Analysys Mason RMA03 Interconnect and Partner Billing Jan10

8/9/2019 Analysys Mason RMA03 Interconnect and Partner Billing Jan10

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© 2009 Analysys Mason Ltd. All rights reserved worldwide.

Outlook

Interconnect and Partner Billing

Peter Mottishaw, Teresa Cottam and Larry Goldman

January 2010

Program: Billing & Customer Care


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Outlook

Table of contents

© 2010 Analysys Mason Ltd. 2

Table of contents

Executive summary ...................................................................................... 4

Market Share ............................................................................................... 6 Forecast ....................................................................................................... 9

Forecast by communications service ................................................................... 9

Forecast by region ............................................................................................. 10

Market drivers and inhibitors ...................................................................... 13

Drivers ................................................................................................................ 13

High mobile subscriber growth .................................................................................... 13

Declining voice revenue and drive for cost savings .................................................... 14

Proliferation of non-telecom partners .......................................................................... 15

Bill disputes are increasing.......................................................................................... 16

New complex IP-based services ................................................................................. 16

Just-in-time buying and selling of capacity .................................................................. 18

Infrastructure sharing .................................................................................... .............. 18

Rate proliferation and change ..................................................................................... 19

Business inhibitors ............................................................................................. 19

Inertia combined with other priorities .......................................................................... 19

Lack of expertise ......................................................................................................... 20

Partner settlement projects are low in budgeting priority ............................................ 20

Business environment ................................................................................ 21

Interconnect settlement ...................................................................................... 21 Roaming settlement ........................................................................................... 23

Content, appl ication and advertising revenue share .......................................... 25

Buying an entirely new system .................................................................................... 26

Buying an adjunct system or module from existing interconnect or retail billing supplier

..................................................................................................................................... 26

Building a solution in house......................................................................................... 26

Outsourced service ..................................................................................................... 26

Market definition ......................................................................................... 27

Partner and Interconnect Billing Definition ......................................................... 27

Interconnect billing ............................................................................................. 31 CABS billing and reciprocal compensation in the US market ..................................... 33

Roaming billing .................................................................................................. 34

Content and application partner billing ............................................................... 35

Vendor summaries ..................................................................................... 37

Amdocs .............................................................................................................. 37

Comptel .............................................................................................................. 37

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Table of contents


Convergys .......................................................................................................... 37

Ericsson ............................................................................................................. 37

I-ConX ................................................................................................................ 37

Intec ................................................................................................................... 38

Oracle ................................................................................................................ 38

Sitronics ............................................................................................................. 38

Subex ................................................................................................................. 38

Telarix ................................................................................................................ 38

Valista ................................................................................................................ 39

Partner billing suppliers .............................................................................. 40

Recommendations ..................................................................................... 42

Recommendations for CSPs .............................................................................. 42

Recommendations for vendors .......................................................................... 43

List of figures

Figure 1: Partner settlement forecast ....................................................................................... 4

Figure 2: Partner settlement market share .............................................................................. 6

Figure 3: 2008-2013 Partner settlement forecast .................................................................... 9

Figure 4: 2008-2013 Partner settlement forecast by communications service ...................... 10

Figure 5: 2008-2013 Partner settlement forecast by region................................................... 11

Figure 6: Industry convergence.............................................................................................. 25

Figure 7: Partner and interconnect billing in the Analysys Mason segmentation .................. 27

Figure 8: General partner and interconnect scenario ............................................................ 28

Figure 9: Interconnect scenario.............................................................................................. 31 Figure 10: Mobile roaming scenario ....................................................................................... 34

Figure 11: Content and application partner billing ................................................................. 35

List of tables

Table 1: Comparison of partner and interconnect billing suppliers ........................................ 40


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Outlook

Executive summary


Executive summary

A customer for telecom services has a contractual relationship with

a given communications service provider (CSP) who bills the

customer for services used. In the simplest case the CSP providesthe service – a call within the CSP‟s network for example – but in

many situations the service will require other service providers to

provide some of the service. Settlement is the process by which the

CSP who bills the end customer pays the other service providers

and third parties for their part in delivering the service. Interconnect

and partner billing software systems have evolved rapidly to

automate this settlement process.

Interconnect settlement software systems enable CSPs to

accurately record the volume and value of traffic (primarily voice

calls) that cross their network borders. CSPs terminating incomingtraffic from international destinations are able to claim a share of the

revenue from the originating CSP. Partner settlement software

systems provide equivalent capabilities for non-telecom partners

who provide content, applications and other services. This is the

fastest growing part of the partner and interconnect billing segment.

Figure 1: Partner settlement forecast

We identify three major areas of partner and interconnect

settlement;

Call termination settlement

CY2008 CY2009 CY2010 CY2011 CY2012 CY2013

Partner (CAGR 7%) $418 $428 $448 $486 $528 $575

$-

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$200

$300

$400

$500

$600

$700

$ m i l l i o n s

Source: Analysys Mason


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Executive summary


Mobile roaming settlement

Partner settlement with content providers and other non-telecompartners.

Call termination settlement is required when a call is made from one

CSP's network that requires termination on another CSP's network.The originating CSP will bill the end customer. But it will be required

to pay one or more CSPs involved in the termination of the call. This

is the oldest settlement area, which has grown dramatically in the

last two decades with the deregulation of telecom markets and the

proliferation of mobile CSPs. It is now a mature area, but the

magnitude of the settlement charges (a significant percentage of

many CSPs revenue) creates opportunities for optimization of the

settlement infrastructure and process. Most call termination

settlements have been provided by third-party clearance companies,

but CSPs are starting to deploy their own platforms to supportsettlement with major partners.

Mobile roaming settlement is required where the CSP subscriber

has roamed to another CSP and makes a call. Unlike interconnect

where settlement is usually performed by the CSP, settlement for

roaming calls commonly involves a clearinghouse or exchange such

as MACH or Syniverse. There are two main types of clearinghouses

used by mobile CSPs: data and financial. Some CSPs use

clearinghouses to exchange roaming data but prefer to settle

directly using their own settlement solution; others choose to

outsource both data exchange and settlement to a clearinghouse.

Partner settlement for service and content provided by non-telecom

partners is a rapidly changing and strategically important area. In

order to compete as mobile broadband is rolled out, CSPs need to

offer content, social networking, web 2.0 services, advertising,

search, location, gaming and other innovative services. There are

established internet and media companies that CSPs must partner

with to deliver these services. CSPs must also attract smaller

innovative partners to meet customer expectations. Partner

settlement systems address these types of relationships.


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Outlook

Market share


Market share

The market share for interconnect and partner billing is shown in

Figure 2. The overall spend was $418 million in 2008. The top six

suppliers account for 43% of the market. This is a fragmentedmarket with the major billing vendors having the most significant

market share. Intec is the market leader with 14% market share

followed by Amdocs with 10%, Subex with 5%, Ericsson with 5%,

Telarix with 5% and Valista/Aepona with 4%.

