Introduction
International voice services are still relevant to telecommunications as they play a key role in connecting people and businesses across borders. Millions of calls are made daily as such services facilitate frictionless communication. The premise of such services are termination of voice calls to the correct destination in any part of the world that has telephony.
And as the margin for such services falls each year due to advances in technology, such as VoIP and 5G, among other factors, it is essential to have finely tuned business models and processes for these three Ts. While over-the-top (OTT) services continue to grow in terms of minutes of voice traffic, carrier services still handle significant numbers of voice traffic for business and social calls as they terminate large volumes of international voice traffic. So the challenge is offering such services with improved QoS and improved efficiencies in Trading, Trunking, and Technology. The following are some of my learnings on this topic.
Trunking in International Voice Services
Consumer Voice vs Wholesale Voice
Voice traffic is broadly classified as wholesale and retail. Wholesale voice traffic refers to large volumes of calls terminating at destinations in a carrier’s network. Retail voice is largely carrier-specific, and consumer voice traffic is routed directly by the service provider to the destination, usually bundled with some form of data service.
Voice Termination in Destination Networks
This is the final step in a carrier’s call processing and delivery ecosystem for international carrier voice. The high-level steps are as follows:
Call Origination: A call starts when initiated by a caller and is routed through the caller’s local telecom provider’s network.
International Transit: The call is transported across borders using physical transport technologies like submarine cables, satellite links, and protocols for VoIP like SIP and RTP.
Call Routing: The call is routed across borders by international carriers selecting paths based on efficiency, cost, and agreements, using interconnect solutions that include private and dedicated IP links, public IP networks, third-party private IP networks, and hubbing services.
Call Termination: The call reaches the recipient’s local carrier, ensuring delivery with quality and minimal latency.
Technology in International Voice Service
High-quality voice transmission is essential, requiring technologies to minimize latency, jitter, and packet loss. In addition to these network functions, the following section describes control plane functions involving decision-making and policy application, and data plane functions representing data generated from call activities.
Routing Technology
Least Cost Routing: This is as explained in detail on Wikipedia. Least-cost routing (LCR) in telecommunications is a method used by carriers to select the most cost-effective paths for outbound communication traffic. This process involves analyzing various routing options based on cost, quality, and capacity. LCR teams within telecom companies regularly evaluate and choose routes from multiple carriers, which can be done manually or automated through least-cost router software..
The LCR Process is also explained on Wikipedia. An example of the LCR team cycle in a carrier is as follows.
- Buyers negotiate new price schedules with suppliers.
- Prices are loaded into software for termination cost calculations and comparisons.
- A route is selected, establishing a cost-for-pricing, and new prices are issued.
- New routes are implemented on the switch; traffic volumes and margins are monitored via billing system reports.
- Loss-making traffic and odd routing is investigated; billing data is corrected, or action taken on routing and pricing as needed.
Origin Based Routing: With origin-based routing, carriers include the originating country or originating network to determine the routing of calls. So, the routing of calls is based on the origin of the call. Origin-based routing should allow carriers to manage cost, QoS, and regulatory compliance more effectively using the following data sets.
- Origin Sets: These are groups of area codes or country codes that define the origin of calls. These sets are used to categorize calls based on their geographical or network origin, allowing for differentiated routing strategies.
- Routing Destinations: The endpoint to target location for call termination explained above. Routing destinations are also manifested as country codes or numbers allocated to specific network operators within a country. It is the destination that is used to determined what route a call can take to be terminated correctly.
- Call Routing Labels: Routing rules and policies define the specific routes the call takes through the network. Each routing rule has an identifier or tag associated with it, and this mechanism enables the call to be routed according to the rule enforced by the tag, e.g., QoS, priority routes per tag(s), cost-based routing decisions per tag(s). In this way, call routing is aligned with business models and pricing models.
- Routes: The specific path the call takes from call origination to call termination. Routes are determined based on various factors, including cost, quality, and regulatory compliance. Carriers use routing tables and algorithms to select the most appropriate route for each call, taking into account the origin set and routing destination.
