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VoIP [email protected]
1.404.526.6053www.transnexus.com
Comptel Plus 2006 – San Diego
Routing, Accounting & Security Software for VoIP Networks
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Agenda
• The Interconnect Debate:– Calling Party Network Pays
(Traditional PSTN Interconnect Model)– Bill and Keep
(VoIP Peering)• Compare PSTN and IP Interconnect
Business Models• Interconnect Business Model Predictions
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The Interconnect Debate
versus
Calling PartyNetwork Pays Bill & Keep
Meg WhitmanEdward Whitacre
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The Interconnect Debate
versus
“… for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!”
BusinessWeek 7 Nov 2005
“Within several years, all telephone calls will be made for free using VoIP”
Rueters 19 Oct 2005
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CLEC2TandemSwitch
CLEC1End
Office
Access Tandem Interconnect
ILECAccessTandem
ILECEnd
Office
CLEC1TandemSwitch
ILEC = Incumbent Local Exchange CarrierCLEC = Competitive Local Exchange CarrierIXC = Inter-Exchange Carrier
CMRSSwitchin MTA
ILECTandemSwitch
404-526-6053
1 2 3
4 5 6
7 8 9
* 0 #
Talk End
404-526-6053
11 22 33
44 55 66
77 88 99
* 00 ##
TalkTalk EndEnd
0.2 ¢
0.6¢ Inter-state2.5¢ Intra-state
0.2 ¢
1.8¢ Inter-state3.0¢ Intra-state
Local Area or LATA
CLEC2End
Office
CMRSSwitch
out MTA
404-526-6053
1 2 3
4 5 6
7 8 9
* 0 #
Talk End
404-526-6053
11 22 33
44 55 66
77 88 99
* 00 ##
TalkTalk EndEnd
CMRS = Commercial Mobile Radio ServiceLATA = Local Access Transport AreaMTA = Metropolitan Trading Area
0.6¢IXCTandemSwitch
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CLEC2TandemSwitch
CLEC1End
Office
Interconnect Comparison
ILECAccessTandem
ILECEnd
Office
CLEC1TandemSwitch
CMRSSwitchin MTA
ILECTandemSwitch
404-526-6053
1 2 3
4 5 6
7 8 9
* 0 #
Talk End
404-526-6053
11 22 33
44 55 66
77 88 99
* 00 ##
TalkTalk EndEnd
Local Area or LATA
CLEC2End
Office
CMRSSwitch
out MTA
404-526-6053
1 2 3
4 5 6
7 8 9
* 0 #
Talk End
404-526-6053
11 22 33
44 55 66
77 88 99
* 00 ##
TalkTalk EndEnd
IXCTandemSwitch 0.2 ¢
CLEC1 pays ILEC0.2¢ per minute.
2.5¢ Intra-state
IXC pays ILEC 2.5¢ per minute to use identical facilities.
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Intercarrier Compensation Rates
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CLEC2TandemSwitch
CLEC1End
Office
Interconnect Fraud
ILECAccessTandem
ILECEnd
Office
CLEC1TandemSwitch
CMRSSwitchin MTA
ILECTandemSwitch
404-526-6053
1 2 3
4 5 6
7 8 9
* 0 #
Talk End
404-526-6053
11 22 33
44 55 66
77 88 99
* 00 ##
TalkTalk EndEnd
Local Area or LATA
CLEC2End
Office
CMRSSwitch
out MTA
404-526-6053
1 2 3
4 5 6
7 8 9
* 0 #
Talk End
404-526-6053
11 22 33
44 55 66
77 88 99
* 00 ##
TalkTalk EndEnd
IXCTandemSwitch
Call scenario 1:CLEC2 collects 3.0¢ per minute from IXC.
Call scenario 1
Call scenario 2
Call scenario 2:- CLEC1 collects from IXC. - CLEC2 collects from CLEC1
for local interconnect –possibly zero.
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In the beginning of IP …
MAEEast
• Bill and Keep Model• ISPs charged for
Internet access.• ISPs interconnected
at public exchange points.
• No interconnect payments.
• Quality of service via free interconnection collapses.
Web Server
$
WebBrowser
$
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IP Peering Develops
MAEEast
• Large ISPs use private peering to bypass public exchange points.
• Peering ISPs pay only for their peering costs. There are no inter-ISP settlement payments
Web Server
$
WebBrowser
$
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IP Transit Develops• In general, the cost
for a large ISP to peer with a small ISP exceeds the benefits.
