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21 March 2023

Origin-based routing: What the increasing pace of rollout tells us and how operators need to adapt to the trend

In the second part of our series about origin-based routing we’ll look at the increasing pace of OBR rollout and begin to understand how carriers need to adapt their infrastructures to accrue its benefits.

Though innovative, data-based telecoms services such as over-the-top have in recent years changed the service dynamic and eroded the market for voice, the traditional segment remains lucrative even where there’s decline. According to Statista[1], revenue in the mobile voice segment is projected to reach US$257.70bn in 2023, representing an annual growth rate (CAGR 2023-2027) of -1.83% and resulting in a total market volume of US$239.30bn by 2027.

Declines may, in any case, be temporary. The increase in spending on 5G technology is expected to spur renewed growth potentially changing the balance again. 5G, in fuelling growing demand for high-speed mobile phones is likely to also result in a new platform for next generation voice services.

Meanwhile, Telemedia[2] notes the international wholesale voice market size exceeded $25 billion in 2020 and is poised to register gains of over 10% between 2021 and 2027. Voice traffic in this segment accounted for around 600 billion minutes in 2020 and is expected to surpass 1 trillion minutes by 2027 at a CAGR of above 10%.

What does this fluid, dynamic landscape mean for carriers?  Among other conclusions, to maintain profitability there’s now a premium on finding ways to combat revenue leakage, maintain margins and grow profitability but both now and in future.

Origin based routing: motivations

One such way is origin-based routing which, as we explained in the first blog in this series bridges the pricing differential between calls originating and terminating in the same region and those originating in one but terminating in another region. In Europe, a rapidly growing number of operators have already introduced origin-based rating for voice termination, and more are expected to do so in 2023.

The German mobile market provides a case study into why Origin-Based Routing is so important. In Germany, mobile network operators levy significant surcharges in mobile termination rates depending on the country where a call originates. Differences of as much as €0.20 per minute (a 1,000% increase) with penalties for calls with fraudulent calling party numbers (CLI/ANI).

These surcharges are significant, and challenge originating service providers and transit carriers to more effectively manage the routing, rating (for reconciliation), and pricing of their voice traffic as if they don’t, losses can quickly mount up. Furthermore, because there is variation within the groups of countries for call origination as well as different rules for CLI validation, it’s vital for carriers to be able to accurately identify both originating and terminating carriers for their calls in order to understand which charges should be levied.

In this context, the rise of origin-based routing, which can result in a cost difference of as much as 30% in rated records if they’re handled correctly, is unsurprising. And OBR’s appeal is underlined by how, though first introduced as we’ve already noted, by European operators, is seeing more and more non-EU countries starting to implement surcharges for other countries., thus spurring its growth. Presently these include Saudi Arabia, Algeria, Tunisia, South Africa, United Arab Emirates, and Turkey. Rollout of OBR across Asia is now also gaining pace.

Understanding the problem: real-time decisioning

Nevertheless, presently many carriers lack clear insight into the scale of the problem OBR can help them address. They’re generally aware of the risk of potential surcharge losses, but many can’t easily access or simply aren’t using the necessary data to make accurate routing calculations in real-time and, thus, to deliver predictable margins.

This must change, and OBR should be part of the solution. Both originating and transit carriers have to be able to validate the A-number (CLI/ANI) for traffic terminating to OBR destinations. They must also be able to validate the CLI to avoid or mitigate against penalty fees. Validation requires having access to complete, accurate and up-to-date number plan data for each country that can be accessed in the call routing platform switch in order to make real-time decisions.

Meeting OBR’s data processing challenge

Managing and organising the required data isn’t straightforward and meeting the challenge should be part of the OBR solution. Doing so necessitates the ingestion and processing of large volumes of data that has multiple dimensions so any solution to OBR must be capable of accounting for the potentially large number of different origins and rates a carrier may have stored in different rate sheets, regardless of how that data is presented (and it’ll rarely, if ever, be unform).

At the same time, carriers need insight into origin-based breakouts so they can access a normalised, harmonised view of all rating operations in one place. This information is the basis of optimised routing plans based on origin as well as destination – ensuring all calls are always directed to the best available carrier – regardless of whether origin is a factor or not.  Doing so will improve a carrier’s profit while simultaneously reducing its risk.

Carrier Cloud from Digitalk

Carrier Cloud from Digitalk fully supports OBR optimisation and delivers optimised rating mechanics. It immediately upgrades the efficiency of managing Origin Based destinations - without increasing workload in managing Rest of World rating – driving as noted both efficiency gains and reduced costs.

With this level of Origin Based Rating, Routing and Billing functions, import of any rate plan is also considerably simplified. In addition, Digitalk also offers a range of highly effective integrated simulation tools to easily diagnose OBR scenarios. This ensures 100% reliability of rating and routing prior to introduction of live traffic.

 

[1] https://www.statista.com/outlook/tmo/communication-services/mobile-voice/worldwide

[2] https://www.telemediaonline.co.uk/booming-voices-trends-in-the-wholesale-carrier-market/


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