A growing number of carriers are coming to XConnect asking us about Origin Based Rating (OBR) and what their potential losses from surcharges might be. They are either seeing surcharges appear on their bills or are proactively looking at ways to prevent losses or disputes caused by OBR.
What is Origin Based Rating (OBR)?
Origin Based Rating, also known as Origin Based Charging for voice termination, takes into account both the origination and termination of a call when billing. The terminating network (usually mobile) will apply a surcharge to the mobile termination rates (MTRs) based on the country of the call’s origin.
Penalty surcharges can also result from invalid or manipulated Caller Line Identification (CLI) and Automatic Number Identification (ANI). Currently networks in over 20 countries (including many EU) have begun charging OBR. This list of countries is growing almost monthly.
Carrier contracts typically have clauses where a call with an invalid CLI (also known as A-number or ANI) will be charged a penalty surcharge (or the highest country surcharge). An example of an invalid CLI is if the CLI is not defined as allocated in the official number plan issued by each country’s regulator.
Penalties can mean an increase of 3,500% over the standard termination rate, for example $0.35 vs $0.01 for termination to German Mobile networks. Therefore, even a small amount of traffic to an OBR destination with invalid CLI, incurring the penalty surcharge, can wipe out many months of margin.
Where is it in place?
More and more networks across different countries are now adding OBR, averaging around one every month or higher.
In March alone, one or more networks in Saudi Arabia, the UAE, Algeria, Tunisia, and of course the two main MNOs in Germany, all added OBR, which is causing challenges for carriers around the world. On top of this, in Q2 2020 networks in two more EU countries began OBR charges, including a third major network in Germany as well as a network in Denmark.
Here is a list of just some of the countries where we’re aware OBR is active today, which is just a subset of the full list:
- 10+ EU countries,
- Saudi Arabia
- South Africa
- United Arab Emirates
We are also aware that certain networks in Asia have recently began to charge OBR, which will see more challenges span across continents.
Who does it affect?
OBR has the potential to impact the business of any carrier that terminates international voice traffic. With OBR gradually being introduced across continents, it’s important that carriers understand the risks and take the necessary steps to reduce the impact on their business today.
Mitigating OBR is critical for carriers of all sizes. Smaller carriers that are only carrying a few thousand dollars of transit traffic per month can incur losses of $100,000 per month if just a small percentage of these calls have invalid CLIs. Therefore, the OBR losses could wipe out any gross margin and create a massive loss not only for large carriers, but also for small and midsize carriers.
Why does it matter?
We have seen surcharges range from $0.10c to $1.00, and typically the surcharge for manipulated/invalid CLI is set at the highest surcharge price for that destination. If carriers do nothing, they risk an existential threat to their business, or if they block high risk voice traffic they will potentially lose some market share.
Blocking high risk traffic offers a quick solution to OBR management, but any carrier looking to optimise their business for the long term must be able to correctly identify and manage the traffic subject to OBR. If left unchecked, carriers will see negative margins and lose time and resource to disputes with other carriers.
However, if they understand OBR and take the necessary steps to safely carry traffic and accurately charge according to any surcharges that apply, they can minimise the risk of OBR to their margins and ensure their business is ready to adapt.
A Tier 2 carrier operating across Europe and the Middle East selected XConnect to help it to stop future losses resulting from Origin Based Rating (OBR) on its voice traffic in Germany.
How Can You Stop Losses from OBR?
The best way to stop losses from OBR is using data to gain control over your voice traffic.
Using real-time data for CLI/ANI validation can mitigate the risks associated with OBR and power informed decisions that deliver predictable margins. As a minimum, originating carriers and transit carriers need to validate the A-number (CLI/ANI) on traffic terminating to OBR destinations.
To perform most A-number validation techniques, carriers must have access to complete, accurate and up-to-date number plan information for each country. In addition, they must be able to access that data in the call routing platform switch in order to make real-time decisions.
We can help you to use global numbering plan data to put an end to OBR related surcharges, as well as:
- Capture higher margins
- Accurately price your services
- Never turn away new business
- Reduce resources spent on disputes
- Route traffic with confidence
Book an OBR consultation and we can help you understand your risk from OBR, build a business case for tackling it, and help you to stop potential OBR losses.