Figure 2: 2008 Partner settlement market share


Intec is the long-time leader in this area by virtue of its strong

position in traditional interconnect billing. It has expanded its

product set largely by acquisition to add a range of capabilities

including carrier access billing systems (CABS). It has integrated all

of it‟s interconnect billing, trading, routing, partner settlement and

management products into the wholesale business management

solution (WBMS). While no vendor is yet able to offer a completeend-to-end solution for partner management and settlement, Intec is

now articulating a coherent, convergent vision of telecom partner

management with WBMS and is well placed to take advantage of

growth in this market.

Amdocs is the leading supplier of CSP bill ing solutions globally.

Amdocs Partner Settlement Solution, based on Amdocs Partner


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Outlook

Market share


Manager, provides support for convergent partner settlement

including interconnect, roaming, content, digital advertising, MVNOs,

wholesale and dealer settlement. Amdocs Partner Settlement

Manager is a stand-alone product for managing the partner lifecycle

from registration to financial settlement and is part of the Amdocs

CES portfolio. In addition to settlement, the solution also providesself-care and self-registration for partners, agreement management

and product and service management. When combined with

Amdocs QPass, Amdocs Partner Manager forms an end-to-end

digital commerce solution that provides support for a large number

of partners and potentially complex settlement arrangements. When

combined with Roam Clearing Manager the solution can be

extended to enable CSPs to in-source roaming clearing.

Ericsson is the leading network equipment supplier to CSPs globally

and a major supplier of software solutions. Ericsson's product set

derives from its own products such as the Ericsson Roaming Billing

Solution and Multimedia Brokering (IPX), as well as functionality

derived from its acquisitions of Drutt and LHS. The LHS solution

provides integrated customer care and billing for both retail and

wholesale customers. Drutt's MSDP (Mobile Service Delivery

Platform) solution - acquired in 2007 - provides multi-channel

support for a mobile service delivery business.

Subex has grown both organically and also by acquisition since it

was founded in 1992. Its original core expertise was in fraud

management and revenue assurance, but it boosted its partnersettlement and revenue assurance offerings with the acquisition of

UK-based Azure Solutions in 2006. The Subex solution suite now

provides revenue assurance, service fulfillment, fraud management,

data integrity management, risk management and inter-

connect/interparty management solutions. Typically Subex's

customers are based in Europe, Middle East and Africa (EMEA) and

are either a fixed (PSTN) or mobile CSP. The extensive revenue

assurance and fraud management capabilities the company

provides makes it appealing to CSPs who need to proactively

assure their partner settlement - particularly those that are at high

risk of partner fraud or of inaccurate invoicing.

Telarix is a specialist in traditional interconnect settlements. Telarix

offers a suite of modules – iXTools – that support end-to-end

management and optimization of CSPs interconnect businesses.

Unlike most other interconnect settlement vendors, Telarix comes

from a background of routing software although it has substantially


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Outlook

Market share


expanded its proposition to include interconnect settlement, revenue

assurance and information exchange (via its iXLink platform).

IXTools supports routing, trading, business intelligence, optimization

of rates, rating and billing for different types of traffic as well as audit

and dispute management. It provides turnkey solutions for CSPs

that do not have the expertise to handle settlement solutions,particularly international agreements, in-house.

Valista is a specialist focused on partner settlement with content

providers and other non-telecom service providers. It was acquired

by Aepona in June 2009 with the aim of offering a complete platform

for providing exposing and monetizing network and service

enablers.


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Outlook

Forecast


Forecast

Changing business models make partner and interconnect billing

very important. CSPs have much more roaming revenue and are

working to manage the cost of those settlements. They are signingnew partners for content and advertising that has little impact now

but helps drive growth in the later years of the forecast. This

segment is held down by the recession but will grow from 2010 –

2013 at a stronger 9% CAGR (see Figure 3). Today it constitutes

10% of total billing spending.

Partner and interconnect is heavily influenced by two factors that

hold down spending for commercial systems. One is that CSPs tend

to develop partner settlement in an adhoc, in-house-driven manner.

The other is that most mobile roaming settlements are handled by

clearinghouses that provide roaming settlement as an outsourcedservice.

Figure 3: 2008-2013 Partner settlement forecast

Forecast by communications service

Figure 4 shows the forecast broken out by communications service

type. Traditional interconnect settlements for PSTN services decline

as PSTN services themselves decline.

Mobile settlements growth of 9% CAGR is driven by a number of

factors. CSPs are supporting more roaming partners and supporting

CY2008 CY2009 CY2010 CY2011 CY2012 CY2013

Partner (CAGR 7%) $418 $428 $448 $486 $528 $575

$-

$100

$200

$300

$400

$500

$600

$700

$ m i l l i o n s



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Forecast


more services for their roaming customers. They are also deploying

software to support direct roaming settlements rather than using

clearinghouses for all cases. Mobile is also the biggest area for

content settlement and in the later years will be dealing with

advertising settlements.

Business and wholesale services settlements are very small at $36

million last year but will grow at 12% CAGR to be over $60 million in

2013. CSPs are providing more business data and ICT services on

a multi-national basis that calls for more settlements with operators

who control access facilities in other regions or countries. Cloud

computing will also lead to more business services settlements.

Residential broadband settlements are driven by many of the same

factors that affect mobile services. CSPs are providing video content

and specialized services such as gaming through partners. They

already have significant advertising settlements, which will continueand become more complex.

Figure 4: 2008-2013 Partner settlement forecast by

communications service

Forecast by region

Figure 5 shows the partner settlement forecast by region. North

America (NA) is significant but has the least growth while all other

regions have some notable growth.

CY2008 CY2009 CY2010 CY2011 CY2012 CY2013

Mobile (CAGR 9%) $199 $214 $228 $255 $280 $310

PSTN (CAGR -9%) $93 $81 $72 $68 $63 $57

Business (CAGR 12%) $36 $34 $40 $46 $53 $63

Res BB (CAGR 10%) $90 $98 $108 $117 $132 $144

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Forecast


NA put interconnect settlement on the map with all types of ILECs,

CLEC, IXCs, rural ILECs and mobile CSPs terminating voice traffic

for each other. This led to a lot of spending that still continues but

does not sustain much growth. Many of the major CSPs handle a

great deal of their partner settlement systems development and

maintenance in-house. We expect this to continue to be a factor ascontent settlements grow and advertising settlements become

important. However, North American CSPs will spend money on

these new areas creating opportunities for ISVs and other

independent suppliers. Commercial spending in NA will match the

trends shown in Figure 19; while PSTN-related spending declines,

other service areas will drive new spending decisions.

Figure 5: 2008-2013 Partner settlement forecast by region

Developed areas of EMEA and Asia Pacific (APAC) are starting to

spend money on content partner settlement and evaluating the

ways to handle advertising. They are also spending for roaming

settlements that do not require clearinghouses. EMEA and APAC

mobile CSPs have more roaming revenues, more volume amongkey roaming partners and more roaming settlement costs that do

North American mobile CSPs.

