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Least-Cost Routing Programs Pick the Route to Substantial Savings.

Least-Cost Routing Programs Pick the Route to Substantial Savings

Frequent changes in long-distance calling rates and a wider choice of carriers following the AT&T divestiture have presented new problems (and opportunities) in managing telecommunications networks. Today, cost-conscious communications managers can achieve substantial savings through engineering of their telephone systems.

Says Gary Fisher, telecommunications manager for Hewlett Packard in Palo Alto, California: "Until recently, we hadn't even considered the idea of engineering our network. We have had an Account-A-Call program, which does a good job of summarizing call data but very little in the way of engineering. We had been considering adding another carrier at the time, and had been using services from AT&T and Pacific Bell before divestiture.

"Then, when we started to work with Delphi Associates (Walnut Creek, California), our eyes really opened to what the possibilities of engineering were really all about. The firm's Least Cost Route Design (LCRD) programs gave us the opportunity to build accurate pricing models, such as for WATS and foreign exchanges (FXs), and to see how they reduced our costs and which configuration gave the best results. (See Figure 1.)

LCRD is a series of engineering and cost-analysis programs for network optimization that sort and organize call data by message unit (MU) or zone usage measurement (ZUM) rate centers, price service options, engineer and price trunk groups of most common carriers, and prepare automatic route selection (ARS) routing sheets for programming a switcher.

Fisher continues, "We already had Flexible Route Selection (FRS) with our Centrex system. We set up a California WATS, Band 5 WATS and intra-LATA foreign exchange lines. The FRS system would then select the least-expensive route, depending on where you're calling. After engineering the system with LCRD, we added three MCI lines on the front end of the Band 5 WATS group. We were able to increase our savings over the already reduced costs from the engineering and to see its effectiveness immediately.' (See Figure 2.)

"Now, I'm in the process of ordering more OCC lines because we can see they'll obviously provide a great reduction. With only the first three MCI lines, our tolls went down 22 percent in Palo Alto alone. I could see that even in the first month, we could save enough to pay for the software, as well as the personal computer (HP-86) for the software to run on. So, essentially, we paid for the entire system with that first month's savings and realized some savings beyond that.'

The LCRD programs are currently available in MS-DOS and PC-DOS, and are now used by Hewlett Packard on its HP-150.

Engineering Had Been Trial-and-Error Process

Comparing the engineering process before he began using the new programs, Fisher relates, "It was very much a trial-and-error process before. We'd install a couple of lines to see how that would reduce out toll, but the results would take a couple of months to see the real effect. Now we're able to calculate service options and make the changes instantaneously, and derive savings almost immediately--without wasting the time and costs of a trial-and-error period. For instance, we just went through re-engineering and our calling patterns have changed. So we're going to fine tune our network again.'

The Least Cost Route Design is a modular set of programs for complete off-network or single-mode engineering. They sort and organize call data by message unit (MU) or zone usage measurement (ZUM) rate centers and LATAs; calculate miles and costs for ZUM, MU, FX, intrastate and intra-LATA long distance; and engineer and price common carriers' state and interstate WATS--like services where carrier A overflows to carrier B, with the final overflow priced on a third service. Additional program modules include Erlang-C and Poisson for predicting blocking, delay and queuing, plus programs to demonstrate the effect of bill rounding by common carriers and for cost comparison of present and proposed services.

Did the programs have to be customized for use at Hewlett Packard? Says Fisher: "No, in fact we're going to engineer the networks at five other HP locations. We have their intrastate rate tables in our programs and only need to enter the V&H coordinates of the originating location. The interstate engineering and pricing is good throughout the country. If we were to engineer intrastate service for other states, we would just need to add those rate tables.'

Prior to using LCRD, HP used to re-evaluate its telecommunications network each month. Today, notes Fisher, he can do it anytime. "Our Account-A-Call reports give us the summarized call data. We then enter that data into Delphi's program, and can easily see on one scale which will be the least-expensive way to go. Now, we're able to have an experienced person redo the whole cycle of engineering in 30 to 45 minutes from these programs. The time savings is just incredible!

"What we have now on a regular basis is a way to see our trends. As every telecommunications manager knows, each company has its own calling patterns. There are trends in calling patterns with peaks and valleys during the year, the month and during the hours of the day. So, if one hires a consultant or engineer to evaluate a system, say in January, results may be deceptive if that's a particularly heavy month. Whereas in May or June, traffic may drop off due to vacations, and there's simply less activity. Similarly, at the end of our financial quarter, activity increases. So we'd actually have to have a consultant in here the whole year to get the benefits of the LCRD software.'

Least-cost routing also fits into a communications manager's personal business strategy, Fisher remarks. "Before, our system was engineered, managers of the company would read articles in The Wall Street Journal and see on TV how other common carriers could save you up to 25 percent, and wonder what we were doing about that. So telecommunications managers have to take a close look at this or be accused of not doing their jobs.

"Least-cost routing programs are a viable tool for the management of any telecommunications network. We spend approximately $7 million on telephone services, with half of that in tolls. This engineering package is actually saving us 20 percent of that. Those figures are merely for the Palo Alto location--and we have 60 other locations around the country.'

With the LCRD package, one simply loads the disk in a PC and can immediately start the engineering process from call data entered from the keyboard or retrieved from disk files of previously stored data. No special training is needed other than the communications knowledge of the network as it exists.

Recounting Hewlett Packard's training experience, Fisher states, "It's helpful to have some communications knowledge to buttress the user manual and the eight hours of training the vendor provides. Yet the person initially trained had no telecommunications experience and was able to operate the system and acquire the information. Then we had people in the telecommunications department interpret the information. That worked fine for us for six or seven months, but now we've gotten someone involved who does have a telecommunications background. So we now have both telecommunications people and non-telecom people using the system.'

Photo: Figure 1--This is the summary section of the printout from the program that prices overflow and related costs for line engineering. The full printout of foreign exchange pricing shows costs for all trunks, open-end ZUM costs and overflow rate.

Photo: Figure 2--This is the summary section of the printout showing an engineering and pricing model with exact costs for one carrier overflowing to a second--MCI to AT&T, in this example.
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Copyright 1985 Gale, Cengage Learning. All rights reserved.

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Publication:Communications News
Date:Jan 1, 1985
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