Carriers Resist VOIP Peering

Nifty new technology is available that enables carriers to hand off voice traffic across disparate IP networks, saving on the huge costs associated with traditional interconnection methods. But carriers are skeptical of the market opportunity this approach affords, Light Reading has learned.

Using border control switches, carriers can avoid the need for traditional, expensive voice switches at the junction of carrier networks. Today, an operator using IP to carry voice on its network has to convert the traffic to TDM in a tandem switch in order to connect to a similar TDM tandem switch in another operator’s network.

Now carriers can accomplish the same results, but avoid the TDM conversion via border control switches. Analysts say the cost of IP-to-IP peering can be as little as 20 percent of the cost of converting the traffic to TDM then back to IP to cross network boundaries.

These border control switches, made by Acme Packet, Ingate Systems AB, Jasomi Networks, Kagoor Networks, Netrake Corp., Newport Networks Ltd., NexTone Communications Inc. and Ridgeway Systems & Software Inc., also overcome other technical hurdles, like firewall and NAT (network address translation) traversal and signaling interoperability. (For more on these issues see Session Controllers Kick Off, Startup Raises Bar on SIP Security.)

This all sounds terrific, but, several carriers contacted by Light Reading had reservations about the benefits of this approach.

”If someone could definitely say what the market opportunity is to do this, we’d be interested… Everything has to do with ROI. We won’t spend time on it otherwise,” says Martin Capurro, director of product management, global data and IP, Qwest Communications International Inc. (NYSE: Q).

Likewise, AT&T Corp. (NYSE: T) is sitting on the fence for now. “The market for this type of peering hasn’t happened yet,” says Joe Aibinder, director of product marketing for VOIP, AT&T. "We are moving to a SIP-based network -- we’ll see what happens."

Aibinder adds that one of the biggest issues in this kind of exchange of traffic is keeping track of who is carrying what for whom. And he says carrying voice will have the added complexity of who owes how much to whom. “This won’t be handled like Internet peering, where we all terminate each other's traffic without paying fees; it’s going to follow the voice model."

Christine Hartman, analyst at Probe Group LLC, says carriers have yet to work out IP voice peering between networks, precisely because of these business issues. "The hard part is coming to agreements on who pays whom more or less," she says.

Still, there are unilateral IP peering arrangements starting to happen, whereby one carrier terminates the voice traffic over IP for another carrier, which analysts say is a move in the right direction.

Level 3 Communications Inc. (Nasdaq: LVLT) on Monday announced a deal like this with T-Systems Inc. -- a division of Deutsche Telekom AG (NYSE: DT) -- that it claims establishes the first softswitch-based interconnection between two independent operators ever (see Level 3 Expands VOIP Service, T-Systems Teams for US VOIP).

Level 3 says T-Systems is using its softswitch-enabled voice termination service to offload voice traffic from its enterprise customers to Level 3 through a standard IP port to avoid the cost of TDM interconnection. Level 3 is using a combination of its own homegrown softswitches, Sonus Networks Inc. (Nasdaq: SONS) gateways, NexTone border control switches, and Edgewater Networks switches for NAT and firewall traversal.

Dennis Kyle, Level 3 VP, says right now the service is a TDM-to-IP handoff. “We will enable voice peering down the road, but we’ve not yet publicly connected those dots.” He adds that Level 3 is in discussions with carriers to establish these deals but “there is a chicken-and-egg situation where everyone wants to know who else is in before they will commit."

Acme Packet, the loudest company on the block in the border control switch space, made a big song and dance about its deal with Global Crossing Holdings Ltd. recently. But a closer look at this deal reveals that Global Crossing is actually using Acme’s switch to terminate IP traffic for Point One. In other words the peering is only one way (see GlobalX Uses Acme).

A spokeswoman for Acme says carriers have to "learn to walk before they can run, and hopefully soon they will be doing two-way deals."

— Jo Maitland, Senior Editor, Boardwatch

optical_man 12/4/2012 | 11:10:03 PM
re: Carriers Resist VOIP Peering Must be a typo, changing Packet to Racket. Or are you trying to tell us something.....:-)

Acme Racket, the loudest company on the block in the border control switch space, made a big song and dance about its deal with Global Crossing Holdings Ltd. recently.
straightup 12/4/2012 | 11:10:03 PM
re: Carriers Resist VOIP Peering Hey Optical_man
The typo was probably a "Fraudian" slip.
expert_advice 12/4/2012 | 11:09:51 PM
re: Carriers Resist VOIP Peering
It is no suprise that the established long distance providers are not interested in peering.
Established carriers want to recreate the same old business model on the Internet to protect their existing revenue stream.

iConnectHere/DeltaThree, IAXTEL, Interex, Free World Dialup and IPTel all have voip peering in place and operational today. These are free interconnections.

Numbering plans are still chaotic in the VOIP world. Borrowing blocks of numbers from the PSTN ties VOIP into the same established local/long distance business model of the PSTN. Preserving the old business model will slow the deployment of VOIP.

While SIP would allow [email protected] to replace the conventional numbering system, there is no easy way for people on the legacy PSTN to dial letters on their numeric keypad. Most IP Phones still have only numeric keypads as well.

Evolving the numbering plan to provide a new numbering block for IP Phones within the NANP could allow IP Phone companies to move away from the legacy local/long distance business model and create the new value proposition that will encourage the broadband connected masses to migrate to VOIP.

IP Phone to IP Phone calls regardless of distance or if the customers purchase from two different voip telcos, should be treated as a local call because the bearer traffic (The voice itself ) is carried on the Internet which is distance-insensitive in its business model.

The established PSTN Telcos should be regulated to support calls to VOIP Telco's with IP as the interconnection rather than TDM and T1 circuits.
(n many cases the modem pool equipment they have to support dial up internet can also do VOIP/PSTN interconnection with re-programming.)
A settlement fee system like CLECs currently use with telco's would apply, and Telco's would be compensated for PSTN to VOIP interconnection at a regulated rate of return.

All PSTN subscribers in the country should be able to dial the new VOIP number block as a local call much like a 1-800 number. The PSTN Telco will have a settlement agreement in place with VOIP telco's.

Simply taking a "no regulation" approach to the VOIP industry is not entirely helpfull. New PSTN-VOIP interconnecton regulations are needed that do not force the VOIP industry to adopt the same-ole, same-ole business model of the PSTN.
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