As we discussed last month, new innovations, pricing and dynamics are increasingly shaping the prepaid service provider’s relationships with wholesale minutes providers, and just as on the retail level, VoIP is transforming wholesale minutes in four ways: pricing, reach, quality and packaging.  As wholesale carriers migrate to IP and SIP wholesale termination, the biggest near-term impact will undoubtedly be on the pricing and packaging of wholesale minutes. 

The shift is driven by two factors - the cost advantages to wholesalers of delivering minutes via IP, and the more advanced, customizable control over rating engines and product bundles that IP service delivery platforms afford them.  Some of these new controls and policies you’ll see as a result of the underlying wholesaler shift will be finely nuanced, but others may have you reexamining your fundamental pricing and business models, depending on the degree to which new policies directly impact you or your primary competitors.



Increased Management of Credit Risk by Wholesalers 

Watch for wholesalers to more closely manage their prepaid and post paid pricing to invoke more control over interactions with service providers they consider to be credit risks.  Perceived credit risk prepaid service providers may or may not be offered minutes at higher prices, but will almost certainly be subject to automated control and hard credit limits that will stop their traffic flow (from IP addresses or trunk groups) when a total credit limit is reached. 



Customized, Tiered Pricing Based on Hybrid Prepaid Bundles and  Postpaid Overruns 

Some wholesale carriers are likely to leverage the rate controls of IP service delivery platforms to offer creative pricing features, such as perhaps charging a flat rate for a block of minutes on a ‘use it or lose it’ basis.  For example, ‘Carrier A’ may offer a block of 10 Million minutes per month of UK fixed termination to a prepaid service provider that they must prepay and use during the course of a month.  For any traffic over the 10 million minute block, the prepaid service provider would then need to pay ‘Carrier A’ on a post paid per minute basis.  In such a case, the service agreement between the wholesaler and an individual prepaid service providers ‘Carrier A’ could call for 1) a hard shut off of the interconnected carrier until a new prepayment for another allotted block of minutes is received, 2) a higher rate for the as-needed quantity of postpaid minutes the carrier then uses, 3) a mid-level rate for a new block of ‘use it or lose it’ minutes, or 4) other pricing per minute quantities negotiated between the prepaid service provider and wholesaler.



Other Wholesale Minutes Pricing Options

Some wholesale carriers may want to further leverage new IP-enabled pricing controls by offering credit worthy and longer-term prepaid service providers different products, such as a lower price for typically post-paying prepaid service providers if they buy destinations on a prepaid basis.  This is ideal for wholesale carriers who want to give new incentives to prepaid service providers in order to expedite receipt of payments, rather than waiting the typical 30 to 45 days (or as much as 120 days in some cases).  This type of ‘loyal prepaid service provider reward’ offering can put wholesalers in a position to improve their cash flow while reducing risk, and increase traffic flows by offering flexible pricing mechanisms that are currently not commonly available.  The potential for credit card, bank line-of-credit or other asset-based payment assurances for automatic re-provisioning further broadens the scope of negotiation between the wholesaler and prepaid service provider, inviting additional pricing permutations and programmatic rewards.

Whether these new variables end up being beneficial, or detrimental, to your business is up to you.  In order to make such new pricing model flexibility work for you as a prepaid service provider, you’ll need to demand (and be ready to administer) new levels of communications between yourself and your wholesalers.  In many ways, mirroring your relationship with your own subscribers, you will need to negotiate with your wholesalers for advance email notifications that a top up is required, and either negotiate to automate or proactively check your balances, rates and routes with the wholesaler’s finance, routing and business managers to understand exactly what you’re buying and the terms you’re being offered. 

But most of all, you’ll need to sharpen your negotiating skills to ensure that the new pricing and packaging variables made possible by wholesaler migration to IP service delivery platforms work for you. 



Ken Osowski is the VP of Marketing & Product Management at Pactolus

Communications Software. He can be reached at keno@pactolus.com.