margin management webinar comptel final pp...assurance •advertizing and royalty settlement credit...

Margin ManagementGain Ultimate Visibility and Control

Gary Zimmerman – Director, NeustarJuly 15, 2010

COMPTEL WEBINAR PROGRAM POWERED BY:

Neustar – Who we are

• Nearly 900 employees worldwide

• Corporate headquarters in Sterling, VA (USA)

• Offices in North America Europe and Asia N t bli lOffices in North America, Europe and Asia

• 10,000+ customer entities, including 4,000+ network operators

• 2 major Network Operations Centers

Neustar, enabling seamless connectivity across disparate networks, technologies and

applications. • 2 major Network Operations Centers

• Nearly 150 network nodes worldwide

• Publicly traded (NYSE: NSR)

app cat o s

• FY 2009 revenue: US $480.4M

© Neustar, Inc. / Proprietary and Confidential

AGENDARevenue management analyticsThe case for margin managementThe case for margin managementAn example in actionTaking the first stepGoing beyond margin managementGoing beyond margin management

© Neustar Inc. / Proprietary and Confidential3

Revenue Management Analytics Overview


Opportunity - Reducing revenue leakage can provide headroom to address strategic issuesp g

•US communicationsservice providers (CSP)average around 14%annual revenue loss.

•Mobile providers are around 15%

Mid i CSP (100K t•Midsize CSPs (100K to1M Subs) average >18%loss

•Largest carriers averageb t 6% labout 6% loss

•All CSPs polled voicedconcern over next gentechnologies andapplications and theirimpact on revenueloss exposure.

Source: Analysys Mason


Bottom line: A 1% reduction in revenue leakage can yield a 5% improvement in operating income

The broader view of Revenue Managementg

•RequiringD t ti

Next Gen RANext Gen RA•Policy &bandwidth mgmt.•Video & content

•Policy &bandwidth mgmt.•Video & content


Fraud Mgmt.Fraud Mgmt.

•Consumer &business fraud &credit risk




Business AnalyticsBusiness Analytics

•Customer retention mgmt.•Marketing & campaigns•Customer retention mgmt.•Marketing & campaigns


•Customer retention mgmt.•Marketing & campaigns

» Detection» Correction» Prevention

Video & contentassurance•Advertizing androyalty settlement



credit risk•Interconnect fraud•Dealer mgmt.



g p g•Product management•Customer / handset analytics



Traditional RATraditional RATraditional RATraditional RA Cost ManagementCost ManagementCost ManagementCost ManagementOperations» Prevention

across a number of

• Switch & order tocash mgmt.

•Billing qualityand contract rates •Broadbandreconciliation





•Least costrouting•Margin analysis•Partner &ecosystem mgmt.•Interconnect



Fulfillment Assurance Billing

Customer relationship mgmt.

Service mgmt. & operationsnumber of operational disciplines.

•Wireless roaming•Wireless roaming•Wireless roaming•Interconnectusage analysis•Interconnect billverification

•Interconnectusage analysis•Interconnect billverification

•Interconnectusage analysis•Interconnect billverification

Service mgmt. & operations

Resource mgmt. & operations

Partner / supplier relationship mgmt.

Network & ServiceNetwork & ServiceAssuranceAssurance

•Fault / performance•Application mgmt.•Fault / performance•Application mgmt.

•Compliance•Service quality mgmt.•Compliance•Service quality mgmt.


•Fault / performance•Application mgmt.

•Compliance•Service quality mgmt.


The Case for Margin Management


An industry conundrumy• Voice still a big part of industry

revenues» 70% of Mobile

$120.00

Unlimited plans

» 70% of Mobile» 56% of Fixed

• A mature service in a mature $80.00

$100.00

nth

market, growing on par with GDP

• Competition squeezing margins» Ready substitution $40 00

$60.00

Cos

t per

mon Vz, T

SprintT-MobileMetro PCS» Ready substitution

» Flat rate pricing− Metro PCS - $10.00 goal− Magic Jack - $1 70 today

$20.00

$40.00 C Magic Jack

Magic Jack $1.70 today$-

2009 Today

Pricing and routing efficiencies are key to optimizing margins


g g y p g g

Importance to voice provider communityp p y

•Maintaining margin in a falling (commodity) market•Right-sizing NNI capacity (trunks)•Managing interconnect agreementsg g g•Protecting your market


A delicate balance

$

TiTime

…at the end of the day, I hope I’ve made money


Hope is not a planp p• Do you have reliable visibility acrossall four variables?all four variables?1. Price2. Cost3. Capacityp y4. Quality

• Are the critical sources of information accurately correlated?correlated?

