Arbinet-thexchange Introduces “Highest Quality First” Routing
Prioritization, Enhancing Carriers’ Abilities to
Manage their Margin on Off-Net Traffic
NEW YORK – October 3, 2001 –
Arbinet-thexchange, the full-service trading solution for
buyers and sellers of telephony bandwidth, has introduced “highest quality first” as a second way for telecommunications companies to route international off-net minutes. Previously, all traffic was routed on thexchange using “lowest rate first” priority. The innovation now offers buyers a choice of routing methods and can be implemented at the individual order level.
“The lowest rate doesn’t always produce the highest margins,” according to Curt Hockemeier, Arbinet-thexchange President and CEO. “Our members are typically willing to pay a higher price if it means they can get better call completion (Answer Seizure Ratio). Now they have two ways to have thexchange software automatically route their traffic and improve their margins.”
The following example from thexchange illustrates the impact of call completion on carrier margin:
Situation: 1 million retail calls to China; of 4 minute average duration; at a $0.10 retail rate.
Scenario 1: An average Answer Seizure Ratio (ASR) of 50.9% available at a rate of $0.0468 yields 2,036,000 minutes of traffic. This earns $203,600 of retail revenue, less a $95,285 cost of termination, which generates $108,315 in carrier gross margin.
Scenario 2: An average Answer Seizure Ratio (ASR) of 57.5% available at the higher rate of $0.0482 yields 2,300,000 minutes of traffic. This earns $230,000 of retail revenue, less a $110,860 cost of termination, which generates $119,140 in carrier gross margin.
Conclusion: Choosing “highest quality first” routing in this real-life example maximizes this carrier’s margin.
“Arbinet-thexchange’s service provides far more than just a way to buy and sell termination to a few destinations. Rather, buyers use it as a means to flexibly manage the routing of off-net traffic from their desktops,” explains Mr. Hockemeier. “For example, a member can manage a traffic mix that may contain high margin retail traffic that benefits from highest quality termination and still specify lowest cost routing to other destinations for its wholesale business.”
With Arbinet-thexchange’s advanced software, calls are routed between buyers and sellers in real time. The rate and quality prioritization parameters are input by members and the software optimizes the routing logic for the entire market every four hours. This is the first time such sophisticated technology is available to carriers. Members using thexchange are gaining the benefits of world-class breakout routing to more than 1,300 discrete destinations without having to upgrade their legacy TDM switching infrastructure.
Two processes central to all telecom companies are selling access to their networks and
routing off-net traffic to destinations worldwide. Arbinet-thexchange has created the spot
market and designed and built the world’s most advanced system to automate anonymous
minutes trading between telecom companies. The world’s leading telecom carriers use this
system to perform dynamic least cost routing via the spot market to reduce their cost of
service and expand revenues by reaching new markets without extensive network build out.
Thexchange’s system automates sales and purchase order execution, complex calling code
matching, call routing to specific breakout destinations and manages the quality of service
of traded capacity. The system also handles the credit risk management, billing and
commercial settlement aspects of these transactions. Currently over 135 members are
using thexchange to process calls at well over a two billion minute per year run rate.
Arbinet-thexchange also develops and distributes AXCESSCODE sm international calling code
breakouts, the standard market reference tool. For more information, visit Arbinet-thexchange
120 Albany St. Tower II, Suite 450, New Brunswick, NJ
phone: 732-509-9100, fax: 732-509-9101, website: www.thexchange.com