Email a colleague    

January 2015

Why it’s Time to Modernize Financial Clearing for Mobile Roaming

Why it’s Time to Modernize Financial Clearing for Mobile Roaming

One of the rewards of exploring this telexchange market is learning about the interesting trading mechanisms that make inter-operator business work.

The roaming clearinghouse is one of these vital mechanisms — and it’s something we can easily take for granted.  Imagine if operators had to bill and settle their roaming charges with each and every individual carrier — or with a cluster of regional clearinghouses.  Think how costly and inefficient that would be.

Well, the beauty of today’s clearinghouse is an operator only needs to go to one place for the status of its invoices and payments.  And the few roaming clearinghouses around the world coordinate with each other: when an operator selects a clearinghouse, then all billing records for that operator are directed to that one clearinghouse.

Aside from some smaller clearinghouses in places like London, China, and the Middle East, the two largest ones by far are Syniverse in Tampa, Florida, and Starhome Mach in Zurich, Switzerland.

So joining us now with a perspective on the developments in the clearing business is Guy Reiffer, Vice President of Marketing and Partnerships at Starhome Mach.

Dan Baker: Guy, maybe a good place to start would be to understand the business that Starhome Mach is in.

Guy Reiffer: Sure, Dan.  Our mission as a company is to address the full range of roaming wholesale processes.  It all starts with the exchange of billing records between the operators and ends with the financial clearing of invoices and settlement.  But there are many other niche processes that fall in between which ensure that all the operators are paid correctly for their services.  We also offer a number of network value-added services such as steering of roamers, SMS campaign management, and mobile traffic intelligence.

You mentioned “steering of roamers.” What’s that about?

Steering of roamers is the routing of roaming traffic to wholesale operator partners who deliver the best price/performance value.  For instance, an operator may have agreements with three or more operators in one country.  But which operator offers the optimal arrangement in terms of reduced costs and best quality of service?  That’s what steering is about.

Starhome Mach serves about half the global market for these steering solutions.

Being in the middle of mobile transactions is certainly a great place to gather market intelligence.

Yes, we have a bird’s eye view of what’s happening in mobile across the world’s regions.  For instance, these days we’re seeing a growing volume of business between Europe and North America.

We can also see how price changes ripple through the market.  For example, after the last EU price reduction in July, we saw a jump of about 25% in European voice minutes, which is a surprising and positive trend because voice volume has been flat for many years.

It’s not just billing intelligence, by the way.  For instance, when users land in a foreign country, we can see when they register on a visited mobile network.  In this way we can tell operators exactly how many subscribers are using their phone when they roam.  So we supply the intelligence to drive SMS promotional messages to entice users to use their devices when they are abroad.

And each message has a “click here” option to buy something or update their subscription.  So these offers are very popular today and a welcomed additional revenue stream, given the decline in roaming revenue due to European regulation.

The upshot is if you can increase roaming activity even 10%, this can drive some very profitable additional revenue.

One industry initiative that’s certainly going to impact operator traffic is Machine to Machine (M2M).

Actually, Dan, when you look at our network stats, there’s quite a bit of machine-to-machine traffic already out there.  And many operators are simply not aware of all the additional SIM devices in their networks, so they need to be careful.

M2M devices can put a big load on international links.  To give you an idea: one misbehaving type of device we discovered was absorbing 20% of the international link between two European countries.  On our side, we saw tons of billing records with tiny amounts.

So yes, M2M is out there andi is having an impact even at this early stage.  M2M is clearly not a two-year payback business model: it’s probably more in the range of a 10 or 15 year business model.  One of the challenges is M2M can involve many partners and systems and processes need to be fine tuned in M2M.

I understand one of biggest programs Starhome Mach is tackling is the improvement of financial clearing and payments.  What are the key problems that legacy systems face in that area?

Well, clearly the biggest issue with the legacy method is the disconnect between the clearing of billing records and the settlement.  The clearance process is complicated enough since several hundred operators are usually being billed off one platform.

