Trading Desk - Arbinet-thexchange Presents Solution to Calling Code Confusion

Posted: 03/2001

Trading Desk

Arbinet-thexchange Presents Solution to
Calling Code Confusion
By Bruce Christian

Recognizing that calling code confusion currently costs the world’s telecom
carriers hundreds of millions of dollars annually, Arbinet-thexchange Inc. (www.thexchange.com),
a full-service trading solution for buyers and sellers of telephony bandwidth,
has implemented an international calling code management program.

Arbinet averages more than 255 changes in international codes each month
because of worldwide deregulation and explosive growth in wireless services,
according to Chris Reid, the company’s director of marketing.

This program addresses the potential financial impact of code omissions and
errors for the company’s members, Reid explains.

Financial losses can occur when carriers cannot terminate calls to new codes,
undercharge customers for premium services, or operate with noncompetitive cost
structures on routes because of a lack of information regarding low-cost
termination options.

According to Reid, the situation is becoming more difficult for carriers to
manage as the number of network operators increases as countries deregulate and
encourage competition. This gives rise to increasing numbers of calling codes
and tariffs for fixed, mobile and audio text services.

Carriers lose money because of code errors when they cannot terminate calls
to recently implemented codes globally, Reid explains. They fail to break out
city destinations from "proper" codes (a "proper" code
allows a carrier to complete calls within an entire country, but typically at a
higher cost than city breakouts); and they routinely send high-priced mobile
traffic over standard agreements hoping calls will be completed at the
lower-priced fixed termination rate. The seller that accepts this traffic loses
at least 10 cents per minute.

Arbinet has developed comprehensive code intelligence, which is revised
biweekly and is available to members. These data are used to define markets, and
to program the company’s trading engine and switching platform, to ensure that
buyers and sellers match up exactly on the specific types of service they agree
to buy, sell and deliver.

The benefits for members include:

* Buy side: The exchange lowers a buying member’s cost by filling orders in
real time at the per-call level, at the lowest cost termination available in the
market at the specified price ceiling and quality parameters. Because codes are
matched by proprietary software at the per-call level, Arbinet identifies and
routes calls to specific destinations globally onto low-cost termination
breakouts posted by selling members.

* Sell side: The exchange insulates a selling member from the financial risk
of code mismanagement and fraud. Arbinet’s software examines codes at a per-call
level and allows traffic that matches a specific sell order a member has posted
in the market to be sent onto the selling member’s network. Calls destined for
higher tariff breakouts, such as mobile codes, are blocked unless the selling
member has entered a specific ask-order for this route.

"The global telecommunications market is becoming much more complex as a
result of the explosion of new carriers and codes unleashed by
deregulation," says Curt Hockemeier, Arbinet- thexchange president and CEO.

He adds that developing international calling code intelligence is central to
what an exchange must do.

"It allows us to protect sellers through price and code differentiation
and, at the same time, deliver the lowest prices to buyers by automatically
routing to city breakouts where they exist," Hockemeier explains.

Automated delivery through an exchange is accomplished by using software and
processes that link the web-based trading platform with carrier-grade
telecommunications switching equipment.

Arbinet estimates the global market in 2000 for telephony bandwidth measured
in minutes reached $706 billion.