The IT industry has for some time now, been moving towards a converged market for communications, data and IT services. In this converged market, many IT resellers and data VARs are excellently placed to supply voice, connectivity and associated billing services to their customers. Yet some seem to believe that providing these services, particularly VoIP and other types of voice products, requires specialist skills that represent an insurmountable barrier to entry into this market.
Today, providing these services is no more technically challenging than the data networking that IT resellers and VARs already provide. Once established, voice and connectivity services will generate an ongoing revenue stream that the customer is unlikely to change unless there is a major disruption in service. This can also help to prevent rival suppliers from breaking into the account, keeping the customer ‘sticky’.
So, how easy is it to be a supplier of voice and connectivity solutions?
Choosing Service Providers
The first step is to partner with a wholesale network or Service Provider (SP) and here there are two options. The first is to establish a direct relationship with network operators or carriers such as Openreach. Such direct relationships have advantages, but it can mean maintaining several accounts with these SPs so that you can offer a full range of services at competitive rates. The wholesale price you are able to negotiate can often be dependent on the volume and commitment you are willing to make. Operators and carriers will also require a strong financial track record and may set minimum billing levels with upfront payments. This can be challenging for a new entrant into the voice market.
The alternative is to partner with one of the many aggregators (or wholesale service providers). In addition to lines, these companies usually offer a raft of other network services. This can include hosted telephony services, non-geographic numbers, mobile, conferencing and so on. Using an aggregator also means there is usually one contact for all services.
When it comes to partnering with aggregators, there are two basic categories of partnership; reseller and dealer (also known as agent). The main difference between the two is the payment and contractual model. With the dealer model, the Aggregator has a direct financial relationship with the customer and pays the dealer partner a commission on sales and/or recurring revenues. In this case, the services are usually branded in the aggregator’s name and they are running the financial risk with the customer base.
Alternatively, there’s the reseller model. As a reseller partner, you buy the aggregator’s services and bill the customer direct with an added margin. In this scenario, services can be supplied ‘white labelled’ so that you, the reseller partner, can brand them as your own. Obviously, there is a higher financial risk with this approach if the end customer defaults on payment.
The approach you take will really depend on how much of a potential market you see coming from your customer base for voice network services and how risk averse your company is. If you see the potential and/or probability for rapid growth and are keen to exploit it, a direct relationship with network carriers is probably a better option.
If you just want to dip your toe with the minimum of resources, then using an aggregator can be better. Some will pretty much do all the work for you, such as line provisioning, fault administration and so on, leaving you to collect a tidy commission each month. However, some aggregators also supply end-user accounts direct, so there is always a possibility that customers may seek to eliminate you as the middleman.
Billing For Resellers
Once you have chosen your preferred method of sourcing voice and connectivity services, you will need an effective method of invoicing your customers for their use of these services. If you have partnered with an aggregator as a dealer and they are billing the customer direct, then this function is covered. Even if you are invoicing the customer and taking white-labelled services from the aggregator, they may still manage the billing under your brand.
There are, however, substantial advantages to managing billing operations in-house. Most obviously, it puts you in control and you have the reassurance that all the services you are providing to customers are being billed accurately, rather than taking this on trust. Voice billing charges can rise rapidly to over £100,000 a month so accuracy is critical.
Billing your customers directly without the involvement of your suppliers is a relatively straightforward process of taking call data records (CDRs; records created each time a call, text message or other type of transaction crosses over a communications network) and using them to measure each customer’s network usage. Once you know what each customer has used, you can then rate that usage according to each customer’s tariff and calculate each customer’s bill.
Due to the potentially large volumes of call traffic involved, this can quickly become a time-consuming process. It’s advisable, therefore, to use a telecoms billing software package (or billing platform) to automate the process of calculating and dispatching bills. The latest billing platforms, such as Union Street’s aBILLity™ platform, take much of the effort out of CDR processing and setting up and managing customers. It is very intuitive and easy to use.
Having your own billing platform also allows you to provide consolidated single-source billing for all types of communications services, including data, VoIP and mobiles, as well as fixed line voice telephony from multiple carriers. With an agnostic billing platform, you can cherry pick the most attractive services from multiple suppliers to build a diverse and competitive portfolio of communications services. Coherent, consolidated billing is a major selling point for customers and can be as important to them as cost savings. In addition, the billing platform can be used to bill for service charges and other types of contractual arrangements (software licenses for example) that you are providing.
If the thought of managing billing under your own roof appeals but, you’re still uncertain as to whether or not you could manage this in-house, you might consider choosing a billing platform that has a bureau service. This is where the vendor that has supplied your billing platform manages the generation and dispatch of bills on your behalf in exchange for a commission of the monthly billing value. Many billing platforms, including Union Street’s aBILLity™, are offered with an optional bureau service. This can be a great way of getting started quickly. Best of all you retain the maximum level of control over your customer base from the outset, whilst outsourcing much of the work involved.
If you’re not offering voice and connectivity services to your customers, then someone else will. Developing your voice proposition could also generate opportunities for cross selling telephony with your existing service portfolio and vice versa.