Operators set to gain minimum 25% uplift through OBR Rating, according to iCONX study

Operators stand to realise an uplift to their termination rates of at least 25% when they implement an OBR-compliant rating solution, according to a detailed market study conducted by Dublin-based interconnect billing specialist iCONX.

The study, conducted during 2017-18, analysed complex sets of real-world data from a representative cross section of both terminating and transit operators, in order to clarify the positive and negative finance impacts of “OBR” (origin based rating) on a telco’s business.

Hitherto, the operational ‘pain’ in managing OBR had been widely recognised by billing teams across Europe. Now, thanks to iCONX’s study, the finance conclusions are clearly apparent.

Method

iCONX employed a Before/After comparison methodology that compared billed totals both Without/With OBR rating present, across a number of months and applied to actual traffic volumes. The data was also normalised to account for factors such as reduction in MTR and volatility in call volume.

Conclusions

From this exercise, the benefits of being able to rate for OBR were clearly visible :

1.      In all cases, the adoption of OBR in-country produced an initial ‘spike’ of revenue gains, which thereafter settled to a lesser but sustainable level.

2.      Revenue gains were directly attributable to OBR in 2 areas :

a.       (1) Standard OBR : for undisputed (valid CLI) traffic, average rates uplift typically spiked at 50%+, then settled at 25%+

b.      (2) Misrepresented CLI traffic : for traffic carrying either blank, invalid or manipulated CLIs, average rates uplift spiked at 80%+, then settled at 40%

3.      Operators are now observed to be surcharging partners at a high rate wherever Misrepresented CLIs are found, and standards organisations are supportive of this practice

4.      Whereas advanced “CLI Refiling” (aka manipulated or “spoofed” CLIs) represents a formidable technical challenge to trap and surcharge, even without this capability operators can realise significant revenue gains just from correctly charging against simpler invalid or blank CLIs. This requires detailed knowledge of the World Numbering Plan and its incorporation in the rating

5.      Some countries applied OBR gradually over time to a number of destinations, whereas others applied it in a single move to their full country list; nonetheless, the phenomenon of a spike followed by sustainable uplift was observed in both types.

6.      For a handful of originating countries, which are charged with a high termination rate, traffic was observed dropping to very low volumes in the weeks after being surcharged. With total call volume not decreasing, this suggests that some non-EEA countries are masquerading as EEA originating in order to avoid the surcharge

7.      Traffic volumes continued to increase through the period tested. OBR did not – perhaps contrary to expectation - depress overall volumes or drove customers from Voice Carriers to OTT en masse.

Analysis & Comment

Commenting on the study, iCONX SME Vincent Coessens said :

“With OBR adding a stable increase to the termination rate of 25 to 40%, it looks like the strategic goal of OBR – re-balancing international termination rates via reciprocated charging – is partially being achieved.  Of course, where arbitrage exists then refiling will always happen. But whilst the operator and vendor community is working on safeguarding the Anumber against clever refiling, the rating techniques used by iCONX customers have been shown to recover a significant part of this loss”.

The iCONX billing solution enables operators to perform CLI validation at the technical level, and then supports a flexible range of billing user responses via its sophisticated and highly configurable billing software.

Vincent Coessens continues :

“Operators who prefer not to monetise Misrepresented-CLI traffic, and instead take a ‘safety first’ (Transit Carrier) or ‘quality first’ (Terminating Carrier) approach by blocking it, will still realise significant revenue gains just from the ability to bill valid-CLI OBR traffic accurately. Our study showed this is true for both terminating and transit carriers alike . Meantime, those remaining operators who lack advanced OBR capability are not only missing out on significant additional revenues – they are increasingly vulnerable to negative impacts from CLI refiling, where fraudulent carriers need to find a home for such traffic”.

iCONX also supports complex re-rating scenarios with ease. Operators who have missed the initial spike in OBR traffic value may typically find their wholesale partner agreements allow for back-billing over several months or even years.

“The spike period contains significant value, but it doesn’t finish once that period got rated. After the initial period, carriers can enjoy billing steady and significant added revenues by surcharging based on origin. If you have an opportunity to bill your partner at a higher rate, why would you not take it?”

Next steps

If you have additional questions, or would like to arrange to arrange a more detailed presentation of iCONX’s findings, please contact info@iconxsolutions.com.

Footnote : OBR Explained

Origin Based Rating (OBR) is the newly introduced practice to charge the cost of a call on a combination of both calling and called number, rather than just the called number only. This re-balancing technique, which was originally introduced by EU carriers who – due to regulatory pressure – saw their rate drop to a fraction of the termination rate in some calling countries, is now also being adopted outside of the EEA. Where Carriers may see OBR as a means to ensure that the cost for calling from A to B will be in line with the cost for a call from B to A, others see it mainly as a revenue opportunity.

 

What can we help you with today?