However if billing and settlement are not fully integrated, you end up with big data integrity problems.  And this creates a kind avalanche situation where thousands of error-filled invoices are created, and it takes great effort and time to get them resolved.

Legacy systems also create a large queue of outstanding payments that can cause severe cash flow problems.  So the whole process is archaic and very manual driven.

So what’s the answer to this dilemma?

The answer is to lock billing and settlement into a single process within one database.  And that’s what Starhome Mach has done.

Our new financial clearing system fully modernizes the wholesale settlement and payment industry for roaming.  Along the way we’re replacing 1990s-vintage systems that were developed before the arrival of internet banking and web-based interfaces.

As you can imagine, in that previous era, to get anything done you had to call a service center to know whether you could accept an invoice, create a deviation, and figure out how much money you were going to receive.

But the advantage of a modern, unified system is that processes are fully automated and online.  It puts operators in total control: they can now have full visibility over their outstanding due, their invoices, and their payments.

What are some other capabilities of these modern financial systems that operators should be looking for?

Well, believe it or not, much of the industry still relies on paper invoices, so if your document scanning technology is weak, it’s hard to do the conversions properly, so you end up having to input invoices manually.

Applying foreign exchange rates is another area we’ve poured a lot of energy into.  When a service provider in China settles with a provider in the USA, getting the best exchange rate is important.  Now clearinghouses will apply rates for you, yet what often happens is the exchange rate mechanism is a profit center for the clearinghouse, and costs the operator money.

What we’ve done is introduce a fairer and more transparent mechanism that allows the operator to see exactly how the exchange rate is computed.

Guy, thanks for the nice briefing, and good luck on bringing the clearinghouse into the modern age.

Copyright 2015 Telexchange Journal

 

About the Expert

Guy Reiffer

Guy Reiffer

As a 25 year veteran of the telecoms industry, Guy leads the Marketing and Partnerships function of MACH.  Recently he launched the combined company brand and is reinvigorating the company’s partnership program.  Guy joined Starhome MACH through the acquisition of MACH Clearing in 2013.  He has led Marketing and Partnership functions for many years and has a broad experience across innovative startups, Tier 1 Operators, and major vendors.

He has worked across Mobile, Fixed, and Cloud based providers in technologies as diverse as fiber optic transmission, policy control, messaging, Clearing & Billing, and of course now network based inter-carrier products such as steering and campaigns.  A qualified Engineer and member of the Institute of Engineering & Technology (IET) and the Chartered Institute of Marketing (CIM), Guy lives in Luxembourg with his wife and 3 daughters.   Contact Guy via

Related Stories

  • Roaming Strategy in the Bill Shock Age: Fresh Ideas to Win the Trust of Silent Roamers interview with Jason Bryan — Despite WiFi competition and pricing rules, smart operators can figure out ways to turn roaming into a big winner.  A roaming expert talks about strategies and poses questions that people in the roaming biz need to consider.
  • Why it’s Time to Modernize Financial Clearing for Mobile Roaming interview with Guy Reiffer — The beauty of the roaming clearinghouse is it gives an operator a one-stop-shop for billing and payments.  This interview explains initiatives to improve financial clearing and provide value-added services such as steering and marketing campaigns.
  • Roaming — if Managed Correctly --  Can Be a Spark to Revenues by Brian Silvestri — Major analyst firms are predicting that roaming revenues will almost double in five years.  What’s more, roaming remains at the pivot point of Wireless Carrier strategy.  Drawing lessons from the incredible rise of AT&T’s Digital One Rate Plan, this article points to future challengtes and raises key  questions about how mobile operators will ultimately come to terms with smartphone market profitability, service quality, and data roaming.
  • LTE Analytics:  Learning New Rules in Real-Time Network Intelligence, Roaming and Customer Assurance interview with Martin Guilfoyle — LTE is telecom’s latest technology darling, and this article goes beyond the network jargon, to explain the momentous changes LTE brings.  The interview delves into the marriage of IMS, high QoS service delivery via IPX, real-time intelligence and roaming services, plus the new customer assurance hooks that LTE enables.
  • Virtual Operator Life: Enabling Multi-Level Resellers Through an Active Product Catalog interview with Rob Hill — The value of product distribution via virtual operators is immense.  They enable a carrier to sell to markets it cannot profitably serve directly.  Yet the need for greater reseller flexibility in the bundling and pricing of increasingly complex IP and cloud services is now a major channel barrier.  This article explains what’s behind an innovative product catalog solution that doubles as a service creation environment for resellers in multiple tiers.
  • Roaming Fraud: The Importance of Real-Time Data Exchange and Analysis interview with James Stewart — The Near Real Time Roaming Data Exchange (NRTRDE) is a GSM standard allowing operators to gain fast access to the roaming records of service providers half way around the world.  The article explains how 65 carriers are using this data to combat fraud through a service bureau.  Learn about the dangers of international roaming fraud and the value a roaming service bureau brings to the table.