The Role of Call Detail Records
This is defined as in Wikipedia. A Call Detail Record (CDR) is a data record produced by a telephone exchange or other telecommunications equipment that documents the details of a telephone call or other telecommunications transaction, such as a text message or data session. CDRs are used by telecommunications companies for billing, monitoring network usage, and analyzing network performance. Here are the key components typically found in a CDR:
1. Call Date and Time: The date and time when the call was initiated and terminated.
2. Call Duration: The length of the call, usually measured in seconds.
3. Calling Party Number: The phone number of the person who initiated the call.
4. Called Party Number: The phone number of the person who received the call.
5. Call Type: The type of call, such as local, long-distance, international, or roaming.
6. Call Status: Information about whether the call was completed, failed, or busy.
7. Unique Call Identifier: A unique identifier for the call, which helps in tracking and managing records.
8. Route Information: Details about the network path the call took, which can include information about the switches and trunks used.
9. Billing Information: Data used for billing purposes, such as the rate plan, cost of the call, and any applicable taxes or surcharges.
10. Service Provider Information: Details about the service provider handling the call.
11. Additional Features: Information about any additional services used during the call, such as call forwarding, conference calling, or voicemail.
Trading in International Voice Services
Termination fees in International Voice Services
Whenever a call is completed on a carriers network a termination fee is charged by that carrier. This fee forms the bases of the cost structure of international voice services, and it is the cost incurred by the carrier to connect the call to the called user. Each carrier involved with routing the call from the call origination to the call destination plays a role in call termination and hence is entitled to intercarrier compensation. These fees vary significantly depending on the destination country and the related carrier network in that country. This is explained in detail on Wikipedia
Cost Structures and Pricing Models for International Voice
In the international voice carrier wholesale market, carriers employ various pricing models to optimize revenue and maintain competitiveness. These models are designed to address the dynamic nature of the market, which is influenced by factors such as demand fluctuations, regulatory changes, and technological advancements. Here are some common pricing models used by carriers:
1. Cost-Plus Pricing: This model involves calculating the cost of providing the service and adding a markup to ensure profitability. It is straightforward but may not always reflect market conditions or competitive pricing.
2. Tiered Pricing: Carriers offer different pricing tiers based on volume commitments or quality of service. Higher volumes or better quality often come with lower per-minute rates, encouraging customers to commit to larger volumes.
3. Destination-Based Pricing: Prices are set based on the destination of the call. Rates can vary significantly depending on the country or region, reflecting the cost of termination and regulatory factors in those areas.
4. Time-of-Day Pricing: Rates vary depending on the time of day the call is made. This model helps manage network congestion and incentivizes off-peak usage.
5. Flat-Rate Pricing: A single rate is charged regardless of the destination or time of the call. This model simplifies billing and can be attractive to customers who prefer predictability.
6. Dynamic Pricing: Prices are adjusted in real-time based on demand and network capacity. This model requires sophisticated technology to implement but can maximize revenue by capturing higher rates during peak demand.
7. Bundled Pricing: Carriers offer packages that include a set number of minutes or a combination of services (e.g., voice, data, SMS) for a fixed price. This can increase customer loyalty and reduce churn.
8. Promotional Pricing: Temporary discounts or special offers are used to attract new customers or increase usage among existing customers. This can be effective for entering new markets or countering competitive threats.
9. Quality-Based Pricing: Different rates are offered based on the quality of service, such as premium routes with guaranteed quality versus standard routes. Customers can choose based on their quality requirements and budget.
10. Revenue Sharing: In some cases, carriers may enter into revenue-sharing agreements with partners, where revenue is split based on predefined terms. This can be beneficial for expanding reach without significant upfront investment.
Carriers often use a combination of these models to tailor their offerings to different customer segments and market conditions. The choice of pricing model can significantly impact a carrier’s competitiveness and profitability in the international voice carrier wholesale market.
Hubbing vs Bilateral Trading in Voice International Interconnections
Bilateral trading focuses on direct, high-quality connections between two carriers, while hubbing involves multiple carriers and offers more flexible routing options but can vary in quality depending on the interconnection topology used.
Bilateral Trading:Bilateral voice international IP interconnections involve two carriers directly interconnecting their networks to transport voice calls and services. This setup is typically used to interconnect retail networks, whether mobile or fixed. The combination of voice traffic to be carried through the international IP interconnection is determined through bilateral negotiations between carriers
Hubbing: The international voice hubbing service involves multiple international carriers to deliver voice services between end users. It allows the exchange of international voice calls with multiple networks via one voice over IP interconnection. Hubbing services can involve multiple transit hops as calls transit through several carriers towards their destinations, especially for lower quality levels. Hubbing allows for more flexible routing options and can be used to reach multiple destinations through a single interconnection point.
While the industry is mature, the challenge is in efficincies and optimization for these three Ts.