Margin Optimisation
When you place a phone call you don't care who engineered the networking equipment that makes the calls possible.
The goal for a global telco is to leverage it's backbone network (Ethereum) to route inbound traffic to it's intended destination at optimum cost by handing off (interoperability) to alternative carriers (Alts, L2s & L3s) they trust to deliver at a competitive cost and quality of service. A stable cost base is essential for implementing a pricing strategy that balances profits per route vs continued loyalty.
Related
Algorithm
The Travelling Salesman Problem.
Automate routing case decisions to fulfil intentions to extract maximal value from a network of solution providers.
Reference Data
Data Integrity is fundamental to making accurate data-driven decisions.
![Routing Algorithm](/img/telcosMarginOptimisation.png)
- Wholesale vs Retail Strategy
- World Number Plan
- Routing Case
- Quality of Service SLAs
- Network (Bandwidth) Capacity
- Customer Records
- Trade Deals
- Time of Day
- Regulations
Operational data
- Inter-carrier Destination Costs
- Call Records
- Aggregated Network Traffic
- International Cost base
- Inter-carrier Destination Pricing
Arbitrage
During the early 2000s many Telco operators had not updated their systems to monitor or create routing decisions for international calls to mobile phones because this required collaboration and co-ordination across many departments and systems that had weak interfaces for transforming and exchanging critical data.
Adding to the complexity, a definitive standard for a world number plan does not exist. To operate effectively each of the following systems must share common reference data taken from a single source of truth.
- Switches
- Mediation
- Pricing
- Billing
Arbitrage opportunities arise against a Telco when it's reference data is outdated or is not aligned across business critical systems. As an example of this French mobile numbers begin +336 or +337 but in the early 2000s many international carriers had not updated their routing tables and reference data to reflect this. Therefore international operators based in France could route national mobile terminating calls over their international backbone to another country and pass on to another international carrier that was still charging fixed line rates for calls to France mobiles.
Network Management
Use traffic profiling a growth projections plan where to invest in infrastructure.
- Routes per switch (capacity)
- Routing cases per switch (destinations)
Network Traffic Profiling
Need to profile expected traffic based on:
- Pricing relative to the market
- Day of Week
- Time of Day
- Special events
- Christmas
- Ramadan
- Olympics
Capacity Planning
Physical cables from one switch to another. Where the other switch could be
- International backbone
- Domestic backbone
- Another carrier
Quality of Service
Product type examples are Retail and Wholesale.
Each product type must have a way to designate what level of service the customer had paid for either by route or A number matching.
Each Routing Case (Destination) had acceptable target KPIs. If a supplier falls below thresholds for a particular Destination and Product, add them to a blocklist.
- Answer Seizure Ratio
- Post Dial Delay
Trade Deals
Prioritised volumes that had to be reached to avoid contract penalties.
- Bilateral Agreements
- Multi-lateral Agreements
Open-ended agreements with prices for Number Plans sent via spreadsheets.
See trade in telecommunications
Routing Algorithm
In the dream scenario the network would be full but not overflowing capacity, with every destination perfectly priced to customers for maximum trading profits.
All traffic for each product type and destination, terminates with the first-choice selection with no routing overflow and all traffic terminated above benchmark quality
Pricing at the highest possible price to attract maximum customer volume without cause overflow as per point one.
Rules
Sequence of logic to deliver routing plans that optimise profits against available capacity and acceptable user experience for call quality.
- Overflow from first-choice selection is minimised
- Use suppliers most valuable routes, then exclude
- Backbone by customer type
- No circular looping
- Minimal overflow
- Blocked destination suppliers
- Trade Agreements
- Dial Code Destination Matching
- Dial Code Cost Blending
Preparation
Gather and sanitize and standardize data.
Predicted Traffic Profile Projected Minutes by Routing Case code per Hour
- Growth Trend
- Historical Trend
- Global Events
- Pricing
- Time of Day
Blend Rates
Load Blended Rate Profile for each routing case by mapping offering price, code overlap for each Time of Day
Routing Logic
In an iterative process that exits after achieving a set variation threshold or maximum iteration limit.
- Lock in bilateral agreement deals with any special rules
- Find the order for each destination
- run in order from highest volume destinations to least
- do not consider blocked providers
- get the first and second routing providers
- For each node on the network, against anticipated overflow setting, calculate the blended cost for each node in the backbone network add egress cost.
- Recalculate the best routing options for destination including backbone nodes
- Ensure no option for circular routing
Run the routing algorithm in iterations, after each pass of the routing order logic;
- Subtract the second choice cost from the first choice cost
- Order dataset by greatest saving
- Loop through to sum anticipated volume per provider for each destination/product profile based on volume demand (as)
- If a provider's safe outbound capacity is reached;
- Remove provider with full capacity as an option
- Add the provider and route to a list to be ignored as a routing option in the next routing iteration
- Move next provider option forward
Cost Base and Pricing
Goal: provide prices that balance demand with capability to deliver at predicted margins
Predict cost base of routing with a factor of safety to account for traffic overflow.
Establish the extremes of what the market with pay by analysing their price sheets.
Review objectives of relation with the provider in the big picture, their relative demand for minutes to destination.