Central and Latin America (CALA) and the developing areas of

EMEA and APAC are heavily focused on mobile settlements. They

have termination agreements with more in-country networks and

have growing roaming revenues. Many developing market CSPs

CY2008 CY2009 CY2010 CY2011 CY2012 CY2013

NA (CAGR 1%) $100 $97 $99 $101 $104 $107

CALA (CAGR 9%) $32 $34 $36 $40 $45 $51

EMEA (CAGR 7%) $194 $201 $211 $233 $253 $276

APAC (CAGR 9%) $92 $97 $102 $113 $126 $141

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$100

$150

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$250

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Forecast


have used adhoc methods of interconnect settlement and will be

turning to more complete commercial solutions during the next few

years.


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Market drivers and

inhibitors


Market drivers and inhibitors

Increasing competition and the introduction and proliferation of

complex IP-based services are transforming the partner and

interconnect billing market. The pressure for CSPs to optimize theirbusiness processes to reduce operational expenditure and to

comply with legislation and regulation is also stimulating the market.

The market is changing rapidly, however, as CSPs move towards

providing complex services and new business paradigms. Legacy

solutions will struggle to cope with these and replacements and

upgrades are likely to be supplied by either third-party vendors or by

outsourcing because in-house development has become much less

attractive to most CSPs.

DriversThe principle market drivers are:

High mobile subscriber growth

Declining voice revenue and the drive for cost savings

Proliferation of non-telecom partners

Increasing number of bill disputes

Introduction of new complex IP-based services

Just-in-time buying and selling of capacity

Network sharing

Rate proliferation and change

The following paragraphs provide more background on the market

drivers.

High mobi le subscr iber growth

High mobile subscriber growth; particularly in emerging markets,

such as the Middle East, Africa, Latin America and emerging Asia,will increase the amount of mobile and roaming traffic. It will also

stimulate the demand for new content and applications. These

effects will directly drive spending on partner and interconnect billing

solutions. The global recession has slowed mobile subscriber

growth, but growth rates are still high and will accelerate as the


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Market drivers and

inhibitors


recession comes to an end. This is reflected in our forecast for

spending in this segment.

A related affect is the increasing international mobility of mobile

subscribers. This stimulates more international and roaming calls,

increasing the volume of interconnect and roaming traffic as well as

the number of calls between different network types. These effects

mean CSPs need more interconnect partners to cover the

increasing range of countries their customers are travelling to and

legacy solutions are put under pressure due to increased volumes

of both partners and traffic. This will therefore drive the replacement

of legacy solutions.

Decl in ing voice revenue and the dr ive for cos t savings

In most mature regions CSPs are experiencing declining voice

revenues as competition and regulatory changes drive down the

price per minute and the introduction of flat rate plans. Even in many

emerging markets CSPs are experiencing pricing pressure on voice

calls. At the same time call minutes continue to grow. This

combination of increased usage and declining revenues puts the

operational costs of settlements under significant pressure.

In the European Union (EU), for example, the roaming regulation of

2007 now limits the amount CSPs can charge customers for

roaming calls in other EU countries. The EU had called for a

reduction in SMS roaming charges but found no change in average

prices after one year of asking for self-regulated decreases. In

September 2008 it announced its intention to reduce the price of

SMS while roaming by 60% from 1 July 2009. As roaming charges

are reduced in Europe, CSPs will have to increase their operational

efficiency in order for these services to remain profitable. This will

put pressure on the entire partner ecosystem to ensure that

inefficiency is not disguised in higher prices, because these higher

prices will no longer be sustainable.

In the US, there has been great emphasis on controlling operational

costs, both in terms of minimizing them and of increasing visibility.

This is due to wide-reaching legislation such as Sarbanes-Oxley(SOX), which is designed to ensure better and more transparent

financial control. SOX has a direct impact on partner and

interconnect billing, since partner costs are a major component of a

CSP‟s operational costs. Due to SOX it has become essential that

CSPs have a much better understanding of their net position with

respect to partner settlement, as well as for them to have taken

steps to combat fraud (including partner fraud). SOX compliance


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Market drivers and

inhibitors


has already stimulated demand – and will continue to do so - for

outsourced partner settlement and for technology that improves

partner interaction by speeding up information exchange, providing

audit trails and reducing disputes between CSPs.

Prol iferat ion of non-te lecom partnersThe rapid growth in mobile and fixed broadband has created new

service opportunities for CSPs. To fully exploit these, CSPs will

have to deal with an increasing number of non-telecom partners.

The resulting partner proliferation is putting pressure on legacy

systems that were not designed to scale to this extent and is raising

a number of new issues for CSPs, including an increased risk of

revenue assurance and fraud issues. Since partnerships are no

longer necessarily between established, well known and trusted

partners, CSPs now need to monitor their partnerships more closely

to avoid the possibility of bad debt, fraud and poor quality services

affecting their own business. They therefore need to have more

visibility of current balances in order to detect problems at an earlier

stage. And increased visibility also enables them to invest in

partners that are positively contributing to the business. Legacy

systems, however, were designed for a time when partner

settlement cycles were much slower and are not optimized to deliver

this type of key data in the timescales now required.

From a commercial perspective, CSPs need to offer an efficient

partner platform to attract the best quality and most innovative

partners. Paying these partners on-time and accurately is an

important aspect of this, as is providing them with visible, up-to-date

information about balances owed to them so they can manage their

own business more efficiently. Legacy systems, however, are

usually disconnected from partners; with information being

exchanged in formats such as excel sheets or CSV. The onus is

currently on partners to check, scrutinize and dispute balances, and

the timescales for receiving this information are determined by the

CSP‟s billing cycle. Time pressure combined with the relative

inaccessibility of information means that many CSPs pay bills

without sufficient scrutiny. In addition, it is difficult for business

partners to judge their net position and therefore comply with

legislation that requires them to have tight governance over their

financial position. Ideally, information would be provided on a secure

portal and updated regularly, or delivered in a manner that allows

analysis and interrogation. Investment in a range of partner


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Market drivers and

inhibitors


systems, including billing, is required to deliver on this commercial

vision.

It should be noted that new entrant partners will favor outsourced

solutions as they may lack expertise in this area and believe that it is

not a core competence. In addition, the pay-as-you-grow model

favored by outsourcers will be attractive as it requires less upfront

investment.

Bi l l d isputes are increasing

Driven by the proliferation of partners, lack of operational efficiency

and increasing pressure on Opex, the number of bill disputes

between CSPs is increasing. These can be both disruptive and

costly to settle, as they slow down cash-flow and consume

resources to resolve them. Bill disputes come in many forms: some

are due to poor information or data exchange; others due to

inaccurate processes or even fraud; others are over commercial

terms.

An example of the latter type of dispute occurred in early 2008 when

AT&T asked the FCC to arbitrate between itself and Sprint Nextel.

AT&T and Sprint had a „bill-and-keep‟ arrangement in nine US

states, which had been in place since 2001. In 2007 Sprint decided

it wanted to expand this arrangement to all its subsidiaries and in

September 2007 it persuaded Kentucky‟s public service comm ission

to allow it to expand its bill-and-keep agreement with AT&T to two

other subsidiaries within the state. Sprint says its position is backed

by an undertaking from AT&T to allow competitors to take

interconnect agreements they have in one state and replicate them

in others. AT&T argues that this was intended to reduce the cost of

negotiating agreements, not to allow competitors to avoid payment

for interconnect services. While neither company has provided

financial details on these deals, it is likely that it represents

hundreds of millions of dollars.