Related Articles

  • Tier 1 International Access Solved: Sidestepping the Low QoS & High Cost Risks of Wholesale Connections interview with Manoj Jain — A new wholesale service allows smaller operators to secure indirect Tier 1 access and minimize the hassles, high cost, and risks of tacking up international routes on their own.
  • Connectivity as a Service: Providing Last Mile Access to the Cloud with Private Networks interview with Mary Stanhope — The cloud revolution can‘t leap to the next level till “last mile” access issues are solved.  This article explains how “connectivity as a service” firms deliver access for cloud application providers, enterprises, small business, and telecoms.
  • Roaming Strategy in the Bill Shock Age: Fresh Ideas to Win the Trust of Silent Roamers interview with Jason Bryan — Despite WiFi competition and pricing rules, smart operators can figure out ways to turn roaming into a big winner.  A roaming expert talks about strategies and poses questions that people in the roaming biz need to consider.
  • Coping with Chaos: The Copernican Revolution in Wholesale interview with Jan Dingenouts — Vaporized margins have changed the  wholesale business forever.  A consultant explains the shakeup, the staff cuts, and the new reliance on automation.  Where is wholesale headed and how can retail operators leverage their partner relationships?
  • A Global Voice Network on the Fly: Own It & Manage It Virtually with a Cloud BSS/OSS interview with Rene Mendez — Lease a global IP voice network together with a real-time intelligent BSS/OSS to manage it.  In this interview, you’ll learn the benefits of a virtual network business, one that launches quickly and removes the maintenance headaches and the vast majority of costs needed to build a network from scratch.
  • White Paper: 16 Top Features of a World-Class Wholesale Billing System by Dan Baker — Wholesale billing is one of the most complex areas in the telecom business.  This white paper organizes the capabilities to be considered into 16 advanced billing features.  The paper is a reference guide that will help you plot your path to billing excellence.
  • Solution Vendor & Integrator Partnering: The Key to Enabling an Operator to Meet its Strategic Goals interview with Kirill Rechter — Working with strategic partners is an essential component to the success of any on-going billing project.  In this interview, a billing vendor CEO explains how a software vendor, systems integrator and service provider can best work together to drive the service provider’s business strategy.
  • The Shifting Winds of Wholesale: Building Systems that Adapt to Business Change & Greater Partnering interview with Hassan Iftikhar — Telecom wholesale is radically transforming itself today to support the retail and enterprise wings of the business as they greatly expand their portfolio of digital and partner-supplied services.  This interview discusses the forces driving the change and systems needed in the new era.
  • Why it’s Time to Modernize Financial Clearing for Mobile Roaming interview with Guy Reiffer — The beauty of the roaming clearinghouse is it gives an operator a one-stop-shop for billing and payments.  This interview explains initiatives to improve financial clearing and provide value-added services such as steering and marketing campaigns.
  • Book Review: A Playbook of Tactics on Internet, Cloud, and Network Partnering by William Norton — The internet is a magnificent feat of engineering, but the internet has a commercial side too.  Before anyone receives his flow of internet electrons, an ISP somewhere in the world must get paid — or rewarded in some other way — for making that connection.  So how is this behind the scene interent trading done?  This book opens up the fascinating world of the commercial internet for you to understand.
  • Payment Assurance: Getting a Handle on Poor Billing & Credit Card Processes that Disrupt the Subscription Journey interview with Paul Larsen — As operators increasingly partner with OTTs to distribute video, music, and other content, it’s important to  understand the many issues OTTs deal with in the payments area.  This interview with a payments and direct markteing expert explains the transaction challenges that all subscription billers face.
