and good for business, as long as a positive margin is being achieved.

In its negative sense, unwanted cherry-picking refers to exposing oneself to a negative margin, most commonly triggered if one is offering a ‘blended rate’ to a destination that’s highly-priced. In such a scenario, and with every voice minute losing you money, the more traffic you carry – the bigger the loss.

Hence there exists a critical requirement to identify and shut-down loss-making offers as soon as they occur. Better still, predict in advance on which destinations such a risk exists, so that pricing can be adjusted promptly before losses occur.

This advanced predictive capability is the key deliverable in the latest iCONX anti cherry-picking tools.

Blended rates explained

In the case of carrier rates, it is often the case that the destinations defined by the carrier in their rate list do not precisely correspond with the destinations as defined in the operator’s own master code list. An important function performed by the RO (routing optimisation) system is to reconcile these differences by using an appropriate costing methodology.

Therefore the iCONX system allows the user to assign one of the following costing methodologies to each routing table, to be applied in cases when a carrier’s destination definition includes more dial codes than the operator’s own code list:

  • “Maximum rate” – the system will apply the maximum rate quoted by the carrier.
  • “Blended rate” – the system will calculate a blended rate determined by the proportion of traffic that is sent to each dial code that is included in the destination.

Of the two, the “Max-rate” approach is the safer option. However this can be problematic from a commercial point of view, because re-selling from the highest possible costbase is unlikely to attract much traffic in a price-sensitive market. Hence it is common for carriers to go with the other option and apply a “blended rate” which generates a selling price that’s low enough to attract more traffic, and accepts a certain risk that margin may be lost on a minority of sub-destinations, but gained on a majority of others, in order to achieve an overall margin that is positive.

Whilst this is a valid strategy, offering a blended rate opens up a degree of commercial risk and in turn the issue of management controls for protection.

Exposed by destination

This potential exposure is compounded when an operator chooses to offer a highly summarised destination, such as “Germany mobile”, or even at the full country level without even featuring a fixed/mobile breakout (eg. “Austria”). Such a destination must then be priced correctly to adequately cover the supplier costbase on each of the additional, hidden sub-destinations (eg. “Austria mobile”, “Austria premium 2”) which the supplier may break out to, even if you do not. At month end you’ll need to pay that supplier for the true costs of termination against their more granular destinations. By which time your own revenues may or may not cover those costs. If not – then a loss has just been created!

The typical patterns requiring extra vigilance involve :

  • any destinations that are high-cost

and/or

  • wherever a wide variation in price exists between those destination breakouts.

These are the scenarios which other carriers will try to target in your business. If they spot you offering a blended rate that’s much lower than some part of the destination mix, then the rival carrier’s LCR system will flood that traffic to you – and deliberately put you in a loss-making scenario.

Protection is at hand.

As a first line of defence, iCONX minimises the element of guesswork from setting a blended-rate advantageously. Using real, historic data the system analyses and predicts the expected traffic mix in great detail so that we can understand our potential exposure to the highest-cost destination breakouts our supplier is offering.

The next requirement is to identify every scenario where our own destination list is different to that of our supplier(s). In theory this sounds simple – however any international carrier will have hundreds of commercial ratelists, and several hundred supplier ratelists/codelists also. So as a manual task, this is daunting and would be almost impossible to manage without an automated number management analysis tool.

iCONX Master Number Management Module

In the iCONX Master Number Management Module, you can easily analyse your commercial and switch/routing code lists against all of those received from all of your suppliers and with configurable alerts/alarms. This provides instant visibility where you may want to include any carrier terminating code definition (with a much higher price) that is not already defined in your numbering plans.

The iCONX Master Number Management Module allows you to:

  • Compare your Master code definitions that differ from those of all of your supplier definitions
  • Configure multiple Master Code List Types (e.g. National, international, mobile etc)
  • Analyse the ‘differences’ based on high volume traffic/ code price
  • Prioritise and select which additional code breakouts you choose to add to your master code lists
  • Easily add / load the selected codes to your relevant Master Code List Type
  • Instantly update your code lists – and protect yourself commercially
  • Synchronise with other Master Code Lists, e.g. Switch Code Lists for Routing to avoid any further exposure

Predictive capability

Typically, updated carrier ratesheets will be future-dated, such that both code changes and price changes will be received having +7 days notice. Terminating code and ratesheets can be immediately loaded into iCONX, but with a future “active from” date assigned. From that, the iCONX system will detect and alert where there is possible future exposure based on future analysis dates. This ensures that the iCONX costbase takes the real cost for any highly priced specific terminating code, as opposed to a blended rate based on previously defined switch and or/commercial Master code list definitions.

Rich reporting power

A full suite of alerts, alarms and near real-time reports are available to ensure 24/7 vigilance against the risk of cherry-picking. Our focus is always to provide such detailed end to end visibility to enable you to manage your commercial and routing code lists more easily, reducing exposure and protecting your business for voice termination.

The future

In a future article, we will explain the new risks carriers face through “origin based” cherry-picking created by the recent innovations in origin based rating (eg. Anumber surcharges).

For more information please contact info@iconxsolutions.com.