Improving the management of commercial and financial

arrangements between partners is vital to avoid bill disputes. When

CSPs invest in this area to improve the exchange of commercialinformation such as rates and terms, combined with audit trails and

proof of agreed terms, the number of costly disputes drops

drastically.

New comp lex IP-based services

In addition to increasing the number of potential new partners in the

value chain, the introduction of IP-based services has added a


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Market drivers and

inhibitors


range of new factors that partner settlement systems will have to

accommodate. For example, CSPs now need to manage complex

content agreements including intellectual property rights

management issues. A key trend in rights management is to cut

rights finer and finer. CSPs need to ensure that they have the right

to use content when and where they wish to. While they may ownthe right to use the content via SMS, for example, they may not hold

the right to use it on a website; they may have obtained the rights to

use it in the US, but not hold the rights to use it in Europe.

This is set to become a highly problematic area: large content

providers and aggregators do not always have precise visibility over

the rights they hold, while CSPs need to link rights information with

service design and delivery as well as partner settlement. This will

ensure that CSPs do not breach intellectual property rights and that

they pay rights owners the fees owed to them.

Complex IP-based services are also driving the requirement for real-

time, active and web-based partner management. This allows

partners to securely access CSPs‟ systems over the Internet and

monitor and query financial balances, agreements and other

partner-related information. (See Partner proliferation section

above.)

With the advent of long-tail service support and more sophisticated

service delivery platforms (SDPs) based on service-oriented

architectures, content and application billing is set to change once

again. The wholesale challenges of supporting long-tail services

are to handle a much wider variety of partnerships, some of which

may be low-transaction volume, low value and transient; but others

may prove to be highly lucrative and longer term partners.

Functionality will be required to closely monitor partner relationships

and highlight issues such as: low-value partners who transition to

becoming higher volume partners; partners that are causing

problems in the value chain (e.g. by supplying low quality service);

fraudulent partners. Better visibility allows CSPs to target more

support and better terms at the best partners, to garner more loyaltyfrom them and thereby potentially gain more revenue from them.

Partner settlement systems will therefore have to handle much

faster partner lifecycles, with the ability to onboard and off-board

partners quickly and at regular intervals. This faster pace of partner

relationship will also drive the requirement for better integration with

revenue assurance and fraud management to ensure partners pay

what they owe for use of CSP services.


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Market drivers and

inhibitors


With the advent of service oriented architecture (SOA)-based,

sophisticated SDPs, CSPs will also need to handle the issue of

billing for core telecom assets that are exposed as service building

blocks to third parties. This is a particularly new and uncertain part

of the partner settlement market

Just- in-t ime buying and sel l ing of c apacity

One feature of the new business environment for partner settlement

(see Business Environment section) is that carriers are increasingly

buying and selling capacity in much shorter time frames and

sometimes just-in-time. Legacy partner settlement solutions are not

built to support this type of model but were intended to support a far

more sedate partnership environment.

In frastructure shar ing

Infrastructure sharing has been a feature of some markets for a

considerable time, but the range and number of infrastructure

sharing agreements has risen as a result of the build out of 3G

mobile networks. Infrastructure sharing comes in several forms –

including basic unbundling and intra-country roaming, as well as

collocation and spectrum sharing – and is a form of cost

optimization.

With intra-country roaming CSPs agree to build their networks in

non-overlapping areas and permit inter-network roaming backed by

a commercial agreement.

In the US, intra-country interconnect is the norm. Long-distance

carriers use and pay local exchange carriers for transiting and

terminating calls (carrier access billing); local exchange carriers

charge one another (reciprocal compensation) and long-distance

carriers charge one another (interconnect billing).

In the EU, Directive 97/33/EC encourages the sharing of facilities

and properties, but CSPs are expected to comply with local

competition law

In India the government revealed new guidelines for active

infrastructure sharing in April 2008, which permitted sharing of

antenna, feeder cable, nodes, radio access network and

transmission systems (but not spectrum)

In the Middle East and Africa, intra-country roaming is used

extensively in countries like Jordan, Morocco, Oman, Saudi Arabia

and the United Arab Emirates, while unbundling is employed in

countries such as Egypt and Saudi Arabia.


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Market drivers and

inhibitors


In the UK mobile CSPs 3 UK and T-Mobile agreed to 3G network

sharing in late 2007. BT established Openreach as a separate

business to provide equal access to the local loop to both its own

business units and those of about 400 rivals.

The type of infrastructure sharing employed and the relationship

between the carriers will determine the impact on partner

settlement, but in general it will increase pressure on legacy

solutions and stimulate demand for replacement.

Rate prol i feration and ch ange

The number of rates available for roaming and interconnect has

risen substantially as the number of potential partners has

increased. The speed of rate change has also substantially

increased. To take advantage of the best rates CSPs need a

solution that can upload new rates quickly and accurately.

Preferably it should highlight changes or rates where action needs

to be taken. Very few, if any, legacy solutions provide this type of

functionality and therefore this requirement will drive the purchasing

of new solutions.

Business inhibitors

Inertia combined with other priorities

Lack of expertise

Partner settlement projects are low in budgeting priority

Iner t ia combined w i th other pr ior i t ies

There is great inertia in this part of the BSS/OSS market. The

market is characterized by a high level of custom-built or self-

developed solutions and replacement cycles are far longer than for

other BSS/OSS solutions. There is a tendency to view partner

settlement as a cost that needs to be managed, rather than an area

that can drive revenue increases, and thus traditionally there has

been a much lower level of investment or interest. Analysys-Mason

was told by a European CSP during the research for this report that

although their self-developed system wasn‟t coping with increasedvolumes or complexity and its weaknesses were increasing

operational costs considerably, the interconnect department had

been told that they would “have to manage”. Asked wha t they

intended to do, the CSP said they would have to find internal

resources to try and add on functionality and bolster their existing

system, even though they knew this was by no means the best way

to proceed.


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Market drivers and

inhibitors


In addition, CSPs may recognize this as an area that needs

investment and the positive impact this will make to their business,

they have even more urgent things they need to do first. Partner

settlement may not come high up enough on the list of priorities for

many CSPs and therefore investment will be delayed. This may not

be due to a lack of investment cash, but rather lack of personneland expertise to oversee change and an unwillingness to disrupt a

process, which while not optimal is still working. While there is a

relative low level of efficiency across the industry, CSPs may judge

their performance adequate when compared to peers, rather than

inadequate when compared to an arbitrary standard of best

practice. The effect will be to slow down investment and

transformation overall. However, when enough first movers improve

their partner management and settlement processes and solutions,

the bulk of the market is likely to swiftly follow.