• Is the capability available on demand?

Having access to the right info at the right time is critical

11 © Neustar Inc. / Proprietary and Confidential

Neustar™ Margin Management


Neustar Margin Management – a complete solution• For CSPs who want to more

effectively optimize their voice traffic margins, Neustar’s Margin Management is an analyticsManagement is an analytics, address resolution, and routing solution that allows you to» Optimize costs, prices, capacity,

and revenue through interactive

Address resolution

and revenue through interactive analytics,

» Advertise and find the most direct routes for each number called,

» Take advantage of newer IP

Voice margin

optimization

Real-time routing

change / arbitrage

Optimized margins

» Take advantage of newer IP settlement models,

» And leverage termination rate and routing changes in real-time.

optimization g

• Unlike other solutions providers who solve aspects of the problem, Neustar provides a complete solution, with a TCO/ROI model th t’ i i th i d t

IP to IP interconnect

that’s unique in the industry.


Visibility is the critical first stepy p•Massive mediation capabilitiesp

•Strong correlation of variables

•Visibility through effective displayp y

•Predictive power through scenariothrough scenario planning


Optimized marginp gIs provided through an analytics application that provides “Margin Analysis” capabilities. It leverages the data correlation and aggregation capabilities of Agilis’ DataMind® platform.

• Benefits» Speed to results

− 60 to 100 days from start to production

g p

60 to 100 days from start to production» Compelling economics

− In quarter payback» Simple answers to complex problems

Holistic Approach

Managed Service

− Turn-key solution integrated with your infrastructure

» The comfort of Neustar− Built and operated by experts

Experienced Team

Carrier-grade

Platform

− Five 9’s quality− Trust and neutrality

Powered by

Advanced Capabilities

y


Margin Management in action


Reviewing the dashboardg

Build a custom dashboard to quickly get a pulse on key performance indicators suchpulse on key performance indicators such as:• Profitability by carrier• Profitability by destination• % Margin by carrier

• Carrier N is taking the highestEXAMPLE:• Carrier N is taking the highest terminated traffic and it is also the highest margin carrier• Carrier T has highest margin %, sell more to Carrier T!• Highest exposure is from Carrier S, investigate if it is a pricing issue or a routing issue!


Business Case 1: Pricing Issue

Scenario: • Domestic Routing Analysis | LCR & Actual Compared by Carrier

Summary: • Actual Routing Analysis (analysis on historical data) shows loss (negative margin) of $867,295• With Optimized LCR Routing, the margin improves to 255,305 p g, g p ,• There is net improvement of $1,122,600

Observations [for Carrier S]:• 74% of the loss ($642,768) is coming from Carrier S in Actual Analysis• Carrier S is showing negative margin even with the Optimized LCR Routing• Carrier S is showing negative margin even with the Optimized LCR Routing• The losses are reduced from $642,768 (Actual Analysis) to 171,169 (LCR Analysis)• There seems to be Pricing Issue with Carrier S• We’ll drill down on Carrier S to identify the issues…


Case one details

Drill Down: Carrier [Carrier S] Choice [1] NPA [641] NXX [315]

• To destination 641-315, Carrier S is Choice 1 in the Actual Routing Analysis as well as in LCR Analysis• Carrier S has least cost among all carriers to this destination• However the margin is still negative• This indicates Pricing Issue with Carrier S for the destination 641-315


Business Case 2: Routing Issue

Scenario:• International Routing Analysis | LCR and Actual compared by Destination• International Routing Analysis | LCR and Actual compared by Destination

Summary: • Actual Routing Analysis (analysis on historical data) shows margin of $386,779,844• With Optimized LCR Routing, the margin improves to $657,803,337

f $• There is net improvement of $271,023,492

Observations:• For Country – Egypt (20), the Actual Analysis shows loss (negative margin) of $2,305,791• With Optimized LCR Routing, the margin improves to $37,344,665With Optimized LCR Routing, the margin improves to $37,344,665• This indicates there were routing issues to this destination, which were fixed in the LCR Analysis• We’ll drill down to find out details…


Case two details

Drill Down: Country[20: Egypt] Destination [208878]

• To destination 208878, there was a loss (negative margin) of $4,358,432 in Actual Analysis• With Optimized LCR analysis, the margin improved to $33,908,048, thus making a netimprovement of $38,266,480• Detailed report shows Carrier E took ~ 206 Mil minutes as Choice 1. It has highest costDetailed report shows Carrier E took 206 Mil minutes as Choice 1. It has highest cost(cost: 0.886254) among all available carriers to destination• This indicates Routing Issue to this destination• Optimized LCR analysis fixed the Routing Issue and made Carrier B (cost: 0.700198) asfirst choice


