comptel plus 2006 – san diego voip peering“sip-ix generic.ppt” description of neustar voip...

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VoIP PeeringJim.Dalton@TransNexus.com

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

4

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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The Interconnect Debate

versus

Your Nuts! You’re a Dinosaur!

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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 - richard.shockey@neustar.biz