Mobile Network Operators (MNOs) and other voice service providers are challenged to maintain and grow margins. The growth of Origin-Based Rating (OBR) across markets around the world means they have new business risks they need to manage.
Juniper Research estimates that MNO voice revenues will drop from $381 billion in 2019 to $208 billion by 2024, as subscribers choose OTT alternatives or simply make fewer calls. There are two big takeaways from this 45% drop in revenue.
The first is that the voice market is still an absolutely massive opportunity. A market worth $208 billion is still a significant business opportunity. The second is that MNOs and other service providers need to adapt and insulate themselves from risk. Otherwise, they’ll face both declining revenues and margins, as demand moves elsewhere.
Within this context, OBR is proving to be a massive headache and a growing risk. Telecom regulations are constantly changing, and the rise of OBR only brings more complexity to surcharges faced by service providers. Bill shock caused by surcharges has the potential to ruin businesses if they don’t have the right intelligence or routing capabilities. It is extremely difficult to pass this cost on to carrier partners or subscribers and that means the MNO or service provider has to take the hit. Across the entire value chain, there’s no tolerance for increased cost per minute.
The challenge is to understand a constantly changing OBR landscape globally and ensure they don’t face unexpected surcharges. Many organisations don’t understand the consequences until it is too late and will see bills that have the potential to cut their paper-thin margins.
Changing regulations
OBR is being deployed across an increasing number of markets in Europe and beyond. When applying surcharges to carriers, OBR considers the location the call is made from, whereas previously costs only took into account the receiver’s destination and termination of a call. A rapidly increasing number of countries are adopting OBR. This means that multiple calls to the same location can vary completely and potentially pass the pound-per-minute threshold instead of just the expected fraction of that.
OBR penalties can mean an increase of 3,500% over the standard voice calling termination rate. This is potentially crippling for Mobile operators and is often passed on to subscribers, which is disastrous at an already testing time and pushes them to OTT players.
Platforms such as Microsoft Teams and WhatsApp already pose a threat to traditional service providers, but this is heightened when they can provide subscribers with the stability other providers cannot. Using subscription or even free models means that consumers know the exact price they’ll be charged at the end of the month – a necessary incentive to compete with.
In a competitive and consistently changing market, service providers need to properly prepare for the expanding requirements to avoid penalties and preventable losses. Billing possibilities are volatile, and ensuring your business is OBR-compliant is an absolute must.
Staying OBR compliant
It’s time-consuming and impracticable to learn each rate and regulation manually, but failure to do so results in high charges, extreme losses and margins to fall. Surcharges are disrupting businesses’ ability to maximise resources and it’s difficult for carriers to manage routing and pricing independently.
MNOs and carriers need to look at their Operational Support Systems (OSS) and Business Support Systems (BSS) systems and take proactive steps to avoid bill shock. With more advanced number intelligence, carriers can prevent any traffic blind spots that will ultimately lead to a costly surprise.
The steps to tackling OBR:
- Gaining visibility – It’s unlikely MNOs get visibility on their rates until after they have been charged., and time is then spent manually reconciling, disputing or ultimately passing charges on to subscribers. MNOs need to access minutes on demand so they can make decisions in real time. Once issues are highlighted as soon as they occur, this allows for a speedy resolution.
- Being data-driven – Getting better insight and analysis into your traffic quality enables carriers to make accurate and evidenced decisions about how to manage their traffic to remain OBR compliant. For example, benchmark reporting enables users to set benchmarks for acceptable quality and solves any ambiguity carries may feel over whether they are compliant or not.
- Utilising automation – With increasingly restrictive regulations, the best way to ensure you’re OBR compliant is to adopt an automated approach. MNOs can keep margins predictable, and once any discrepancies are flagged, there’s a third-party team ready to share their expertise.
Without ensuring billing processes are reliable, robust and up-to-date, MNOs will miss out on significant revenue. Whether they choose to take the hit or pass it on to subscribers who rebel by migrating to OTT players, MNOs lose out.
By tapping into the right technology, MNOs can balance user-defined business rules with automatic and pre-existing processes to remain compliant with OBR without legitimate traffic getting caught in the crossfire. Adopting a pre-existing foundation for traffic analysis
sets carriers up with a long-term partner that knows the industry and requirements and takes the manual strain off.
Avoiding leakage for increased success
Voice and messaging organisations cannot afford any revenue leakage to OBR regulations.
By updating back-office systems, communications service providers gain optimum control over traffic quality and can make better-informed decisions to prevent surprise charges.
As OBR becomes more widely adopted, MNOs that act now will give themselves the best possible opportunity at understanding and reacting to regulations to improve their bottom line. The risk that being complacent does to a provider’s reputation and subscriber count is just too great to ignore.
