By Joseph George, Director Revenue Protection & Interconnect
If managed correctly, roaming services not only provide consumers with the voice and data connectivity they require, but also deliver the home network operator with a steady revenue stream. A profitable revenue stream can only be delivered with full information about costs and margins. The management of inter-operator tariffs (IOTs) can be a complex affair and if not conducted effectively can end up costing an operator more money than they make.
Roaming margin management is a complex environment where a number of factors need to be taken into consideration. For outbound retail roaming transactions, margins are calculated using the difference between wholesale IOT and the retail roaming tariff offered to the subscriber. For inbound roaming, margin is based upon the difference between the cost of providing network access and the wholesale roaming IOT. Margin calculations are further complicated by other interconnection costs, ‘Steering of Roaming’ (SoR) and ‘Least Cost Routing’ (LCR) strategies.
There are multiple elements that need to be balanced to ensure there is sufficient margin to make a roaming business profitable. Without an accurate means of comparing interconnection costs and the roaming element of a roaming call there is a danger of not knowing what the actual margins are, not being able to meet internal margin targets or worse, actually losing money on some roaming agreements. However the means to monitor these types of transactions can be both time-consuming and potentially inaccurate, as they usually involve trying to reconcile large amounts of disparate data, using time-consuming manual calculations.
Tune in tomorrow to learn how to manage the margins.