The New Wall Street Feast, Trunk Provisioning and More! 

By: Peter Mueller, VP-Switching, ATS

Regular readers of this column know that we sometimes diverge from the dry matters of switch translations, AMA analysis and all of that to look at what’s going on in the big picture, so I’ll start with that. 

An interesting article in the New York Times (by Gretchen Morgenson, June 1^st) this past weekend caught my eye.  It had to with the now-famous issues plaguing Wall Street in terms of how it handles our fragile industry.  Those “Chinese Walls” that were supposed to keep industry analysts separated from their investment banker counterparts have – supposedly- been re-cemented following several high-profile lawsuits.  But have they really reformed? 

The Times asked this question and with good reason.  It seems that Wall Street is back at work again, this time issuing a whole lot of convertible bonds.  These are bonds in the old-fashioned sense that when you buy one, you’re buying a piece of the debt that a company will eventually repay.  (In Telecom, of course, you need to raise debt to expand networks, buy software, and so on…)   When interest rates are low, bond prices tend to go up but, over the long haul, they tend not to perform as well as equity (stocks).  So the catch with convertible bonds is that the holder has the right (but not the obligation) to convert bonds into stock at any time in the future.  In that way, the holder supposedly gets the best of both worlds:  The steady cash flow of the bond, plus the right to switch it over into stocks should things really turn around. 

Now, where was I?  Oh yes, Wall Street.  Well, it seems that the same firms that are now issuing all of these bonds (and reaping the investment banking fees) also have research wings predicting that – you guessed it – our industry is on the verge of a huge turnaround.  For instance, on May 13^th, an analyst at Smith Barney (a subsidiary of Citigroup) upgraded Lucent and predicted a substantial stock increase in the near-term.  Less than two weeks later, on May 29, Citigroup announced that it was going to tender $1.53 billion in convertible bonds.  When asked to explain the reasoning behind the boost for Lucent (and 11 others), the response was that Smith Barney saw an increase in capital spending. 

I’m still suspicious.  After all, the other day I still saw switches listed on E-Bay!   It’s hard to imagine that many Telcos have decided to lay down a lot of new fiber or put in brand new switches, when so many of them are still under-utilized and revenue assurance is getting the lion’s share of attention.  But, that remains to be seen, I suppose. 

Well, that’s probably enough of the high-level stuff for now. Let’s get back to some nitty gritty.  When was the last time your company performed a full audit of trunk provisioning?  I’ll use this column to indicate something we’ve been seeing a lot more of in recent months in our Switching Technology business unit.  It seems that more and more carriers are struggling with interconnected trunk groups provisioned to receive traffic from the tandem.  Specifically, one of two things are happening:

1.   The trunk group is remarked as one type of trunk (i.e. IXC) when it’s in fact set up as something else (Local Toll Connect).  That means that it’s much harder to get your fair share of Carrier Access, since the trunk group isn’t provisioned right.

2.   The trunk group is set up to stamp all incoming calls as having originated from a particular number (usually a billing number).  In the age of reciprocal compensation, that means that every call appears to be from the same place.  When that happens, your reciprocal compensation billing system can’t figure out who really originated the call, because the originating NPA/NXX is the same for all traffic, even though a tandem-trunk could –theoretically- be carrying traffic from any carrier (OCN) hooked up to that tandem. 

So what can you do?  Well, to start with, I’d recommend you take a quick snapshot of your trunks groups.  Get a usage report that details traffic by trunk group.  Ideally, you’d get a breakdown of AMA call codes by Trunk Group.  For instance in this graph, we’ve broken down some sample records by trunk group (on the X-axis) with each color of the bar indicating a different AMA call code.  The height of each bar represents total minutes of use on a logarithmic scale.  A simple analysis such as this one, looked at around the water cooler between network and billing humps, will point out if there’s anything drastically wrong.  For instance, if you don’t expect to see any IXC traffic on a particular trunk, you’ll see right away if there are Call Code 110s showing up there.

Armed with this knowledge, you can go a step further and look inside the switch itself to check trunk provisioning.  Again, take a close look at the remark fields, but don’t assume that’s how the trunk is actually provisioned.  Go after the low-hanging fruit first – there’s no sense in fixing trunks that don’t bear any traffic.  (Now would be a good time to see if you really need those trunks!)  Before you make any changes, make sure your billing systems – especially for recip comp – can handle it.  It’s great to get the right AMA billing being created at the switch, but if your system can’t recognize it, you’re wasting everyone’s time.  Remember the old adage:  if you can’t bill for it, you’re working for a charity. 

Here’s another quick litmus test.  Do your interconnected carriers always pay their bills on time, without ever questioning your data?  If they do, they probably know something you don’t.   Take the time to look at the data.  You might be surprised at what you find. 

(Do you have any thoughts on how Wall Street is handling our industry?  Have you had any good recent ‘finds’ on the trunk provisioning side of your operations?  I’d love to know.  Please e-mail me at pmueller@atso.com.)

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