By Aelea Christofferson
Least cost routing and disaster recovery has been understood and applied to outgoing calls for years. Programming a switch to select a traffic route is as old as the introduction of the PBX, but understanding that all the same capabilities apply to incoming toll free traffic has long been overlooked. The capability involves multi-carrier routing of toll free traffic. Although the technology has been available since 1993, the use of it has been slow in coming. However, interest in multi-carrier routing has been growing.
There are several reasons for this growth. The first is that acceptance of tier two and three carriers has grown. As networks and switching have improved, the idea that only the largest carriers can provide stable service has lessened. This has given rise to a number of carriers that can offer choices to call centers.
Another reason that multiple carrier routing has become more attractive is that as the per- minute rate has dropped, the difference in a fraction of a cent in cost is important. When carriers and resellers could charge $.12 cents per minute to customers, half a cent one way or another was irrelevant, but as competition has grown and margins have shrunk differences of one or two cents have become important.
Both of these elements lead the most important carriers and resellers to accept multi-carrier routing arrangements. End users, especially large users, are discovering this option and demanding the choice. In the past, the large carriers might have dismissed a customer’s suggestion that traffic be split, but in this competitive market, that is no longer an option.
Least cost routing is an important aspect of managing toll free traffic. Three of the reasons least cost routing is important include: 1) control of carrier costs, 2) the ability to make use of regional or prospective carriers, and 3) the manipulation of current carrier contracts. In order to explain how to accomplish these tasks, it is first important to understand how the national toll free database works.
The Service Management System (SMS) was developed in the late 1980’s to support FCC ordered toll free number portability. The system is based on the entity that controls the toll free number, the Responsible Organization (Resp Org), building a routing record that then downloads to Service Control Points (SCPs) around the country. This design allows traffic to be routed via the Carrier Identification Code (CIC) to different carriers based on where traffic originates. This routing can be accomplished at a state, area code, LATA or even NPA/NXX level. Carriers have used this capability for a more than a decade to cover geographic areas that are not part of their network. All but the largest carriers send traffic to other carriers in places like Alaska and Canada because it is not cost effective to have their own networks in these areas.
This same approach can be used to accomplish least cost routing (Diagram A). Two calls originating from two parts of the country will arrive at different SCPs. The calls originating in New York can be sent to a carrier with especially good rates in New York while the rest of the country can be sent to another carrier.
The Resp Org has sent instructions to those SCPs to route traffic to two different CIC codes. In this case rather than overcoming coverage issues, the routing is used to make the best use of different carrier rates. Due to their own coverage, carriers frequently have different rates in different geographies or at different times of day. Sometimes these differences are driven by keeping traffic on their network and sometimes the differences are used to fill underutilized facilities.
This same process can be used to “try out” new or unfamiliar carriers or resellers. Rather than risk all of your traffic to a carrier you are not certain of, send portions of the traffic to the carrier and test it out. Traffic load can be changed at any time and within 15 minutes if the Resp Org you are using is highly efficient and properly staffed. These changes can take place 24 hours a day, seven days a week, so you have little risk.
Another option is to use multiple carriers through percentage allocation. This is especially useful to manipulate carrier contracts (Diagram B). Let’s say you negotiated a contract for $.03 per minute when that was a good rate. You committed to a minimum of 100,000 minutes per month. Now the going rate is $.022 cents per minute, but you can’t leave your original carrier because you are still under contract. However, you are running 200,000 minutes per month. The Resp Org can build a record that sends 50% of your traffic to the contract carrier and 50% to a carrier with better rates and this percentage can change any time you chose. If you find midway through the month that your minutes are only going to amount to 150,000, you can change the percentage so your contract carrier gets 75% of the traffic for the remainder of the month.
All these capabilities then support disaster recovery (Diagram C). As long as traffic is flowing to two or more carriers, traffic can immediately be moved off a carrier that is having network problems. Again, in as little as 15 minutes the record can be changed to eliminate the carrier that is down and just as quickly changed back when the carrier’s network is restored.
Another routing option is the use of the 0110 code. Unlike other CIC codes, the 0110 code is not carrier specific. The code is meant to drive intraLATA traffic to the intraLATA carrier. That carrier is determined by the terminating location (Diagram D). To use this code, a Local Exchange Carrier (LEC) must “own” that line. In the case of a CLEC that means the line must either be a facility based line or a UNE-P line. The intraLATA traffic cost then moves to the CLEC’s wholesale contract. In most cases, this is far less than either local retail rates or interLATA carrier rates.
So what do you need to be able to make use of all these routing capabilities? You need Resp Org expertise or you need to outsource to a company that has Resp Org expertise. You can become your own Resp Org, you can use your carrier, or you can outsource to an independent third party Resp Org. There are a few things to consider when making this decision.
Becoming your own Resp Org is expensive. The set up fee and deposit is approximately $7,000. You then need to train people and hope that the people you train do not leave your company. Based on my company’s costs, we recommend that a company should act as their own Resp Org if you do at least 2,000 transactions per month. Realize that this is transactions, meaning changing the routing of your numbers or setting up new numbers. The number of numbers you have is not relevant as the per month SMS database cost (currently $.1833 per number per month) is the same if you are your own Resp Org or outsource the Resp Org responsibility. These costs are based on ATL’s rates. This may or may not apply using another independent Resp Org.
Using your carrier may seem at first to be an advantage because there may not be an identifiable cost for Resp Org responsibility. The cost in many cases is just a part of the per- minute rate, but control of your traffic by your carrier could limit the options you have for routing. Remember, if your carrier is the Resp Org on your numbers that is where the control lies. You will need your carrier to make the changes and often carriers cannot or will not agree to add competitors to their records. Also, review your experience with your carriers. Are changes generally accomplished in 15 minutes?
Therefore, the bottom line is to look at your toll free traffic in the same way you look at your outgoing traffic. Can the use of multiple carriers lower your cost and/or provide effective disaster recovery? If the answer is yes, the next step is to ask yourself, “Who is my Resp Org?”
Aelea Christofferson is President of ATL Communications, which provides third party resp org services.
[From Connection Magazine – June 2004]