Increasing numbers of mobile operators within the European economic area have introduced origin based rating for voice termination and more are expected. In March 2020, German mobile network operators are expected to introduce significant surcharges in mobile termination rates (MTRs), based on the country of call origination, with differences as much as €0.20 per minute (a 1,000% increase) and further surcharge penalties for calls with fraudulent calling party numbers (CLI/ANI) such as manipulated or invalid numbers.
Typical carrier contracts clauses now determine that calls with calling party numbers (CLI/ANI) that are not recognised as valid, based on the current official number plan issued by each country’s regulator, will be charged the penalty surcharge. This penalty surcharge can be around €0.35, which means a 3,500% increase over the standard termination rate.
These surcharges are causing significant market disruptions as many originating service providers and transit carriers are challenged with managing the routing, rating (for carrier reconciliation) and pricing of these surcharges.
For transit carriers, there are significant risks of substantial losses on this traffic due to the surcharges and penalties. However, the full force of the surcharges and especially penalty surcharges may not be felt for many months as these charges are often raised many months later. Moreover, we are increasingly seeing contracts with the ability to raise surcharges and penalty surcharges up to six months after the calls occurred. This is leading to substantial billing and settlement disputes, contractual uncertainty, and massive changes in transit pricing.
The challenges are compounded further because there is significant variation in the definition of groups of countries for call origination as well as different rules for A-number (CLI) validation. In turn this is driving an urgent need to utilise Number Portability data to identify which terminating operator will be delivering the call, in order to identify which surcharges and penalty surcharges will be applied.
Mitigating Service Providers’ Risks and Optimising for Origin Based Rating
The biggest risk for voice service providers in a volatile world with massive surcharge increases, is the increased pressure on retail rates, driving customers to over the top providers such as WhatsApp and Skype. This is further complicated by fraudsters manipulating the CLI and the likely opportunities for arbitrage.
The full extent of these risks are unlikely to be known until settlement, and the impact could be significant. As a minimum, and to avoid the biggest risks, transit carriers need to demonstrate that they have taken reasonable measures to filter out invalid traffic or potentially face lengthy and significant disputes.
XConnect, along with its technology partners, has been helping customers prepare for the disruption as well as building a technology roadmap to fulfil switching, accounting, and fraud management needs as origin based rating and differentiated rates for ported numbers become the global norm.
A recent traffic impact assessment for France revealed a cost difference of up to 30% in rated records when compared to pre-OBR charging. This did not account for the risk associated with invalid CLIs.