- 12
FAST FACTS
of being a big international carrier, Dominant
Public Operator (DPO)
- or
other Leading Public Network
Operator, in the 21st Century and
Needing to Grow Traffic:
- You want and need more
traffic, but
your traditional Dominant Public Operator and other major operator sources are
limited. Present volumes are probably at or near the maximum you can
realistically get for a 'deep wholesale' price you can afford to offer to your
traditional 'peering carriers.' Getting more 'market share' there means
unacceptably cutting core revenues and that is very painful. You are
already an 'expert' at 'squeezing' DPO revenues. There is "nothing left
to give." You need new traffic sources, but financially
"safely."
- Internally, 'Pricing
at carrier wholesale' is a very difficult issue, as
you are a Publicly Traded Company or soon will be on 'the exchange.'
Small price changes on big volumes, offered (inescapably) to many carriers,
can dramatically effect your quarterly results and then your market valuation
as a public carrier.
- Unfortunately,
the bulk
traffic that your traditional DPO peering partners generate to you, while
probably growing slowly in terms of minutes, is actually getting smaller in
terms of 'global market share' of total worldwide traffic generated and
carried. This is bad. Your international carrier competitors, who are also
your suppliers of bulk traffic, are also aggressively courting your own
traditional traffic sources (and "eating your lunch"). They
all want part of your international market share.
Your own domestic market is highly competitive and you are working hard not to
lose more local market share after your country's telecom liberalization. Many
of you are seeing your landline numbers drop precipitously. Mobile is nice and
growing, but domestic competition is brutal, 'customer churn' is worse than
many operators expected in most markets, and end-user customers you don't
"own" usually do not get routed internationally through your network
in a paying mode, minute-by-minute. It is really "true": You
need new traffic sources, from anywhere, but it is difficult to find them and
sometimes 'harder' to accept them.
- Non-conventional/non-traditional
carrier sources (i.e., mobile, NewGen, VoIP, Infrastructure Challenged Regions
and Emerging Specialty Markets) are growing rapidly, and have excellent and
quickly rising volumes of international traffic, but you
often cannot do business with them for
a variety of reasons - particularly because of credit related issues
- Giving credit or
'terms' to any of them raises your internal cost of operations. Part
of it is provision for risk. This is ultimately directly raising
your Total Cost of Service Provision, throughout your network,
and can effect your prices globally. This
also creates significant and expensive new 'back office' work and other
internal costs, due to the
multiplicity of potential smaller carrier customers. Together, this can
seriously raise your internal costs as a major operator. You know this and
this is why traditionally your Board prefers you have a few, big suppliers,
with low risk and high traffic and dependably high revenue streams.
- Obviously, however, You
need to 'pass-on those costs' in your tariff offerings to
each new client. This traditionally
requires complicated 'tweaking' of tariff sheets route-by-route, based on
volume projections and 'linked' credit evaluation of every customer.
- Sometimes, even when
you 'wrap-in' your 'normal costs and risks' but you are 'extra
generous' to your customer at the close of negotiations, your resulting
price is still
not competitive enough for them
in a global marketplace where carriers now buy in-discriminately in New York,
London and other leading cities, in a heartbeat, and where their buying
decision for each circuit is simply based on "today's best rate" for
any given QoS. They may love your QoS and NERs/ASRs/PDDs etcetera, but cannot
sign your contract due to your proposed 'best price' appearing to be
"too high" - which they see offered on the now, otherwise, global
marketplace, which is based increasingly on Carrier Grade IP routing. You lose
the valuable customer, too, and probably for a long time, if not nearly
'forever,' because they immediately go buy poorer quality, from
somewhere else, for slightly less money - and often for fractions of a USD/Euro
cent less. (That kind of 'failed deal' costs your company a lot of
money to prepare, and you get 'no new business' for all of the expensive work
and professional time.)
- Ultimately, for many
carriers in the 21st Century, the only question is
what is the <'Total Cost of
Use+Quality of Service' <TCU+QoS
Matrix> of using any given
port. Where it is located, plus or minus 200+ milliseconds transport time
under an ocean or across a continent, on a terrestrial fiber leg (even of a
satellite circuit) ceases to be a very relevant factor in their bottom-line
orientated decision making. Their profit margins are 'tight,' too,
because their direct 'local' competitors are getting stronger and smarter.
- 'On-Time' Customer
Payments are critical to your cash flow costing, internally.
Giving credit terms to infrastructure challenged, mobile, VOIP, ISP and other
non-traditional carriers is 'higher risk' than your Board likes; and the
result is that you are partially self-insuring your new customers'
ability to pay you. It is a kind of vendor finance, which is
useful sometimes, but it can be risky, too.
- Your Board
has 'approved' credit guidelines "for a reason."
- With more and more
traffic being generated by NewGen & VoIP carriers that cannot easily meet
your traditional company credit requirements, resellers you know and some you
don't know, are often recycling your terminating and transit capacity in
constantly shifting 'least cost routing' patterns that they sell-on, but
you don't get paid much for hauling
their refiled traffic. You sometimes don't even know who is really
sending some of the traffic inside your trunks.
- You need to Safely
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