There's a pervasive idea in the marketplace that the anticipated reduction in the interconnect rate will largely eliminate any cost savings businesses obtain from their investment in least cost routing (LCR) solutions.
But this is not necessarily so, says Graeme Victor, CEO of voice-based telecommunications solutions company Du Pont Telecoms.
“It all depends on how the reduction in the interconnect rate affects the retail cost of calls for business contract users," he says. "If the retail rate drops significantly and the differential in costs between 'landline-to-cell' and 'cell-to-cell' calls is greatly reduced, conventional LCR will become redundant.
“However, a far more important consideration will be the ways in which the networks restructure call bundles to protect their turnover in the face of the lower interconnect pricing. This is where businesses will require innovative solutions most.”
According to Victor, it is widely anticipated that the networks will simply bundle more ‘free minutes’ into their existing business call packages rather than reduce the cost of their existing bundles. For example, instead of a hypothetical Corporate500 bundle providing 500 free minutes, a new Corporate500 bundle could offer 600 free minutes.
“That may appear to offer more call time for your rand, but there’s a catch that may result in businesses which rely on conventional LCR solutions not benefitting at all from the reduced call rates. Indeed, multi-branch organisations in particular could end up paying far more per call than they should because of the way in which conventional LCR solutions are implemented,” he says.
Traditionally, each branch has LCR units that host SIMs for the different cellular networks. Each SIM is linked to a specific bundle of call minutes. Minutes not utilised in a month are usually forfeited – despite the fact that they have been paid for in the contract price.
As a result, Du Pont has found that many businesses pay more than they should for calls because of the wastage of ‘free minutes’. This is a particularly significant problem for businesses like multi-branch retailers that operate from numerous locations.
Should the networks increase the number of ‘free minutes’ in the bundle without adjusting its price, the wastage problem will be exacerbated.
However, an LCR solution like Du Pont's TELESallows SIMS to be hosted centrally. This effectively allows for the business’ bundled minutes to be aggregated across the entire organisation. Every SIM is available to every LCR router and minutes are therefore utilised across all SIMs. This ensures that all “free” bundled minutes are utilised every month prior to out-of-bundled minutes being used.