Comparing our Rates

 

By Simon Woodhead

We’re very fortunate in that difficult conversations about our rates are rare, and with established customers they’re almost non-existent. We operate in what I’d call value-added wholesale, and our rate sheets are calculated algorithmically, certainly for international destinations. That isn’t without occasional oddity, but generally we charge a fair and consistent increment to our input costs that reflects the value we add. If the value we add isn’t for you, there’s plenty of choice amongst people who don’t add it.

Occasionally though we come up against someone who really wants what we have to offer, but is buying on price. Now there’s a philosophical argument about whether value-added is worth anything, and if so, who should pay for it. We’re not into offering commodity cheap minutes with the value-add and support we provide. If you don’t need us and have resource to manage the risks, go buy commodity minutes. If you want Simwood, yet are buying on price, you need to appreciate the delta and weigh that up against the value. To be clear though, I’m not implying we’re always more expensive and we hear ‘these are the cheapest rates I’ve seen’ just as often as ‘you need to sharpen your pencil’ (yawn!). The point is there’s going to be a difference that a price-buyer needs to appreciate.

The problem is, how the heck do you know what that is? Whilst the multi-national multi-jurisdictional carriers amongst our customer base have systems that can suck our rate sheet in and get an answer to this, most people can’t. Unfortunately, some think they can with the help of a bit of Excel voodoo. This approach is deeply deeply flawed and I’d like to explain why.

What rates are you being charged?

When comparing rates the obvious place to start is with rate sheets. Ours are automatically generated from the same database that will do the billing; they cannot be different. However, we know of others in our peer group who manually edit their sales price spreadsheet and then manually update the rates and codes in their billing system. What could possibly go wrong!?

Even with those who automatically generate rate sheets mistakes can creep in. Our favourite incumbent recently over-charged us by 97% across the board on international traffic. Our accounting ninjas spotted it and chalked it up as the latest in a very long line of ‘co-incidences‘. The rate sheet was irrelevant as that wasn’t what we were being billed. Would you notice that going on in your supply chain? 97% hopefully yes, but 25%, 10%, 2%?

The only place you can accurately start your comparison from is your buy-side CDRs.

Comparing breakouts

The next thing our spreadsheet jock will do is do some clever vlookup to compare our rates for ‘Belgium – Mobile – Proximus’, say, to the existing suppliers rates for the same. But are they the same? We know many of our peer group blend mobile into a single rate where we have multiple breakouts. The traffic will largely fall to specific breakouts and any rate such as ‘Belgium – Proper’ is a catch-all. Comparing our catch-all to someone else’s blend is unrealistic. The blend may not reflect actual traffic, so they may block the loss making calls, causing you to send them over a more expensive route, or you might assume our catch-all to be what we’d charge when in fact it could be massively cheaper.

The only place you can accurately start your comparison from is your buy-side CDRs.

Still comparing breakouts

There’s a few ways round the above for a seasoned spreadsheet jock. Maybe they aggregate our mobile breakouts and take the average to be the blend. This is still completely wrong, but as spreadsheets always do, it’ll look right!

The problems really come though with prefix classification. Contrary to popular belief there is no universal or regulated list of what dial-codes match what breakouts. Every operator has different breakouts, and therefore different prefixes, and may employ different levels of aggregation.

Thus you may convince yourself that our ‘Belgium – Mobile – Proximus’ is the rate you should compare to all this traffic you have to Belgium to what look like mobile numbers, but where is it actually going? Taking our example of Proximus, whilst one operator may lump this in under a generic ‘mobile’ breakout, another may consider it ‘premium’. Worse, this happens on a per prefix basis, so you could find traffic to a particular prefix is actually billed completely differently to you expect. There are frequently differences of opinion in international markets, snake-in-the-grass prefixes that make good margin from the naive, or fraud/arbitrage emanating from simple mistakes.

Unless you have sufficiently little traffic or a sufficiently big computer, there is simply no way you can handle this in a spreadsheet. At the risk of repetition: the only place you can accurately start your comparison from is your buy-side CDRs.

OK, I’ll pull my CDRs!

So good, I’ve convinced you to look at actuals and ignore the spreadsheet, but you won’t have CDRs from us unless you’ve sent us test traffic for a proportion of your calls. So what to do?

Thankfully we have a tool that can help. Such is our developers’ affection for the sales process, this tool is called ‘Slime’. It will consume the CDRs from your existing supplier or suppliers, rate the calls as if they’d come through Simwood, and give you a summary of the cost of calls across every breakout we have and every service level. No call records are stored but some delete the last digit or two from numbers to safeguard privacy, and you can keep the existing cost as your own secret if you feel so inclined.

The point is that you can compare your actual costs to what your actual costs would have been with us – we’re all dealing with facts. We know from experience that the cost will be very different to the spreadsheet approach and will often show a saving. If it doesn’t we’re all armed with facts – you to assess the monetary value we’re adding, us to assess whether we’re the supplier for you, or a good business case for us to refine the pricing algorithm.

Incidentally, where we do refine the algorithm, everyone wins – we won’t discount your ‘top 10’ or quote against made-up volumes but rather produce one fair rate deck per service level which everyone on that service level enjoys regardless of volume.

Dealing with facts is so much easier all round! If you agree, feel free to send your CDRs to us on team at simwood.com. If not, be careful out there!