  • The Business Case for a B2B Collaboration Platform between Operators and OTTs interview with Landry Ndikumasabo — Wanted: a flexible, open software platform that enables operators and OTTs to collaborate, innovate, and make boatloads of money together.  Learn why a European research study concludes that the revenue impact of such a platform could be great.
  • Wholesale Systems: What They Are & Why They are Important to Telecom’s Future interview with Daniel Ölvebrink — Defining whole systems is problematic because it includes a host of functions: from interconnect billing and roaming to routing and partner web portals.  This interview explains the major functions and challenges in a tutorial.
  • The Power Behind Telecom Thrones: Virtual Comms Technologies & Their Vendors interview with Ben Bannister — Virtual communications providers — who provide telecoms with IPX, messaging, roaming, and other network services — are changing the industry landscape.  A leading vendor discusses how the market is evolving and what to watch as the digital ecosystem matures.
  • Special Report: The Road to a Unified Wholesale Platform by Dan Baker — A unified wholesale platform is an idea that’s been floating around the industry for some time.  And in recent years, carriers have made great progress toward the goal.  This TRI-authored white paper explores the top benefits of a unified platform, advanced system features, likely enhancements coming, and vendor selection questions.
  • CABS Revenue Assurance: How Rural LECs can Recover $284 Million in Revenue Shortfalls interview with Darrell Merschak — Independent rural LECs in the U.S. still rely on the AMA/EMI billing formats for CABS billing, even as that format has proven to be highly inaccurate as a source of inter-carrier records.  This interview includes an analysis and discussion of revenue recovery techniques ILECs can use by leveraging SS7 probes.  Also discussed are billing strategies, traffic dumping threats, and the possible fallout from the FCC’s bill-and-keep mandate.
  • Data Integrity Issues Go Global in the Telecom Wholesale Exchange interview with Vic Bozzo — Wholesale systems enable operators to expand their global reach and work efficiently with partners in an increasingly interdependent telco business.  In this article, you’ll learn about: how many subsystems work together in support of the global trading exchange, why data integrity has become critical, and how wholesale business trends are affecting wholesale systems at Tier 1 and mobile operators.
  • Roaming — if Managed Correctly --  Can Be a Spark to Revenues by Brian Silvestri — Major analyst firms are predicting that roaming revenues will almost double in five years.  What’s more, roaming remains at the pivot point of Wireless Carrier strategy.  Drawing lessons from the incredible rise of AT&T’s Digital One Rate Plan, this article points to future challengtes and raises key  questions about how mobile operators will ultimately come to terms with smartphone market profitability, service quality, and data roaming.
  • LTE Analytics:  Learning New Rules in Real-Time Network Intelligence, Roaming and Customer Assurance interview with Martin Guilfoyle — LTE is telecom’s latest technology darling, and this article goes beyond the network jargon, to explain the momentous changes LTE brings.  The interview delves into the marriage of IMS, high QoS service delivery via IPX, real-time intelligence and roaming services, plus the new customer assurance hooks that LTE enables.
  • Virtual Operator Life: Enabling Multi-Level Resellers Through an Active Product Catalog interview with Rob Hill — The value of product distribution via virtual operators is immense.  They enable a carrier to sell to markets it cannot profitably serve directly.  Yet the need for greater reseller flexibility in the bundling and pricing of increasingly complex IP and cloud services is now a major channel barrier.  This article explains what’s behind an innovative product catalog solution that doubles as a service creation environment for resellers in multiple tiers.
