Market Insight: Solving the complexity of hybrid voice and messaging wholesale deals

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HOT TELECOM

insight

Solving the complexity of hybrid voice and messaging wholesale deals


time has come to investigate systems which can integrate voice & messaging into a single platform

The beginning of a new era? Has the time finally come for the long-awaited marriage between voice and messaging, to create what are called hybrid or bundled deals?

However, in our last round of discussions with different wholesalers of all sizes in the voice and messaging space, we heard a different message.

We have talked with multiple industry experts about the likely evolution to this deal structure in the past, but generally there has been little appetite for such complex agreements.

Whilst there may not be a large amount of deals like this at the moment, an increasing number of carriers are starting to think about and negotiating “hybrid deals”, where one party commits to sending voice minutes, in exchange for messaging traffic, vice versa or a mixture of both. Usually, these types of agreements are negotiated for specific strategic destinations for a duration of 1 to 3 months.

Issues of having separate voice and messaging teams, the mismatch in volumes and revenue and the difficulties of actually managing such a deal often came to the surface in those discussions.

Capitalizing from the voice-messaging convergence The question that comes to mind however, is: Why such types of deals are appearing now in our industry? Well, it is not a hidden fact that wholesalers are struggling with ever decreasing margins, while facing intensifying pressure to compete on prices. Some see these types of agreements as a way of relieving the pressure, as they enable wholesalers to

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benefit from the higher margin that message traffic brings, at the same time giving them the option to subsidize their voice business and gain more business using the messaging margin if necessary. On the other side, messaging providers, who perhaps have recently entered the voice business for example, are often looking to increase their revenue. So, this type


of arrangement enables them to harvest a quick uplift in revenue, something they would never have been able to do by transporting only messaging traffic. These factors are making hybrid deals a win-win proposition. Other mid-size wholesalers are looking to improve their business efficiency by merging their voice and messaging account, deal management and routing teams and systems into one consolidated structure. Meaning that although you may have specific voice and messaging experts, they are using generally agreed common routing policies and work alongside a single deal management team, for example, making these types of hybrid deals a natural evolution. Finally, larger wholesalers, who are offering outsourcing solutions globally, are aiming to better address the voice and messaging convergence. To that effect, they are looking to offer bundled outsourcing deals, combining both voice and messaging offers, with global business support and joint product factories, moving away from product-orientated to customer-orientated, tailored partnerships.

Complexity, Complexity, Complexity However, this new era of hybrid deals sounds too good to be true for many, as with hybrid or bundled deals comes complexity, complexity, complexity. Firstly, only a small number of carriers have integrated their voice and messaging teams, systems and processes, which is a key pre-requisite in being able to manage such agreements efficiently and cohesively. Not having to revert to manual support using spreadsheets for example gives them real time reporting on the current status of each deal in terms of volumes, revenue and net margin, without the problems of human error and missed signals that the deal may be running into problems. Secondly, the equilibrium between the voice and messaging traffic is not that obvious. For example, there is a lot of artificial voice traffic flying around, while messaging delivery has become a spot market which is unstable. Measuring and managing the quality of voice termination is well understood and systems manage it well, whereas messaging delivery is not seen in real-

time in many cases and there are significant incentives on some suppliers to play with the real success rate. Managing the disparity in the nature of both streams of traffic to negotiate manageable and equitable bilateral deals is definitely challenging for both parties involved. Finally, for such deals to take place, both parties must be capable of managing both voice and messaging and willing to implement such a complex business model. This means that the pool of players looking to enter into these types of arrangements is somewhat limited currently, but this could become more prevalent if the complexity in managing these types of deals is addressed. There are solutions out there, such as Linxa’s Voice and SMS platform, which can streamline this complexity, while helping create a more efficient organization and be

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It’s time to move on to build the future Automated systems for managing termination (of both voice and messaging) have been under development and have been evolving for decades. That is not to say that you will find decades old systems in operation in many places, although there may be a few. It is more that they have evolved with the business and many companies are very invested in those existing systems and their wider integration into the rest of the system architecture supporting the business. It was often the case that with separate business units handling different products, that the systems were developed somewhat independently of each other and in their own silos. With such an approach, developing and managing a combined deal across multiple products is not easy as not only is there unlikely to be an overall view of the business at a deal by deal level, there is unlikely to be much commonality in the approach to managing those businesses. What has changed in recently years is that the flexibility and effectiveness of modern development techniques, coupled with rapid deployment of incremental improvements in cloud-deployed environments, has made it much easier to consider the evolution away from internally developed legacy systems, supporting each product separately, towards one integrated solution for all products. Throwing away years of development effort is not something that carriers have ever taken lightly, but a number of mid-sized and large carriers have recently discovered that not only is it possible, but that it has in effect given them a much more flexible and capable system. Instead of yearly drops of new features, they are seeing deployed changes in a matter of weeks. Rather than having teams trained on the intricacies of routing and managing one product, they find that it becomes feasible for their teams to be combined and use the same system for more than one product.

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THE FUTURE is likely to involve multi-product deals

And with parallel operations to build confidence, they have found that they can safely migrate to a modern system swiftly, securely and with ease, all without affecting or losing live traffic Not everyone wants to negotiate these combined voice and messaging deals, and there will always be complexities with them. However, having one modern and flexible system for managing everything, from the ingestion of rate sheets, the handling of unusual rating scenarios, generating complex routing solutions and providing real-time visibility of the status of each deal as it develops, gives them the comfort that they can handle anything that is thrown at them. No longer will a daily report appear that shows that the deal that was supposed to be balanced is now suddenly in the red. These days can be a thing of the past. It appears that the future is likely to involve some elements of flexible business models and multi-product deals and arrangements, and it is also clear that latest technology systems have many advantages over the more traditional approaches. Perhaps the time has come to investigate systems, such as the solution from Linxa, which can integrate both voice and messaging in a single platform, offering an end-to end-rating, routing, billing, reporting and monitoring solution. with high levels of automation and real-time management. Now is the time to build and accelerate for the future, which promises to be all about flexible business models, agility and efficiency.


the authors Steve has a lifetime of experience in designing, engineering and operating networks, both domestic and international. With leadership experience in small technology start-ups through to global service providers, he has deep experience in a wide range of products, technologies and geographies. He has the rare skill of being able to explain complex technical issues in easily understood concepts and uses that extensively in his consulting work with HOT TELECOM. Steve Heap CTO, HOT TELECOM

Isabelle has worked for 29 years in the telecoms industry. Her personal expertise ranges from Int’l Wholesale through to Business Strategy, and Marketing, along with extensive research and global consulting experience.

She has been working with many of the world’s telecom service providers to help them define their transformation strategy and has written multiple articles and speaks at conferences on this topic. She is also passionate about encouraging the involvement of your people and women in technology and science and conducts multiple panels and interviews with leading women and your rising stars globally. Isabelle Paradis President, HOT TELECOM

about Linxa Linxa delivers telecom software platforms for voice and messaging, designed to make it simpler and faster to grow profitability and capture new revenue in the complex telecom market.

Linxa has offices in the UK and Turkey with local presence in USA, Sweden, Netherlands, Germany, Tunisia, South Africa and Australia.

Along with high performance switching and network products, we offer tools and support to efficiently manage rating, pricing, routing, real-time monitoring / reporting and invoicing with high levels of automation.

If you want to talk about how we can help you build a future-proof voice and messaging business, contact us at: info@linxa.com

This enables telecom providers to focus on their core business, reduce fraud and disputes, while optimizing routing and making real-time decisions based on price and quality.

or visit www.linxa.com

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