If you are paying attention to the regulations on termination rates around the world, by now you know that there is a new way of buying and selling voice calls in the European Economic Area. Voice traffic terminating in many European destinations and comprising nearly 20% of the world market is now subject to multiple rates, all depending on where the call comes from. These are massive traffic streams with more complicated rating and routing requirements and this presents a challenge that most telcos aren’t equipped to face today – not if you want to maintain your market share and avoid costly invoice surprises that is!
Origin Based Rating
In the last two-and-a-half years we started to see an interesting trend appear in Mobile (and even Fixed) Termination Rates (MTRs) across Europe. Changes in regulations requires that EU carriers “cap” the rates that they can charge to terminate traffic. Not surprisingly, network operators across the region found a loop hole in the regulations – they’re forced to keep rates low for calls originating in the EU, but there is no regulation against hiking up the rate for calls originating outside of the EU. With voice in decline throughout the industry, EU carriers in many countries have started to employ Origin Based Rating, and this new twist has proven to be a successful move to boost sinking revenues and margins. Now telcos around the world are scrambling to navigate Multiple Mobile Termination Rates in 20 countries, with more to come. Putting it simply, rating and routing based on the caller origination means essentially that to many destinations, calls originating outside of the EEA are being subjected to higher termination rates than calls originating within the EEA.
Here’s an example: A call to a mobile number in Poland might cost $0.048 per minute if called from a Polish number, but cost $0.123 per minute if called from a Non-EU number
The trend doesn’t stop with EU network owners and we predict that it will spread farther. Operators outside of EEA are starting to retaliate, employing higher tariffs on the calls originating from EEA. For instance, Switzerland network owners employ multiple rates for calls originating from some EU countries, creating an added layer of complexity for the rest of us, and we can only speculate on what will happen when the UK leaves the EU. Regulators in some countries are discontented with the fact that not all of the EU members have strictly complied with the EU Commission’s recommendations on Mobile Termination Rates, creating a “fragmented” regulatory approach. In the fall of 2016, the Austrian Regulatory Authority attempted to apply differentiated rates against other EU members, arguing that those countries have failed to lower prices in accordance with the EU recommendation. The attempt by ARA to employ differentiated rates on the fellow EU countries failed, but there is increasing pressure on EU regulators and the door is now open for further study.
Suddenly, understanding this complex routing and billing is critical, especially for the operators that do not have capability to route and bill multiple rates for a single destination today. In short, the MMTR trend does not appear likely to fade away anytime soon, so many telco providers have a tough decision to make – accept the costly surcharges, chase the business away, invest in development to support MMTR routing and rating, or find a trusted carrier to handle it for them.
Luckily for our customers, iBasis is able to deliver help in this complex situation. For customers that have no capability to split their traffic for routing or are unable to facilitate multiple rates for one destination, iBasis can offer functionality which provides the ability to get attractive rates and visibility into your traffic mix with no surprise surcharges. We call it “A-Number functionality” and it is flexible, proven, and available for customers on both our Certified Voice and Premium Voice products.
Please contact your iBasis sales representative right away for more details!