Lack of expert ise

Real heavy-duty expertise and thought leadership in this sector is

relatively rare. Many CSPs simply lack the expertise in-house to

transform the partner settlement processes. If they possess

expertise, then the staff is generally tied up trying to keep existing

systems running. This will impede renewal as implementing a new

solution or process requires available expertise and time to retrain

on new systems. Outsourcing or using a specialist third-party

supplier with in-house expertise will help overcome this barrier to

some extent.

Partner set t lement pro jects are low in bu dget ing pr ior i ty

Given the current economic climate, some CSPs may simply lack

the free cash to invest in partner settlement. Investing now to save

money later may be an attractive prospect, but it requires upfront

investment CSPs might not have. This can partly be overcome via

an outsourcing model or by risk-sharing (paying the vendor on the

basis of savings, for example).


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Outlook

Business environment



Interconnect settlement

The partner settlement market was relatively stable for a long time.

Originally, interconnect was between large incumbent operators. Inorder for their customers to send or receive data or calls to and from

customers of other CSPs, all CSPs involved in the origination,

transit and termination of the call or data session needed to be

interconnected at the network level. To begin with interconnection

was not billed, as incumbent CSPs operated on a biller-keeps-all

basis. However, increasing asymmetry on routes stimulated the

requirement for CSPs to monitor the amount of call traffic transiting

or terminating on their networks and bill for it.

CSPs therefore moved to a system of „netting off‟, whereby two

carriers added up the calls they had sent to one another over the

previous period and settled the net difference using a settlement

rate.

At this point interconnect bil ling was generally performed on paper

or spreadsheets. Some of the larger incumbents with a high level of

wholesale traffic began to build their own in-house billing systems;

there was no third-party billing systems market at this time.

Gradually, the technology and expertise developed inside

incumbents led to the spinning out and development of a third-party

vendor market. However, the vast majority of interconnect billingwas still performed using in-house systems and even spreadsheets.

With increasing deregulation, and due to high levels of asymmetry

(the US in particular was paying around USD3 billion in settlements

to other countries in 2003), CSPs began to move to commitment

deals rather than use settlement rates. The main types of

commitment deals are „minutes swap‟ (where carriers agree to

terminate a pre-determined amount of traffic for one another) and

„pay or play‟ deals (where carriers pay for a given volume of traffic to

be terminated with excess minutes charged at a higher rate).

Commitment deals have changed the infrastructure requirements for

CSPs because they have driven up trade with other carriers in the

wholesale or carrier-to-carrier market. To enable CSPs to avoid

excessive costs or loss of revenue from low-traffic routes, bandwidth

exchanges have sprung up to enable them to buy and sell capacity

anonymously. This, in turn, has increased price fluctuation, such

that carriers can now gain considerable competitive advantage if


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Outlook



they can access lower prices quickly and risk losing revenue if they

do not react to prices going up. The result is that CSPs now need

increased automation, least-cost routing functionality and improved

visibility and loading of rates. The sheer volume of rates available

means that CSPs increasingly need automated ways of analyzing

rate data to find changes to rates and to select the best rates forthem. However, least-cost pricing is not the only consideration that

needs to be taken into account, because least-cost routes may offer

low service quality. Therefore carriers also need information on the

quality of service (QoS) that is being offered so they can select the

best-cost route for them.

Information exchange is becoming a key aspect for interconnect

billing, as this is an area that adds to costs, fuels disputes and slows

settlement cycles. Typically, CSPs receive data from other CSPs,

from clearinghouses and from exchanges, which they have to

process, reconcile and pay. This data comes in a variety of different

formats and may very well not be accurate due to factors such as

duplicated, missing or incomplete records. However, the volume of

data is so large that many CSPs take a pragmatic approach to

dealing with it and tend simply to pay if the bill seems reasonable;

some will attempt basic bill verification by using sample data. Thus

there is often considerable inaccuracy that goes unchallenged.

The interconnect market is characterized by a high level of in-house

or custom-built solutions – some of which are still as rudimentary as

a complex spreadsheet. However, there has been a slow marchtowards third-party solutions and the factors discussed in Market

Drivers favor this trend continuing. It is likely that outsourcing of one

form or another will become much more common in the interconnect

market. This might be use of a third-party data exchange (such as

that provided by Telarix) or of an outsourced solution (such as that

provided by i-conX). Many interconnect billing vendors now offer

managed solutions or ASP solutions as options. The uptake of

outsourced solutions is favored by the relative scarcity of expertise

in the market, and by the fact that many mid-sized or smaller CSPs

view interconnect as a necessary business cost that needs to be

managed, rather than a revenue-generating opportunity.

Outsourced solutions allow CSPs that do not see interconnect as a

core competence to concentrate their efforts elsewhere while

ensuring that this vital function is performed efficiently.

The use of clearinghouses for interconnect settlement makes a lot of

sense in markets where there is relatively little investment in


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Outlook



solutions. However, this model has failed to take off in recent years

– not because it is not a suitable solution but because of factors

such as political reasons.

High on the agenda for many CSPs is to speed up settlement cycles

for interconnect, to make processes auditable to achieve

compliance with relevant regulation and legislation and to achieve

greater business-driven control of interconnect costs. Keys to

achieving greater control are visibility of information and the ability to

apply business intelligence to support better decision-making.

Interconnect costs are significant for the average CSP – typically

generating between 25-60% of some CSPs‟ revenues and

accounting for a similar proportion of costs for other types of CSP.

Even small changes in rates or the cost of administering

interconnect can result in many millions of dollars of profit lost or

gained.

Roaming settlement

GSMA figures indicate there are now 700+ GSM mobile operators in

218 countries, serving more than 2.5 billion customers. Added to

this are customers of other mobile technologies such as CDMA. An

increasing number of these subscribers are roaming outside their

home country, requiring mobile operators to collect and settle

roaming charges in a wide variety of currencies and under different

regulatory and tax regimes. Roaming revenues are considerable –

estimated at $65 billion in 2006 – and lucrative for CSPs.

In addition, intra-country roaming – long the norm in the US – is

increasing in other countries. In particular the cost of building out 3G

infrastructure has seen mobile CSPs agree to allow roaming

between one another‟s network infrastructure as a way of

decreasing build-out costs.

Unlike interconnect, where settlement is usually performed by the

CSP, settlement for roaming calls commonly involves a

clearinghouse or exchange. There are two main types of

clearinghouse used by mobile CSPs: data and financial. Some

CSPs use clearinghouses to exchange roaming data and but prefer

to settle directly using their own settlement solution; others choose

to outsource both data exchange and settlement to a clearinghouse.

Clearinghouses are commonly used because they simplify data

exchange and conversion as well as the management of a large

number (often over 200) of complex roaming agreements. Financial


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Outlook



clearinghouses can handle gross settlement whereby each

company pays each other‟s invoices, as well as bilateral net

settlement („netting off‟) and multilateral net settlement (where all

CSPs agree to a common settlement period, funds are pooled and a

single transfer to or from the pool is used for settlement). In addition

to data and financial settlement, clearinghouses also offer otherservices to CSPs, such as advice, consultancy and expertise to help

them design contracts and train staff.

Using a clearinghouse can be very expensive for larger operators,

as payment is typically by volume of call detail records (CDRs).