  • Partner Settlement: The Adaptable Chameleon that Lives Between Wholesale and Retail Billing interview with Arun Kalavath — Partner settlement has been around a long time, but its profile is on the rise because wholesalers are offering new services and content services are bringing settlements into the retail sector.  In this article, you’ll learn about the market forces changing the wholesale business, the expanded portfolio of services that require settlement, and advice on how to pick a settlements solution vendor.
  • Carrier Usage Audits: Why Regular Checkups Are the Key to a CSP’s Bottom-Line Health by Brian Silvestri — Many telecoms are wholly unaware of the risks of not having a solid usage auditing program for interconnect bills.  Rather than a once-a-year or once-a-quarter audit, this article makes the case for regular monthly audits.  Also discussed are: the different types of audits and organizations involved; the dangers of not auditing often; and factors to consider when selecting a cost-management vendor.
  • Partners in Carrier Management: The Success Story Behind T-Mobile’s Fiber Rollout in Wireless Backhaul interview with Bryan Fleming — Wireless backhaul is the unsung hero of the smartphone’s success.  This interview with T-Mobile’s carrier management architect for backhaul reveals the behind the scenes game plan for one of the most ambitious wireless interconnect programs ever.  You’ll learn about: the reasons for adopting a full-scale fiber strategy; the challenge of finding carrier partners; the clever techniques T-Mobile used to simplify and cut costs; advice on building great relationships with suppliers; and the key role that analytics, assurance, and visualization software played.
  • CABS Revenue Assurance Disputes: May the Carrier With the Best Data Win by David West — Revenue assurance innovation is far easier when partners cooperate to make it happen.  This articles shows how a U.S. operator, software vendor, and consultant teamed to develop a breakthrough in Carrier Access Billing (CABS) assurance.  Learn about: the dispute resolution data gap that needed to be filled, the partnering strategy, the implementation challenges, and payback results.
  • Invoice Audit Productivity: From 19th Century Textile Mill to SaaS by Peter Yelle — When it comes to invoice reconciliation, are your processes and tools modern and efficient, or is your company stuck in a 19th century time warp?  This article show how operators can vastly reduce their manual audit steps by automating via a SaaS solution.  The  detailed case study and diagram show which tasks were automated to achieve an 80%+ productivity gain.
  • Roaming Fraud: The Importance of Real-Time Data Exchange and Analysis interview with James Stewart — The Near Real Time Roaming Data Exchange (NRTRDE) is a GSM standard allowing operators to gain fast access to the roaming records of service providers half way around the world.  The article explains how 65 carriers are using this data to combat fraud through a service bureau.  Learn about the dangers of international roaming fraud and the value a roaming service bureau brings to the table.
  • Is Your Company Penny-Smart and Dollar-Foolish in Auditor Productivity? by Peter Yelle — Operators who fail to automate their invoice reconciliation process could be seriously undermining the morale and efficiency of their most valuable auditors.  This article explains the many subtle ways that manual auditing process can cost operators money.  Also presented is an analysis of the typical returns achieved by CSPs with mature cost assurance programs.
  • An Automated Self-Audit Approach to Telecom Cost Assurance interview with Jim Buttafuoco — What’s the value of an automated approach to invoice validation?  This article explains the power of the SaaS model where the vendor supplies the data-processing expertise, relieves the operator of tedious manual work and boosts auditor productivity so more money is saved.
  • Cost Assurance: Dealing with Rating Variety in Wholesale Bills by David West — Validation of intercarrier wholesale invoices seems like a fairly straight forward process.  But regulatory rules and a variety of bill rating methods have made it very complex.  This article details the challenge by walking through a wireless carrier case, then laying out the argument why operators should opt for a custom solution based on a core reporting engine.