Posts Tagged ‘technology’

Why Modern Telecom Services Demand Usage-Based Billing

July 15, 2026



A few years ago it seemed to me that the all-you-can-eat, flat monthly pricing plan was becoming the way to go for billing telecom services.

It’s amazing how quickly things change.

Flat billing worked well a few years back, with less variety of online services, more predictable usage patterns and far less competition between providers.

Service providers and MSPs now deliver a wider range of consumption-based services, including UCaaS, SIP trunking, mobile connectivity, IoT, messaging, cloud communications, AI-powered services, and APIs. These services don’t fit neatly into a fixed monthly fee—they grow and change with how customers use them.

Furthermore, competition today is more intense and service providers can no-longer slap lazy all-you-can-eat pricing over variable services with built in “safety margins”. Those days are gone for service providers who want to hold on to their customers.

Some other considerations regarding usage-based billing are as follows:

  1. Customers Pay Only for What They Use

Usage-based billing is widely perceived as a fairer pricing model. Instead of paying for unused capacity, customers are billed according to actual consumption.

This is especially valuable for businesses with seasonal demand or rapidly changing requirements.

  1. Revenue Grows Alongside Your Customers

One of the biggest advantages for providers is that revenue naturally increases as customers expand their business.

Rather than renegotiating contracts every time usage grows, your billing model scales automatically with customer success.

  1. It Matches Today’s Telecom Services

Many modern telecom offerings are inherently usage-driven, including:

Voice minutes
SMS messaging
SIP trunks
Mobile data
IoT connectivity
Cloud communications
AI services
API transactions
International calling

Trying to force these services into a flat-rate model often means either undercharging heavy users or overcharging light users.

  1. Lower Barriers to New Business

Customers are often more willing to adopt a service when they know they only pay for what they consume.

Pay-as-you-go pricing, flexible plans, and lower monthly commitments can make it much easier for providers to win new business.

  1. Customers Can Scale at Their Own Pace

Businesses rarely stay the same size forever.

Usage-based billing allows customers to start small, add users and services gradually, and increase consumption without changing billing plans. That flexibility creates a better customer experience and often leads to higher long-term revenue.

  1. Better Protection of Your Margins

Wholesale telecom costs are frequently usage-based.

When customer billing reflects actual consumption, providers are much better positioned to recover increasing wholesale costs and protect profitability as usage grows.

  1. Greater Pricing Flexibility

Usage-based billing enables providers to offer pricing models that customers increasingly expect, including:

Included usage allowances
Overage charges
Tiered pricing
Volume discounts
Destination-based pricing
Burst capacity pricing

This flexibility allows providers to tailor services to different customer segments without creating unnecessary complexity.

  1. Better Visibility Into Profitability

Detailed usage records provide valuable business intelligence.

Providers can identify which services are most profitable, spot customers with unusual usage patterns, understand wholesale cost trends, and make more informed pricing decisions.

  1. Data That Drives Better Decisions

Usage data isn’t just for billing.

It helps providers understand customer behaviour, forecast network demand, identify upsell opportunities, and improve service offerings based on real-world consumption.

  1. Built for the Next Generation of Services

As AI, cloud services, APIs, cybersecurity, and IoT continue to grow, consumption-based charging is becoming the norm rather than the exception.

Providers with modern usage-based billing platforms will be well positioned to introduce new services quickly and monetize them effectively.

Flat-Rate Billing Still Has Its Place

Flat monthly pricing remains an excellent option for many services where usage is highly predictable or customers value complete cost certainty.

The most successful telecom providers increasingly offer a combination of both models—fixed recurring charges for stable services, alongside usage-based billing where consumption naturally varies.

That hybrid approach gives customers the simplicity they want while ensuring providers can price modern services fairly and profitably.

The future of telecom isn’t simply about offering more services—it’s about billing for them in a way that reflects how customers actually consume them.

How are you seeing usage-based billing evolve in your business?

Posted in Uncategorized | Leave a Comment »
Tags: , , , , , , ,

“White Label” telecom services are the better option for MSPs

April 1, 2024

At Datagate, we’re constantly talking with Managed Service Providers (MSPs) about their strategies for providing telecommunication solutions to their business clients, including VoIP, UCaaS, mobile solutions and data connectivity solutions.

We see first-hand that MSPs around the world are generally very successful at selling and providing telecom services to their business clients. This is only logical, because they have a closer “trusted advisor” relationship with their business clients in comparison to their larger telco competitors. Furthermore, businesses generally want to minimize complexity – and it’s much easier and less complex to source your IT and telecommunication services from a single source – your MSP.

MSPs with little or no telecom expertise and/or their own telecom infrastructure are best advised to resell the services of a specialist wholesale telecom provider.

There are two fundamental types of wholesale telecom provider models. These are the “Agency” model and the “White Label” model.

Under the Agency model, the MSP refers their clients to the telecom provider and gets paid a commission on whatever services the providers sells and supplies to the MSP’s client. Under the White Label model, the MSP sells the services of the provider to the client under their own name and bills the services on their own invoice, along with any other non-telecom services.

I always recommend the White Label model to MSPs who don’t have the resources and inclination to provide their own telecom services, but are serious about growing and maximizing the value of their businesses. Below are the reasons for my recommendation.

“Sticky” Clients

The more services you provide your clients, the more complicated and difficult it is for them to move their business to another service provider.

Branding Control

With the White Label model, you have the opportunity to brand the solution as your own. This means you can establish your brand identity in the market, build brand recognition, and foster customer loyalty. Selling as an agent often means promoting someone else’s brand, which may not align with your business goals and does not build your own business value.

Flexibility and Customization

White Label solutions typically offer more flexibility and customization options. You can tailor the services to meet the specific needs of your clients, adding value and enhancing the overall customer experience. As an agent, you may have limited control over the services and features offered, which can restrict your ability to meet client demands effectively.

Higher Margins

Selling White Label solutions often allows for higher profit margins compared to selling as an agent. Since you have more control over pricing and service delivery, you can set your own margins and maximize profitability. As an agent, you may earn a commission or fee for each sale, but the margins are typically lower compared to reselling White Label solutions.

Ownership of Customer Relationships

When you sell White Label solutions, you own the customer relationships. This means you have direct communication with your clients, which can lead to better customer retention and upselling opportunities. As an agent, the provider typically maintains control over customer relationships, which can limit your ability to build long-term partnerships and maximize revenue.

Scalability and Growth Opportunities

White Label solutions offer scalability, allowing you to expand your business and reach new markets more easily. You can white-label multiple services under your brand umbrella, offering a comprehensive suite of solutions to your clients. This scalability fosters business growth and diversification opportunities that may not be available when selling as an agent.

Maximizing your Business Valuation

Eventually you will want to sell your MSP business and will want to maximize its sale value. Valuations of MSP businesses are often based on a multiple of recurring top-line revenue. The White Label model gives you a much higher top-line revenue result than the commission received from the Agency model.

At Datagate, we work closely with White Label wholesale telecom providers in the United States, Canada, United Kingdom, Australia and New Zealand. We are happy to talk with MSPs interested in this subject and make recommendations and introductions where appropriate.

Posted in Billing, Datagate, TELCO | Leave a Comment »
Tags: , , , , , ,