Some CSPs prefer to buy roaming software and perform financial

settlement internally; others use a hybrid approach and use

clearinghouses to settle with some partners while settling with

others using their own internal systems.

Until recently there was very little incentive for mobile CSPs todecrease charges for roaming, which could be as much as 15% of

their profit. However, regulators such as the EU are now actively

regulating to decrease the cost of both voice and data roaming. This

puts pressure on mobile CSPs to decrease roaming costs in order

for them to maintain profitability.

On 1 October 2008 compliance with the Near Real Time Roaming

Data Exchange (NRTRDE) standard became compulsory for GSMA

members. NRTRDE is a method of reporting customers' activities in

the visited network, which means CSPs must send limited

information for fraud analysis within four hours of calls or data

sessions being made. This enables the home network to detect

anomalous and high network usage in near-real-time. CSPs that fail

to make the four hour window will be liable for any fraud associated

with the call or data session. The GSMA says that the standard will

reduce the incidence of roaming fraud by up to 90%, but it exposes

those who are not fully compliant to even more risk as fraudsters will

target those they perceive to be the softest targets.

The main problem with NRTRDE is the time between the data

exchange and the revenue loss caused by fraud. At the time ofsettlement the visited network must prove – up to several months

after the event – that it sent the required information to the home

network within the four hour window. This could potentially create

more partner disputes - whereby partners try to prove or disprove

that the data was sent – unless undisputable audit trails are

available. Thus, although NRTRDE is focused on fraud


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Outlook



management, it impacts on both settlement and partner

management processes because of the requirement to retain data.

Content, application and advertising revenue share

Settlement for service and content provided by non-telecom

partners is a rapidly changing and strategically important area.

Figure 6 illustrates how the complexity of the telecom ecosystem

has increased. At the center is the service offering for the end

customer. This has moved beyond communication to include

content, social networking, web 2.0 services, advertising, search,

location and gaming.

Figure 6: Industry convergence

Rich entertainment & communications experience & more …

MobileOperators

FixedOperators

CableOperators

Media &Entertainment

InternetInnovators

Existing servicesmigrating to the net

Advertising


This presents new challenges to settlement solutions as it

introduces a new range of billing parameters that have to be

handled, as well as new business challenges that have to be

addressed. Legacy interconnect solutions are not built to cope with

this type of settlement and CSPs have a number of choices when

looking to support partner settlement in an increasingly complex

ecosystem. The main options are; buy an entirely new system, buy

an adjunct to an existing system, build a solution or use an

outsourced service.


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Outlook



Buying an ent i re ly new system

This approach is often taken where digital commerce, advertising

and content are handled by a different team or division from

interconnect settlement. It can be quicker to select and implement,

but can also be more expensive. The lack of integration with

interconnect can make having a business-level view of complexservices revenues and costs more difficult to achieve. It can also

result in a fragmented way of dealing with partners that have

multiple relationships with CSP.

Buying an adjunct system or mo dule from exist ing

in terconnect or r etai l b i l l ing sup pl ier

A CSP may choose to expand an existing billing system to support

content partner settlement. Where the vendor supports it, this may

re-use some of the core functionality of the existing interconnect

settlement engine supplemented with a new module to handle

specific needs of content. This can be cheaper and may make

dealing with partnerships easier because they are handled by one

team. It may also make having a business-level view of partners and

complex services easier to achieve. However, the range of

functionality may not be as cutting edge as when using a specialist

provider.

Bui ld ing a solut ion in house

A CSP may judge that existing third-party solutions do not provide

the functionality required, may already have an in-house

interconnect solution, or may have in-house expertise to do this.This may allow greater differentiation than buying a third-party

solution. However, there are fewer CSPs that have IT expertise

readily available today so this is becoming a much less cost-

effective solution than it once was. CSP may judge that IT expertise

may be better used elsewhere.

Outsourced s erv ice

A CSP may not have in-house expertise to run or may not wish to

commit time and money upfront as it believes revenues to be

uncertain. Using an outsourced service allows pay-as-you growoptions and may provide vital extra expertise. However, many CSPs

are concerned about loss of control of what is perceived as a vital

new revenue stream.


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Outlook

Market definition


Market definition

Analysys Mason uses the buying behavior of CSPs to define market

segments. Figure 8 below illustrates the 23 functional categories of

telecoms software analyzed by Analysys Mason grouped under theirmajor segments: service assurance, service fulfillment, billing,

customer care, service delivery platforms and network management

systems. The partner and interconnect billing segment is

highlighted.

Figure 7: Partner and interconnect billing in the Analysys

Mason segmentation


Partner and interconnect billing definition

The need for partner and interconnect settlements arises because a

CSP must sometimes use other CSPs and service providers to

deliver the service required by the end customer. We can define

three types of roles that a service provider (including CSPs) can

play for the end customer;

1. Billing CSP; has the contractual relationship with the endcustomer and bills the end customer for the use of theservice.

2. Service controlling CSP or thrid party; directly controls theend customer‟s access to the service.


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Market definition


3. Service providing CSPs and/or third parties; provides part orall of the service to the end customer.

In the simplest case of a phone call that originates and terminates

on the network of the billing CSP all three roles are provided by the

billing CSP. In the most general case, shown in Figure 8, all three

roles are played by different CSPs or third-party service providers.

In this report we focus exclusively on where the end customer

relationship is with a CSP and not where it is with a non-

communications related service provider.

Figure 8: General partner and interconnect scenario

Billing CSP

Service

Controlling CSPor 3rd Party

InterconnectNetworksInterconnect

Networks

ServiceProviding CSPs

and/or 3rd

Parties

BillingRelationshipwith endcustomer

Controlscustomeraccess toservice

Delivers theservice

Authenticationand payment


Usage records

Usagerecords

End customer


The main interactions among service providers are shown in Figure

8. The principal flows are usage records flowing back to the billing

CSP quantifying how the end customer has used the service.

Payments flow in the opposite direction.

Originally interconnect billing was performed manually and then

performed using Excel spreadsheets. Even today, there is a high

penetration of home-built system and CSPs in many regions havebeen relatively slow to upgrade these to modern third-party or

outsourced solutions.

We identify three types of partner and interconnect settlement;

Interconnect billing: transiting or terminating calls that originatedon another network – e.g. interconnect and CABS


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Market definition


Mobile roaming: specific to the mobile market and can be foreither inter-country or intra-country calls or data sessions

Content partner billing: billing for content and applicationsprovided by non-CSP third parties

These are defined in detail later in this section.

As services and market dynamics have become more complex, an

increasing proportion of telecom services are composed of

component services supplied by partners, although services

supplied entirely on-network (for example, a voice call between

users of the same network where the call is carried in its entirety

over that CSP‟s own network infrastructure) still do not require

partner or interconnect billing. With the increase in service and

market complexity, however, there are now more partners, more

types of partnership and new forms of partner billing including:

Billing for content and applications used in complex IP-basedservices

Billing for the use of core telecoms assets that are exposed asservice building blocks to third parties.