• Small ISPs must pay to access or transit backbone IP networks.
• IP interconnect fees are based on cost of access not usage.
Web Server
$
WebBrowser
$
$$
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VoIP Peering NetworkNeuStar Example
Seattle
Atlanta
ChicagoSilicon Valley
Los Angeles
Dallas
Miami
New York
Ashburn, VA
TorontoTorIX
SIX
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Network BNetwork A
Firewall/NAT Mediation
RTP packets(media stream)
Carrier ENUM
Routing query/response (DNS)
ENUM/NTS
SIP IdentitySigning Proxy
Validation RegistrySIP Signaling
Messages
CDRs, Reports,Settlements
Accounting,Clearing, Settlements
IP/BGP Peering ServicesLayer 1-3
IP packets
(all network-to-network)
Provisioning
Transactions
SIP-IX OSSRegistryServices
Legacy Peering InfrastructureReplaces Access Tandem SignalingFunctions
PSTN Routing Info (NPAC, NANPA, ETNS, T-NPAC)
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Interconnect Predictions
• VoIP Peering will replace SS7 interconnects• You are in trouble if:
►Your business depends on access charges -market forces will drive access charges lower.
►Your business depends on free termination of VoIP calls – No free lunch.
• Future PSTN interconnect model will look more like Internet peering model►Global interconnect access►Market driven interconnect rate
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Interconnect Predictions
• Regulatory Trends– Property rights trump common carrier
requirement– Eliminate mandate for common carrier
interconnection and guarantee of access fees– Political subsidies will be paid by subscribers,
not networks– Atkinson & Barnekov white paper (Sep 2004)
provides guidance on FCC position
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References“A Coasian Alternative to Pigovian Regulation of Network Interconnection” by senior FCC economists Jay Atkinson and Chris Barnekov – September 2004. This excellent white paper provides an economic model which explains current IP peering market behavior and provides a proposed framework for regulating network interconnection that does not mandate interconnection or interconnect rates. http://web.si.umich.edu/tprc/papers/2004/348/CoasianAlternative040901b.pdf“Executive Summary of Intercarrier Compensation and Universal Service Reform Plan” published by the IntercarrierCompensation Forum (ICF) in August 2004. This white paper defines the interconnect regulatory policy recommended by the ICF, a organization of nine interexchange carriers (IXCs) including AT&T, Sprint and Level3. http://web.si.umich.edu/tprc/papers/2004/348/CoasianAlternative040901b.pdf“FAQs for the Facts” Questions, answers and opinions on interconnect policy published by the Alliance for Rational Interconnect Compensation (ARIC). http://www.arictelecom.com/section1.cfmUS Code governing common carrier interconnection: Title 47, Chapter 5, Subchapter II, Part II § 251.http://www4.law.cornell.edu/uscode/search/display.html?terms=Interconnect%20Obligations&url=/uscode/html/uscode47/usc_sec_47_00000251----000-.htmlhttp://cpr.bellsouth.com/pdf/ga/e996.pdf This link leads to the BellSouth Access Services Tariff for the state of Georgia. This 177 page tariff only covers network access. Published interconnect agreements between the CLECs and ILECs are usually over 500 pages long – giving fuel to the Bill and Keep model proponents that interconnect fees have absurdly high overhead costs. BusinessWeek Interview with Ed Whitacre, CEO of AT&T – 7 November 2005 http://www.businessweek.com/@@n34h*IUQu7KtOwgA/magazine/content/05_45/b3958092.htm
“Intercarrier Compensation” by Gary Epstein, VON Magazine - Nov. 2005. Epstein is a partner with Latham and Watkins (source of the Intercarrier Compensation Rates chart ) and adviser to the ICF. http://www.vonmag.com/issue/2005/nov/columns/epstein.asp“Phantom Traffic: Identifiable but Not Billable” by Susana Schwartz, Billing World – July 2005. This article provides insight to how carriers avoid billing for interconnect access fees. http://www.billingworld.com/archive-detail.cfm?archiveId=7687“Intercarrier Compensation: A Balancing Act” by Susan Schwartz, Billing World - http://www.billingworld.com/archive-detail.cfm?archiveId=7704“Are Access Fees Destined for Extinction” by Josh Long, Phone+ Magazine – Oct. 2004. http://www.phoneplusmag.com/articles/4a1feat02.html“SIP-IX Generic.ppt” description of NeuStar VoIP peering service by Richard Shockey - [email protected]
