Paul Taylor of Voiceflex has commented on the recent publication of the Ofcom Narrow Band Market Review and its likely impact upon carriers and channel players. He says most won’t realise the implications until they do or see their next bill runs!
“This is a small 535 page report provided by Ofcom for which the new regulations take effect from 1st February 2014. Like all Ofcom reports, it covers every aspect of the telecommunications market place. The impact of the review will not be realised by the channel for a couple of months, until the bill run is completed for the end of February, and the invoices from the carriers land in March.
Within the call minute market, we have two elements; ingress (entrance) and egress (way out). Within the carrier space each carrier will charge for the calls to be delivered to their network (ingress). It takes as much network resource to process inbound calls as it does to route outbound calls. For egress, the down line carrier will charge to receive the call, which is always higher than the ingress amount as they may have to pay egress to another down line carrier to terminate the call. For example, a call coming from a fixed line UK carrier to a mobile or international carrier.
The NBMR affects the UK fixed line national & local calls which accounts for 51% of UK traffic. As of the 1st February 2014, the ingress is effectively stopped so carriers have to route inbound calls for free!!!
Within the Carrier pre-select (CPS) the channel partner would only ever be billed for the egress amount and would never see the ingress amount (unless selling 087 or 084 services). The CPS main line carriers will increase the call costs for Local & National calls, to compensate for the loss in ingress. The average is 60%, bear in mind the ingress has been removed by Ofcom, so the carrier has no option but to pass on the costs to the channel, who will take the hit or increase prices to end users. It is a very simple equation needed to protect the bottom line. The amount of ingress loss per carrier versus CPS increase will never be known.
In the world of SIP and Hosted the divisions of ingress and egress are not as simple; any carrier who has their own carrier grade platform would have received ingress and been charged egress. With CPS, predominately the ingress sums would be received by BT (ISDN & PSTN) and the egresses from any of a number of carriers.
A company may have moved location and ported their numbers, or used an in-house hosted solution and ported numbers from national locations, inbound on SIP, out bound on ISDN. The SIP carrier now faces routing inbound traffic for nothing!!”
Taylor poses a few questions for the future.
“Is it fair to increase the egress to subsidise customers who only use ingress? Or bundle SIP and national calls where 50% of the customers pay for the usage of the other 50%? Should there be different cost based on the customer ingress and egress?
There are some 80 named hosted providers and 55 named SIP providers, all of whom have infrastructure costs and none are happy routing calls for nothing. The more calls routed the more bandwidth required, the more support staff are required etc.
Business continues to boom in the SIP and hosted market but as the trend continues I feel pricing models will change
We have seen two hosted providers purchased last year. The consolidation of the market sector is set to continue. The fall-out from the narrow band market review will be drawn out, for SIP and hosted carriers it’s positive, but with any forced change everyone looks at the bottom line.”
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