Managing Wholesale SIP Termination

Posted by Jason Tapolci on March 21, 2013 at 7:36 AM
Jason Tapolci

Wholesale VoIP TitaniumIn a recent White Paper we discussed “How to Buy Wholesale SIP Termination” through strategies and processes. We wrote about a process called “RATA”; Researching, Analyzing, Testing, and Accountability. RATA is a formula we personally use to reduce the risk and time spent choosing a wholesale termination carrier. In this whitepaper we will talk about how to manage your wholesale SIP termination services. Managing wholesale SIP termination services brings an entirely new set of challenges. If we were to give one piece of advice to anyone managing a termination platform, that advice would be to develop good reports and watch them on a daily basis. There are many KPI’s (key performance indicators) to watch when managing termination. Minutes, margins, route loss, ASR (average seizure rate), and ACD (average call duration) are just a few things. Knowing what KPI’s to watch and how to read them is key to avoiding a huge monetary loss. It’s critical to know that lost traffic was due to high prices or having less than acceptable margins is due to high route loss or that your ASR/ACD stats are poor due to short duration (dialer traffic) traffic.

So the question is, where do I start when managing wholesale SIP termination? At VoIP Innovations, we are big fans of Verne Harnish, who wrote the Mastering the Rockefeller Habits. The Rockefeller habits are three practices that John Rockefeller adopted in every aspect of his life. They are priority, data, and rhythm and at VoIP Innovations we have adopted them in our everday life as well. Priority is simply setting priorities and sticking to them. Data is having access to the facts needed to make informed decisions. Rhythm is simply your daily routine. We manage our wholesale SIP termination services using these three habits and from past experiences, we can assure you that termination can make you pay, not figuratively, if managed poorly and it takes an entire team of people to manage it well.

Now lets talk more about priority. To be an effective wholesale termination provider, termination has to be a priority of the entire organization. If it’s not, it’s like Einstein’s theory that everything left untouched will move towards a state of chaos. When making termination a priority, it has to come from the top and make its way to the bottom of the organization. Everyone on the team needs to understand the volatility of termination and the negative impact it could have on an organization that doesn’t assign it a high priority.

Likewise, there is no use making termination a priority if there is no data to analyze. Good data is extremely important and can tell you a lot about the health of your termination services. Having access to KPI’s like calls, minutes, revenue, gross profit margins, ASR, ACD, and route loss are a must. The two most important KPI’s to us are the GPM (gross profit margin) and the route loss reports. Anyone using a LCR (least cost route) system understands that there is a delicate balance between the number of carriers in each route, the mark up of each route, and the route failures of each route. For example, if you were to use five carriers in each route (each rate deck has roughly 168K routes) and mark up each route off of the third carriers cost gives you a pretty big potential profit margin swing. If it completes on the first carrier in a particular route, we make our margin plus some, and we love when this happens. On the flipside, if it completes over the fifth route, we have started cutting into our margin and this is something we try to avoid at all costs. As you can see, if you don’t manage all 168K routes closely, your margins can dwindle away or worse you can find yourself under water.

Another side effect of selling termination is short duration (dialer traffic) traffic. Many termination providers will attempt to send their short duration traffic over a conversational rate deck(s). This is done to avoid the more expensive dialer rate decks that are available. A common strategy is to blend dialer (short duration) and conversational (long duration) traffic together and hope that the traffic meets the carriers acceptable use policy and usually this is something that never works. We've seen small and even some large carriers try and fail with this strategy. Eventually they will have unfavorable stats and will get hit with HEFTY short duration surcharges by their underlying carrier(s). Typically carriers want to see a 60/60 mix, which is 60% ASR and 60 second ACD. It’s important to quickly identify these users and address the issue. Failure to do so could also mean less profits and a smaller profit margin.

This takes us to the third habit, rhythm. Rhythm at VoIP Innovations is simply holding a 15-minute daily meeting to discuss the data mentioned above. We require the head of each department to attend these meetings and to hold their own with their individual departments. Our daily meeting consists of reviewing our KPI’s (mins, GPM, route loss, ACD, ASR), discussing ULC (underlying carrier) issues, and reviewing problematic customers. Keeping a daily rhythm provides clear communication and keeps everyone on the same page. Operations knows when we’ve added a new ULC, billing knows when we have a repeat short duration offender, and engineering knows when the route loss is unacceptable. By holding daily meetings, everyone knows where projects stand and who is held accountable if something isn’t moving along the way it should. It’s only 15-minutes a day to get everyone on track and then it’s back to work.

In summary, termination is too unpredictable and too risky to NOT watch on a daily basis. Utilizing Rockefeller’s three habits, priority, data, and rhythm, will help provide structure around your termination services.

Jason Tapolci is President of VoIP Innovations, an Inc. 5000 company. They specialize in providing the largest DID and termination VoIP footprints in North America. Their network includes over 500,000 DIDs in stock in over 8,500 rate centers in the US and Canada. Recently, VoIP Innovations expanded their footprint to include DIDs in over 60 countries and now offers A-Z termination. VoIP Innovations is owned by ABG Capital and is based in Pittsburgh, PA. To learn more about VoIP Innovations, visit them at http://www.VoIPInnovations.com.

Tags: Telephony, Entrepreneurship, Downloads

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