NeuStar's New Portability Play
The quiet, but aggressive, private company has introduced a beefed-up menu of operations support system (OSS) clearinghouse services, offering new ways for telecom service providers to pass orders, requests, and messages to each other through a central hub.
Experts in the carrier world see this as extremely ambitious. But the payoff could be huge.
The company anticipates increased demand for OSS clearinghouse services as carriers roll out offerings like voice-over-IP (VOIP), multimedia messaging service (MMS), and number portability, which require complex communications among carriers.
OSS clearinghouses act as middlemen between carriers, performing such transactions as porting numbers from one service provider to another. Such transactions require gateways that bridge different carriers’ OSS software systems, which handle such functions as ordering and provisioning. Because those gateways are costly and complex, it’s often cheaper and easier for carriers to outsource OSS clearinghouse functions. Small carriers, in particular, can benefit from outsourcing, since they often lack resources for complicated transactions with large incumbent carriers that require specific transaction protocols.
Historically, most clearinghouses have performed single transactions between operators of similar networks, such as validating that a phone number can be ported from one wire-line carrier to another. NeuStar is touting its so-called “convergent clearinghouse” as a breakthrough because it can perform multiple transactions between dissimilar networks, including wire-line to wireless and wire-line to cable.
For example, the convergent clearinghouse lets a cable company automatically notify a phone company when a customer asks to port a wire-line phone number to a cable VOIP number. In the case of message routing, the clearinghouse can translate an MMS message sent from a camera-phone on a wireless network to an IP address on an Internet service provider’s network.
“Typically, in the past, these types of interactions have been in stovepipes, like wire-line to wire-line or wireless to wireless,” says Bill Stewart, senior director of product development at NeuStar. “Now those boundaries are being destroyed.”
The walls have crumbled especially with the advent of wireless number portability, which lets customers port wire-line numbers to wireless phones. NeuStar’s clearinghouse offers services for carriers that lack the infrastructure for such porting.
Rob Rich, an analyst at Yankee Group, agrees that the clearinghouse’s ability to bridge heterogeneous networks is novel. “The big deal is its ability to handle a variety of transactions and do it in one place,” he says. However, he adds that such an undertaking is quite challenging. “This is not going to be a simple thing to pull off. But NeuStar does have a good track record.”
Though only eight years old and still privately held, NeuStar has rapidly grown into a company that generates $92.4 million in annual revenues, according to D&B’s estimate. Its income derives largely from its businesses as North American Numbering Plan Administrator and Number Portability Administrator for North America. Those government-awarded contracts give the company exclusive management of area codes, central office codes, and network routing information for 10-digit phone numbers in North America.
The convergent clearinghouse is not NeuStar’s first foray into the OSS clearinghouse business. For several years, the company has offered Customer Account Record Exchange (CARE) services, which let carriers swap customer information such as billing names and addresses. The new clearinghouse services are the fruits of two companies NeuStar acquired last year: BizTelOne and Nightfire (see Consolidation in the Telecom Industry: Interconnection Gateway Vendors Are One of First Software Vendor Groups to Feel the Impact). For the past year, NeuStar has been integrating BizTelOne’s clearinghouse exchange and Nightfire’s interconnection gateway software into its data center, and the convergent clearinghouse is the result (see NeuStar Expands OSS Suite).
The acquisitions and NeuStar’s previously existing CARE business have already given the company “several hundred” OSS clearinghouse customers, according to Lisa Donnan, VP of marketing at NeuStar. With the introduction of the convergent clearinghouse, the company aims to up-sell those customers to bundled clearinghouse services. For example, rather than simply validating that a phone number can be ported, the clearinghouse may perform the validation and then complete the port all in one transaction.
Competitors to the convergent clearinghouse could come from VeriSign Inc. (Nasdaq: VRSN) and Telcordia Technologies Inc., which have established clearinghouse businesses. But the greatest competition is likely to come from carriers’ in-house OSS systems. NeuStar is betting that multiple transactions among wire-line, wireless, and cable networks will be too complex and expensive for in-house systems to perform. “It’s an expensive proposition to build the infrastructure necessary to connect with all these trading partners,” Donnan says. “Service providers should be worrying about customer acquisition and retention, rather than the plumbing.”
— Justin Hibbard, Senior Editor, Light Reading