While partner billing is similar in terms of the type of relationship

being supported, in reality CSPs usually handle each type of partner

billing in a different way. Some CSPs – particularly smaller ones –

use their retail billing engine to perform their partner billing and have

not invested in additional functionality; some use an adjunct model

from their retail billing supplier; some invest in extensive specialist

functionality (typically large fixed CSPs) and some have chosen to

outsource interconnect billing (common for smaller CSPs in growing

markets, and for CABS). But while it is certainly possible to use a

retail billing system to bill for partner and interconnect services, it

should be noted that these differ from retail billing in a number of

key aspects:

There are fewer invoices for partner billing but each is muchgreater in value, volume and complexity than a typical retail bill.Whereas retail billing consists of millions of accounts each with

a small amount of data; partner billing consists of far feweraccounts but each with a large volume of associated data(potentially millions of data items)

Pre-paid mobile does not generate retail bills but does generateinterconnect and partner bills

Unlimited calling plans do not require a detailed call record forend user billing, but do require one for settlements. There is a


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Outlook

Market definition


much higher rate of error in interconnect bills and these errorscan have profound effects on a CSP‟s financial stability

Interconnect charges may be incurred for all call attempts ratherthan just those that succeed and are charged to the retailcustomer

Interconnect bills reflect the whole route of the call, not just theorigination and termination points.

While interconnect and partner billing solutions can be implemented

in a relatively simple fashion, they may also be integrated with a

number of other systems to provide a convergent, proactive and

business-oriented view of capacity, content and applications being

consumed. In a complex implementation partner and interconnect

billing solutions will be integrated with:

Fraud and revenue assurance to help maximize revenues

Complex rating to support innovative and dynamic pricing

Relationship management, including agreement management,dispute management and self-care, to minimize the cost ofmanaging partners, monitor their value and any problemsarising from the partnership and enable CSPs to build aprofitable business with their most valuable partners

Mediation

Business optimization to enable key data about destinations,utilization, QoS, discrepancies, margin analysis, trending, rateoffers and so on to be analyzed to improve businessperformance

Least-cost routing/capacity trading to enable analysis of rates,agreements, quality levels, and volumes to ensure optimalrouting, enabling CSPs to deliver against their customers‟

service expectations while maximizing their margins

Network management to maximize utilization of existingcapacity, manage and plan network traffic, and plan newnetwork build in response to forecast increases in demand

Financial solutions, to support invoicing, posting to generalledger, purchase order matching, and so on.

For less complex implementations some or most of this functionality

may be provided by the interconnect billing system, or may be

absent. In many carriers, interconnect and partner billing has for

many years been viewed as overhead and attention was focused on

minimizing the cost of supporting it. This meant that while CSPs


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Outlook

Market definition


invested in customer-facing retail billing systems, they were less

willing to invest in partner and interconnect billing solutions.

However, partner billing now embraces the need to minimize costs

by actively managing charges paid for services supplied by other

carriers and becoming a revenue-generating process due to the

advent of complex, content-based services.

Interconnect billing

Interconnect is the term used for connecting different CSPs‟

networks in order that calls or data services can be transited across

or terminated on a network other than the originating network.

Interconnect billing systems support charging for these interconnect

services. Figure 9 shows the generic interconnect scenario. In this

case the “billing CSP” (see Figure 8) also provides service access

control and call origination. Call termination is provided by the CSP

where the called party is currently located. Additional CSPs may berequired to carry the call and in the case of mobile networks, to

locate the called party.

Figure 9: Interconnect scenario

Billing CSP also controlsservice and provides call

origination


NetworksCSPs providingtransit and call

termination



Delivers the calltermination service


Usagerecords

End customer


Interconnect can be either between CSPs in different countries

(international or inter-country interconnect) or between carriers in

the same country (intra-country interconnect). As discussed in the

Business environment section, interconnect payments can generate

considerable sums for some carriers and represent large pay-outs


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Outlook

Market definition


for others. Interconnect bills can have profound financial impacts

and may very well be the single largest operational charge for many

CSPs.

The interconnect market encompasses a range of billing models

from rough biller-keeps-all models and simple peering arrangements

to more precise billing for usage and ultimately dynamic bandwidth

marketplaces. As competition enters a market, the interconnect

billing model typically becomes more sophisticated as the number of

partners rises. This, in turn, stimulates the requirement for more

sophisticated partner billing solutions. In a non-competitive market

where few international calls are made or received there may be

little requirement for such sophisticated solutions, however, although

these types of markets are becoming less common.

Currently, many CSPs perform interconnect billing using a home-

grown solution that may be as rudimentary as an excel sheet.Larger CSPs typically manage their interconnect billing separately

from both their other partner billing requirements (such as content

partnerships) as well as from their retail billing solutions, although in

the future this may change in order to facilitate better revenue

assurance and business decision making, and to lower operational

costs. Some operators (most often smaller operators) already

perform interconnect billing using their retail solution or using an

adjunct module to their retail solution provided by their retail billing

vendor.

The type and sophistication of functionality required by CSPs will

vary according to their size, business model and the market in which

they are operating. In the past, the focus for many CSPs has been

on minimizing interconnect charges, although some large, fixed-line

carriers have established a healthy business from transiting and

terminating calls for other CSPs. In general due to the factors noted

in the business drivers section, interconnect billing systems will

increasingly have to become more business-driven and support an

increasing number of interconnect partners. Faster billing cycles,

greater accuracy, increased visibility of net position and functionality

to support better partner and commercial management are all

desirable features for many CSPs.

Although there are a range of types of interconnect, it is billed

according to two main variants, of the model shown in Figure 9.

CSPs either settle directly with transiting and terminating carriers

(the direct model) or they use a cascade model whereby they pay


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Outlook

Market definition


the next partner in the chain, who in turn passes on a proportion to

the next partner and so on.

The charges for interconnect are set in a variety of ways, with

different countries using different methods. Rates may be

commercially set and based on long-run incremental costs

(calculated via a top-down, bottom-up or combined approach), or

they may be specified to a greater or lesser extent by a third-party

such as the ITU (accounting rates), OBF, EU and so on. In some

countries carriers can agree to zero rate interconnect charges

between one another resulting in a commercially-agreed biller-

keeps-all agreement.

Interconnect disputes are common and cause high costs and a

slowing down of the settlement cycle. They can arise from pricing

errors, problems with information that is forwarded from one

operator to another or from contractual problems. Improving theexchange of data records and better revenue assurance on

interconnect and partner billing are key future trends.

CABS bi l l ing and reciproca l comp ensation in the US market

CABS is an example of interconnect billing used in the US. It

enables local telephone companies to charge long-distance carriers

for use of the local loop. Rules are set by the ordering and billing

forum (OBF), which form the basis for the access tariffs charged by

LECs to long distance carriers. The revenue from CABS can make

up a significant proportion of a LEC‟s total revenues, so tracking and

billing this usage can be critical. The cost of CABS has been

challenged by long-distance carriers, who argue that the charges

are too high as costs are largely sunk. They say that high charges

make it harder for them to reduce long-distance call charges to their

customers. LECs on the other hand argue that the local loop is

costly to maintain and that they need to invest in new technology to

upgrade it.