Summaryy• Domestic example

» Actual Routing Analysis (analysis on historical data) shows loss ( ti i ) f $867 295(negative margin) of $867,295

» With Optimized LCR Routing, the margin improves to $255,305 » There is net improvement of $1,122,600

• International example» Actual Routing Analysis (analysis on

historical data) shows margin of $386 779 844historical data) shows margin of $386,779,844» With Optimized LCR Routing,

the margin improves to $657,803,337 » There is net improvement of $271 023 492» There is net improvement of $271,023,492» Changing one routing decision

created a $40,000,000 swing in profitability


The First Step


A possible outcome (illustrative) p ( )Margin Improvement Calculator Parameters MonthlyNetwork Traffic Information

Monthly Minutes of Use (MOU) 692,333,333Network Operating Numbers

Average revenue per MOU $0 0500 $34 616 667Average revenue per MOU $0.0500 $34,616,667Average cost per MOU $0.0258 ($17,862,200)Margin on MOUs $0.0242 $16,754,467

Improvement of Routing EfficenciesMargin Increase From Improved Routing Efficiency 3.50% $1,211,583g p g y $ , ,Margin Increase from Faster Routing Changes 0.50% $173,083

Improvement of Interconnect ManagementMargin Increase From Pricing Corrections 0.50% $173,083SLA Management 0.50% $173,083

Total Margin Improvement $1,730,833

Opportunity costsFor every ______ you delay here is the impact. Week

$399,423.08Day

$57,060.44Hour

$2,377.52


Minute$39.63

Moving forwardg1. Conceptual agreement

2. Technical assessment2. Technical assessment» Technical discovery» Routing assessment

j t ( i k f ff )project (risk free offer)

3. Implement to maintain the gains

Technical assessment

Maintain the gains

gainsConceptual agreement


Beyond Margin Management


Directions you can goy g

Broader in analyticsD

Network & service

assurance

TraditionalRA

Fraud mgmt.

Optimized Margins

Next Gen RA

Business analytics

Deeper in n

Number Portability Correction

network ro

IP to IP Interconnect

outing

Real-time routing change /


arbitrage

Neustar™ Next Generation Routing –A Powerful Capability For Network EvolutionA Powerful Capability For Network Evolution

MarginMargin

LocalLocalNumberNumber

PortabilityPortabilityOperational Operational ManagementManagementMarginMargin

ManagementManagement

EnterpriseEnterpriseTrunkingTrunking

ManagementManagement

NeustarManaged

RealtimeRealtimeRoutingRouting ServiceService

DiscoveryDiscovery

TrunkingTrunkingManagedService

SS7(MAP, CAP,

INAP)

NGNSIP/ENUM

IMS


Seamless evolution into IMS/RCS capabilities

A broader deployment of Neustar™ Revenue Management Analyticsg y


•Policy &bandwidth mgmt.•Video & content








•Customer retention mgmt.•Marketing & campaigns•Customer retention mgmt.•Marketing & campaigns


•Customer retention mgmt.•Marketing & campaigns

assurance•Advertizing androyalty settlement



•Interconnect fraud•Dealer mgmt.•Interconnect fraud•Dealer mgmt.•Interconnect fraud•Dealer mgmt.

•Product management•Customer / handset analytics•Product management•Customer / handset analytics•Product management•Customer / handset analytics

Traditional RATraditional RAS it h & d tS it h & d t

Traditional RATraditional RAS it h & d t

Cost ManagementCost ManagementCost ManagementCost ManagementOperations• Switch & order tocash mgmt.






•Interconnect billverification•Least costrouting•Margin analysis•Partner &



Fulfillment Assurance Billing

Customer relationship mgmt.

Service mgmt. & operations •Wireless roaming•Wireless roaming•Wireless roaming ecosystem mgmt.

•Interconnectusage analysis

ecosystem mgmt.•Interconnectusage analysis

ecosystem mgmt.•Interconnectusage analysis

g

Resource mgmt. & operations

Partner / supplier relationship mgmt.


•Fault / performance•Application mgmt.•Fault / performance•Application mgmt.

•Compliance•Service quality mgmt.•Compliance•Service quality mgmt.


•Fault / performance•Application mgmt.

•Compliance•Service quality mgmt.


Questions?•Use the Q&A bar to ask any questions


F i f ti N t ’ M i M t S l ti

Thank you for joining us today!

For more information on Neustar’s Margin Management Solution:

Email: [email protected]

Phone: 877.831.3984


COMPTEL WEBINAR PROGRAM POWERED BY:

margin management webinar comptel final pp...assurance •advertizing and royalty settlement credit...

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