Origin Based Rating: Turning Challenges into Opportunities

Telecom operators are moving from the traditional pricing model to an emerging new trend. Instead of using a pricing method based on the recipient’s location, they are adopting the Origin Based Rating (OBR) method, an essential change from traditional routing and billing processes.

This fundamental change presents particular challenges for transit carriers that are in charge of delivering traffic to the OBR destinations. They must radically adjust their charging, billing, and routing systems to the new reality, with OBR at its center. Is the new pricing method a roadblock or an opportunity for wholesale carriers and other stakeholders?

This article aims to provide you with answers and a deeper understanding of the OBR model, including its definition, disadvantages, potential benefits, and recommendations for enhancing these advantages.

What is OBR?

Origin Based Rating (OBR) is a voice termination pricing model that considers both call origination and termination for billing. With OBR, in addition to flat rates for call termination, the terminating side applies surcharges based on the call’s origin. On top of this, specific mobile network operators are frequently considered as an additional factor alongside the originating country.
However, the absence of clearly defined regulatory algorithms for surcharge application complicates the rate determination process. Operators often establish their own schemas for applying OBR-related surcharges, further complicating the process.
Despite this complexity, OBR remains a popular telecommunications pricing model. To shed light on this, we briefly explore OBR’s adoption history in particular regions, namely, the EU.

A brief history of OBR adoption in the EU

Following the harmonization of roaming rates in the EU, European operators started to experience reduced revenues not only within the EU but also for international calls to expensive regions beyond Europe. To address these issues, European operators gained permission to apply surcharges to calls originating from non-EU countries. These surcharges greatly varied from region to region at the operator’s discretion, with the intention of making operator revenues more reflective of the actual costs for these international calls. The rate disparities not only created revenue streams for operators but also the potential for fraud.
The following example demonstrates the regional variability of surcharges:

• Spain – Group 01: $0.0021
• Spain – Group 02: $0.0221
• Spain – Group 03: $0.3521

OBR-related fraud and its consequences

Fraudsters initially started by exploiting existing pricing gaps through methods like CLI spoofing and SIM boxing. While more sophisticated fraud types have since emerged, the basic ones remain popular, causing significant financial losses for operators. For example, based on the pricing data of one of the largest UK operators, a call from origination with surcharges would cost $2.7738, but the same call with a manipulated origination as from non-surcharge country would cost $0.0071. Consequently, in a fraud scenario, an operator would stand to lose around $13,833.5 for 5,000 minutes.

A lack of effective anti-fraud systems contributed to further difficulties in accurately identifying fraud attempts. In addition, the absence of a unified approach to surcharges and rating introduces uncertainties, which, in turn, creates loopholes for fraudsters and complicates accurate determination for operators. These issues are evident through an increasing number of disputes.

However, these challenges extend beyond just operators.

The impact of OBR on wholesale carriers and enterprises

Wholesale carriers and enterprises face many similar OBR-related issues but with some crucial distinctions in their interaction with the OBR model.

Unlike operators who can adjust pricing schemas using their own surcharges, wholesalers are subject to rates and surcharges set by operators. This exposes them to fraud techniques based on the aforementioned price differences and manipulations involving A-numbers.

With the implementation of the OBR pricing approach, billing and rating in telecom have become enormously complex, often making it difficult to identify discrepancies and dispute inaccurate invoices. This complexity presents additional opportunities for fraudsters and can result in substantial penalties for operators and wholesalers if fraud is identified and proven.

In summary, the lack of visibility and pricing access places enterprises and wholesalers at a relatively disadvantaged position within the entire telecoms chain.

How to mitigate the impact of OBR on wholesalers

Given the outlined challenges, it’s essential to establish methods for mitigating OBR-related risks. Here are some strategies for the improvement of the current situation.

• Define Mobile Number Portability (MNP) for transit traffic to ensure accurate call identification and routing.
• Use MSISDN and IR21 forms for accurate operator identification.
• Employ advanced analytics solutions to uncover fraud patterns and trends.
• Integrate your existing routing engines and anti-fraud solutions with Fraud Management Systems (FMS) for traffic monitoring.

Although many wholesalers are trying to implement these measures and observing positive results, they might not always be sufficient or fully implementable.

Underlying issues

While large wholesalers look to integrate OBR billing systems, smaller companies often face difficulties caused by resource constraints which, in turn, pose challenges in terms of implementing effective solutions to assure revenues and decrease losses. The lack of advanced automated OBR billing and routing systems forces smaller wholesalers to manually manage processes which leads to the increased risk of errors and unexpected financial losses.

In addition, transit carriers have very limited visibility into traffic origin. Furthermore, considering that caller ID can be spoofed during pre-carrier routing, they frequently face additional charges from terminating operators who reveal caller ID falsifications.

Managing OBR traffic effectively

Given the previously mentioned issues, the conclusion is evident: OBR traffic requires efficient measures to be taken. More importantly, these measures must be strategically implemented by the majority of market players involved. Such measures can include:

• Separate transit and retail routing. Enhance visibility and control over call paths by allocating distinct infrastructure for transit and retail traffic.
• Check traffic legitimacy. Use advanced FMS and resources to validate caller IDs and detect potentially fraudulent traffic.
• Monitor traffic constantly. Invest in systems capable of detecting abnormal traffic spikes or other signs of potential fraud.
• Respond quickly to issues. Establish processes to quickly resolve any traffic dispute scenarios that arise.
• Partner with trusted providers. Work with providers known for their reliability and responsiveness to issues.

How we contribute to optimizing the OBR-related situation

Being one of the leading global providers of telecom services, we understand and tend to address the challenges associated with OBR. While we recognize the current importance of OBR in the telecom landscape, we also realize that it causes complexities that demand resolution. Our dedicated efforts strive to make the OBR approach beneficial for all market participants. Here’s how we achieve it:

Creating a link between wholesalers and operators

We serve as a link between wholesalers and operators and between Tier 1 and operators. By facilitating these connections, market participants regain their losses in both financial and traffic aspects.

Segregating traffic sources

We believe that segregating traffic sources into transit and retail can help to resolve open OBR issues. We clearly separate these traffic types to enable better visibility and control over traffic, enhancing transparency of traffic origination while avoiding any involvement of unauthorized sources. Furthermore, clear classification of traffic as either transit or retail enables more accurate OBR billing for all stakeholders, particularly for wholesalers.

Ensuring traffic legitimacy

We realize traffic legitimacy is one of the most significant issues related to OBR. To address this issue, we employ a variety of tools designed to validate traffic using several sources.

Advanced solutions we implement are designed to ensure traffic legitimacy. All telecom market players — including originating and terminating MNOs, and wholesale carriers — entrust us with their traffic due to its quality and authenticity.

Helping to resolve disputes

We are committed to resolving any disputes that arise. Our goal is to maintain a fair and transparent environment for all telecom players.

Active participation in telecom communities

We are proud of our contributions to the most important anti-fraud communities in the telecom industry:

Conclusion

Managing the Origin Based Rating method, with its complexities and challenges, requires the participation of all stakeholders. By addressing issues of complexity and transparency through expert partnerships, wholesalers, as well as operators, can leverage the benefits of OBR, including improved interconnection rate alignment and cost optimization. However, the industry must remain alert against potential threats such as fraud that damage the fair communication ecosystem. Effectively managing OBR requires a collaborative effort involving all market players and regulators dedicated to safeguarding a fair communication infrastructure. With a thoughtful approach, Origin Based Rating has the potential to prove advantageous for all stakeholders.

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