Hi, I’m Louis, and I “abuse” your network. Or at least that’s what my service providers tend to tell me. But as a Revenue Assurance Professional, I also know why they think that way – and I’m here to say they are probably on the wrong side of history.
I don’t pay for voice service anymore. Not even on my mobile. I do occasionally pay interconnect charges when I call my family in Singapore, but even when I do I’m paying a third party and not my service provider.
Many Flavors of “Legal” Consumer Bypass
That’s because in the US, Google has launched a service called Google Voice. And with Google Voice, I get a free phone number/DID (Direct Inward Dial), for which I pay no monthly recurring charge (MRC), nor incoming call fees. So basically the people who call me on my Google Voice number are paying (through interconnect termination fees to Google, presumably) for my phone number.
With Google Voice, I also pay nothing for calls anywhere in the US. This is because Google Voice offers “call-back” service, where you initiate calls online. This way, you receive an incoming call, pick up, then Google Voice makes another incoming call to whoever you’re calling.
And because incoming “landline” calls are “free” in the US regulatory environment, neither party pays. Usually the one calling would pay for the call (as in the above example), but in this case no one “initiates” the call – both calls are incoming. Yet network/calling capacity is still being used. Someone is bearing the load of terminating these calls.
As a consumer, this makes me happy because I’m getting something for free that I used to pay for. But as a Revenue Assurance Professional, I worry about how big the risk is from these activities and how it affects telcos’ bottom line.
Free Calls Everywhere, Setup and Data Costs Only
Google also recently bought Gizmo, a VoIP provider. Even before the acquisition, Google Voice was integrated with Gizmo. This meant that my Google Voice number is really just a proxy or forwarding service for my VoIP (actually SIP) service with Gizmo.
Like most SIP or VoIP services, Gizmo allows free calling within their network (like Skype to Skype calls) – so when I’m on my hour long commute to and from GRAPA’s head office in the Chicago suburbs, I can make free calls back home to my girlfriend the entire time.
If I was being particularly naughty, I would set my family up the same way in Singapore, and I would be able to make free calls to them too.
The difference between this and other services like Vonage etc. is that there is no monthly recurring charge or subscription – the only thing I pay for is the equipment (so I don’t have to call from a computer) and the monthly internet/broadband fee.
When I do pay a provider for interconnect (eg: to Singapore) that provider is Gizmo or Google, not my mobile provider. If I worked for a telco that only sold circuit based voice service (if any still exist), I would be very afraid.
Worst For Cellular Providers?
Probably the most expensive kind of bypass I commit (for the telcos) is when I use the 3G connection on my smartphone to make the calls (I use an application called Fring).
Most mobile networks do not yet have as much data capacity as they have circuit calling capacity – which is why wireless backhaul in the US is going through such a huge boom as cellular providers rush to keep up with exponential growth in data usage (admittedly from a very low base).
Now, I am not saying that mobile providers here should allow me to make free circuit calls just so I will not clog up their data network, but that’s not an entirely crazy idea. Because the more I add to their data usage, the sooner they have to make expensive infrastructure improvements.
The problem is that they cannot devalue their circuit calling capacity, because that is still their primary revenue stream. The good news is they are at least still selling me a data connection, and they are charging me a premium to only have data service (instead of having both data and voice).
How Big/Real is the Problem?
The truth is that the level of technical expertise required to do all these things is prohibitive for most people – not everyone is like me, and willing to live with unstable hardware and software environments while trying to see if I can make things work.
And from a broader perspective, it has not been the case that prepaid calling cards used by foreign workers and students all around the world have somehow destroyed telecoms by diverting interconnect revenue.
Consumers typically have a number of trade-offs they make in determining the value of a service. For some people, not having to buy a prepaid card to make international calls is worth the price of paying the interconnect rates charged by their telco.
More to the point, someone in the telco is weighing all these potential bypass scenarios and optimizing pricing in order to maintain the healthiest margins possible. However, if you are reading this, and you do not think it’s you – that probably is not the best sign.
Revenue Assurance to the Rescue, Spotting Trends, Managing Future Risk
Because at the end of the day, we cannot just assume that someone else in the telco is calculating the risk and making these determinations. And when it comes down to it, who is better placed to do this kind of complex modeling than Revenue Assurance?
That said, these kinds of bypass scenarios do point to larger trends in the industry that we in Revenue Assurance ignore at our peril. Certainly in enterprise services, there has been a trend towards “including voice” in the sale of very high speed connections (1Gb/10Gb symmetrical) that service, for example, a large building or campus.
And as more customers come to value their broadband data service more than their voice service, they start to expect cheap or free calls over their data connection.
When it comes to trends like these, telcos have to stay ahead of the curve and understand the risks of either not doing anything and being overtaken, or doing too much too fast and cannibalizing your own revenue streams for no returns.
If you are worried, don’t be. Talk to your Revenue Assurance professional – he/she will be able to help you – that’s what they do.
That’s why I LOVE Revenue Assurance.
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