Reciprocal compensation is distinct from CABS billing in that it is

paid by a LEC to another LEC in the same local access transport

area (LATA) for terminating a call or data session on its network. Ifthe benefit is the same for the caller and called parties then no

money is exchanged. Rates for reciprocal compensation are set by

a state‟s regulatory body or are set by the parties involved. In the

latter case the interconnect agreement would set the rates and their

application.


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Outlook

Market definition


Roaming billing

Figure 10: Mobile roaming scenario

Home Mobile CSP

Visited MobileCSP providescall origination


NetworksCSPs providecall transit and

termination



Delivers theservice



Usage records

Usagerecords

End customer


Roaming is a specialized form of interconnect used in the mobile

market and can be both intra-country and inter-country. When

roaming in an area not covered by their home CSP network, a

roaming customer can still make and receive calls by using a visited

CSP network. The visited CSP network is either automatically

selected by the handset or is manually selected by the customer.Figure 10 shows how the general case of Figure 8 is adapted to the

roaming situation. The only role of the home CSP is to bill the end

customer and authorize service. The visited CSP controls access to

the service, provides call origination or connectivity for other

services and measures usage. As in the interconnect case (Figure

9) additional CSPs may be required to terminate a call where the

called party is not directly connected to the visited CSP network.

The roaming customer pays their home CSP for calls made and

received and the visited CSP bills the home CSP for charges for

using its network services.

With inter-country roaming, mobile users pay for both receiving and

making calls. Roaming agreements between CSPs stipulate the

business aspects of this relationship. The GSMA outlines the

contents of these agreements in a standardized form.

Authentication, authorization and accounting controls are often


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Market definition


minimal and tariffing is often opaque to the end customer. Roaming

rates are perceived to be high by customers.

Mobile CSPs tend to use clearinghouses at least to some extent to

handle roaming charges. Clearinghouses perform two main

functions: data clearing (DCH) and financial clearing (FCH). Many

mobile operators use clearinghouses for data clearing because this

speeds settlement and because it is very complex. The cost of using

a FCH can be substantial so many CSPs – particularly larger ones -

prefer to perform settlement in-house. Some use a combined

approach and settle with some partners directly and others via a

clearinghouse. If the CSP uses a roaming clearinghouse for

settlement it simply funds its account; otherwise the CSP must have

bilateral settlement processes with each roaming partner.

Content and application partner billing

With the growth of content-based services, the requirement for

multi-party settlement has grown, where a single event record

(CDR, EDR) becomes the basis for settlement with multiple

wholesale partners including other CSPs and content providers.

Figure 11: Content and application partner billing

Billing CSP also controlsaccess to service and

provides data connection

3rd Party content,application or

service provider



Delivers content,

application or service


Usagerecords

End customer


Figure 11 shows how the general case of Figure 8 is refined for the

partner content billing situation. In this case the billing CSP also

controls access to the service and provides connectivity for delivery


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Outlook

Market definition


of the content or application. The third party content provider is

responsible for delivering the content.

In our analysis we only consider the scenario where the end

customer is billed by a CSP we do not consider the “over the top”

case where the end customer has a relationship directly with the

content provider independent of the CSP.

To fully exploit the potential of complex, content-based services,

wholesale billing systems need to support data processing for a

wide variety of content types, as well as traditional traffic such as

voice. A range of scenarios need to be supported involving multi-

step and multi-component rating rules, and sophisticated cross-

product and cross-partner discounting, including financial, call count,

usage, tiered and threshold discounts, penalty rates and a range of

other user-defined criteria.

Content and application partner billing, and the advent of long-tail

service support, is driving the requirement for real-time, active and

Web-based partner management that is integrated with revenue

assurance solutions and supports fast on-boarding and off-boarding

of partners.


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Outlook

Vendor summaries


Vendor summaries

Amdocs

Amdocs is a large US-based telecom software vendor that provides

a comprehensive portfolio of solutions including the Amdocs PartnerSettlement Offering. Combined with Amdocs QPass this provides an

end-to-end digital commerce solution; combined with Roam Clearing

Manager it enables in-sourced roaming clearing. Amdocs has 22

customers for its Partner Settlement Offering.

Comptel

Comptel is a Finnish OSS vendor that introduced partner settlement

solutions in 2007. These are Comptel Interconnect Billing Solution

and Comptel Roaming Management Solution. Both Comptel‟s

partner settlement solutions build on its core expertise in mediation,

adding extra value to its 280 mediation customers.

Convergys

Convergys is a complex company offering a large number of

products and services to CSPs. Its outsourced telecom business

operations are declining, but it is building on a strong base of post-

paid billing and customer care from its ICOMS cable business and

its telecommunications-focused Infinys billing and customer care

product line.

Ericsson

Ericsson is a Swedish vendor of telecommunications equipment and

related software. It is particularly strong in the mobile market.

Ericsson‟s partner settlement solutions include products it has

developed such as the Ericsson Roaming Solution and Multimedia

Brokering (IPX), as well as those resulting from the LHS and Drutt

acquisitions. Ericsson has 15+ CSP customers for its roaming

solution, 60+ for MSDP, 500+ for IPX and 130+ for BSCS iX 2.

I-ConX

i-ConX is a Dublin-based specialist interconnect vendor. The i-ConX

System is delivered either as a licensed product or as a partially or

fully outsourced solution. I-ConX targets smaller service providers

and has had success in both its home market of Ireland as well as in

the Middle East and Eastern Europe.


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Outlook


customers are from EMEA. Its systems support both mobile

voice/data (60%) and PSTN services (40%).

Telarix

Telarix is a US-based vendor of specialist interconnect tools. Its

IXTools suite is built on a traffic-agnostic platform and supports

routing, trading, business intelligence, optimization of rates, rating

and billing, as well as audit and dispute management. Telarix’s

client base includes traditional incumbents, emerging global carriers

and dominant regional players. The majority of its customers are

outside the US.

Valista

Valista provides digital commerce software that helps CSPs

generate additional revenue from content-based services combined

with traditional subscriber services in convergent networks. It was

acquired by Aepona in June 2009. Valista's software and managed

services enable CSPs to offer improved services and advanced

merchandising, process payments, process refunds, prevent fraud

and protect their investment in existing systems. Valista's primary

market is mobile operators, particularly in Europe. Most CSPs

license Valista's software but Valista offers a managed service run

out of its own data centers.


40/44


Outlook

Partner billing suppliers


Partner billing suppliers

We have identified 40 partner and interconnect billing suppliers in

Table 1. We believe these companies are sufficiently important to be

worth serious consideration by CSPs. Leadership qualities includemarket penetration by region, telecom segment, and application

area. Relative market strength is categorized as either „market

leader‟; „significant player‟ or „present‟.

Vendors we have designated as leaders in a particular market

segment or sub-segment are those that attract the most revenue in

the segment and that we predict will continue to do so. Those we

judge to be sign

Analysys Mason RMA03 Interconnect and Partner Billing Jan10

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