Switching Your Switch: The Impact of Softswitches on Billing

By Jason Byrne and Patrick Elliott

Jason Byrne

Patrick Elliott

Communications service providers and resellers must keep pace with innovation to stay competitive. As legacy switches no longer keep up with next-gen voice networks, there is an ongoing migration to adopt software switches, or softswitches, for cloud-based communications. This technology not only offers more opportunities for agility and scalability, but it allows service providers to remain competitive and profitable with new, must-have service offerings.

While softswitches may be the future of telecommunications, they’re the latest incarnation of systems that are as old as phone networks themselves. They control routing, signaling and transferring, while also playing a central role in Global System for Mobile Communications (GSM) termination, subscriber identity module (SIM) management, voice over Internet Protocol (VoIP) services and prerecorded interactive voice responses.

Compared with legacy switches and depending on the size of a network, softswitches offer numerous advantages. First, they are built to scale easily via the cloud. Implementation and upgrade is an easy download. Installation and expansion take hours, not days. Additionally, softswitches are versatile and easily streamlined with other software. They’re designed to perform various key functions, such as customizing call rates, while also driving the data that allows service providers to report usage and bill customers accurately. Finally, their use can free time and resources among staff that they can devote to other core business operations.

The Unified Communications Opportunity and Challenge

The global pandemic upended the way that most businesses operate, with so many workers retreating to their home offices. Where many organizations once relied on a combination of office and field services, these same organizations now need a single “work from anywhere” solution. For many resellers, the solution will be found in unified communications or unified communications as a service (UCaaS). The opportunity to combine and sell telephony, video, collaboration and mobile tools will be critical in the years to come.

Where the challenge lies for many legacy service providers is in their choice of switch. A key technical reason for choosing a softswitch is to be able to support class 4 and class 5 communications. Class 4 delivers traffic safely over long distances, and class 5 is utilized to reach end-users and services such as voicemail, conference calls and call forwarding through a Session Initiation Protocol (SIP) signaling protocol. Without this class, the VoIP offerings at the heart of unified communications couldn’t be launched.

At the same time, not all softswitches are created equal. As resellers know all too well, network providers have long charged end users on a per-seat or per-line model. This means that resellers are on the hook for charges even if lines go unused. For example, consider a hotel where one room phone might be in use at any given time, out of a hundred available lines. Historically, the hotel has still had to pay for those extra unused lines and the service providers still have costs connected to maintaining those lines.

As an alternative, resellers should look for a softswitch in which billing is done on a true usage basis. In the hotel example, the company only pays per individual guest call, saving a significant amount of cost versus the traditional model. These kind of softswitches also benefit the service providers themselves. With no direct interaction with end-users and the ability to leverage scalable software, operators can …

… keep the cost savings or pass them on to customers. Those savings can also give providers the flexibility needed to expand their offerings, either in new verticals or with an expanded product offering.

If You Change Your Front Office, Change Your Back Office

While the softswitch opportunity is immense for service providers, realizing the benefits of the new system can depend on back-office systems. Suppose a legacy back-office system isn’t as digitized as the new softswitch. In that case, the result is often seen in revenue leakage because of inaccuracies in product setup, data usage calculations or tax mapping from new system to old. In some cases, service providers are working on manual or homegrown systems that would need to be integrated with the softswitch. This can be a painstaking process, and one prone to manual errors at setup.

Rather than try to retrofit an old billing and back-office system, it makes sense for service providers to start fresh and upgrade to a new system at the time of adoption. Because providers will need to be able to capture and rate a lot of usage quickly, utilizing a cloud-based system is essential. Cloud-based solutions also improve flexibility and scalability while accelerating speed of product launches and new market entry. With innovation always on the horizon, operators should also look for a solution capable of supporting future digital services.

We’re potentially entering a golden age of cloud communications, and the right softswitch will be a key factor in determining which service providers see the best outcomes. But even with mass adoption on the front end, the winners will be the ones who manage their back-end solutions appropriately, and don’t neglect needed billing upgrades.

Jason Byrne brings more than 20-plus years of telecom leadership to NetSapiens, where he leads the strategy, business development and marketing teams. Jason has an MBA from the University of San Diego and a BSEE from Trinity College, Dublin. You may follow him on LinkedIn or @netsapiens on Twitter.

Patrick Elliot is the VP of Marketing at Rev.io, where he leads the team responsible for content creation, creative design, in-market execution, advertising, media strategy and demand creation for Rev.io‘s billing and back-office software platform. Patrick has nearly 15 years of experience in B2B marketing, product and brand management and business development. You may follow him on LinkedIn or @rev_io_hq on Twitter.