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NeuStar Moves Into SIP Peering

Three months after its IPO, NeuStar Inc. (NYSE: NSR) has found another role for its "neutral country" business philosophy -- this time by helping carriers pass SIP application sessions back and forth between their networks. (See NeuStar Unveils SIP-X.)

The company announced Monday both that it has released a new set of “application peering services” specially designed for SIP peering, called "SIP-IX," and that three large Internet peering exchanges have signed up to host the services. (See Equinix, NeuStar Team Up .)

For network operators, NeuStar's CTO Mark Foster says, the new services might increase peering of SIP services and eventually increase the uptake of the services among consumers.

To explain what the tools will enable for consumers, Foster uses the example of a husband sending a video call to his wife who is across the country roaming on a different cellular network. The SIP-based videophone call will be exchanged between the two networks at the Internet exchange/peering point using NeuStar’s new services. (See IMS Guide.)

There is a logical movement from NeuStar's core business, number portability, to its new business in SIP peering. (See Telecom's New Star.)

In order for one network operator to exchange basic IP-based voice calls with another, the phone numbers of the caller and the receiver must be reconciled at an ENUM database. The database matches the two numbers and instructs the gateways on both networks how to route the call. Managing such databases is NeuStar’s core business today. (See NeuStar Speeds VOIP Service Activation.)

But SIP application calls, or "sessions," are a little more high-maintenance. Networks need to reconcile a number of more complex issues in order to pass them back and forth.

Beyond the ENUM services, networks exchanging SIP traffic also must negotiate a number of other SIP-oriented parameters like provisioning and OSS, SIP security, QOS, and traffic accounting and settlement, Foster says. (See Who Makes What: VOIP Infrastructure Equipment.)

NeuStar's new suite of "application peering services" enables the peered networks to do exactly that. But NeuStar doesn't sell these new peering services to the network operators themselves; it places them at the Internet peering exchanges used by network operators to exchange IP traffic of various kinds.

The first three such relationships NeuStar has arranged are with the large exchanges, Amsterdam Internet Exchange B.V. (AMS-IX), Telehouse International Corp. of America, and Equinix Inc. (Nasdaq: EQIX). Collectively, the three exchanges interconnect more than 640 global IP networks, covering most of the IP traffic for North America and Europe, NeuStar says.

Foster says that, while these exchanges do not peer all the IP traffic in the world, they handle a significant enough amount of it to give NeuStar "critical mass" with its new product offering.

NeuStar isn't disclosing exactly how or by whom the company will be paid for the new services. But Foster said it is a payment model similar to that of the ENUM services. In that case, NeuStar gets a small transaction fee each time a network uses its databases to pass a call to another one.

Foster says text messaging increased 30 times when competing wireless carriers began to allow subscribers to text message with subscribers on competing networks. NeuStar believes something similar can happen for service providers selling SIP services today. "Our customers aren’t interested in using these services so that they can keep more of their calls in IP and save opex," Foster says. "They want to increase the number of revenue generating services.” If the pool of possible users of a particular (SIP) service is not limited by network borders, the value of that service grows exponentially, Foster reasons.

It’s Metcalfe’s Law again: “The community value of a network grows as the square of the number of its users increases.” It’s a concept heard a lot in conversations about the end goals of SIP and IMS.

NeuStar's movement into SIP peering might make sense to its investors because, strategically speaking, it makes the company less of a one-trick pony.

NeuStar rode to its IPO based on its contracts with the North American Portability Management LLC; the North American Numbering Plan Administrator (NANPA); and the National Pooling Administrator (NPA) to manage large ENUM databases. If the company lost those contracts to a lower bidder, the bulk of its revenues would vanish.

The SIP peering business diversifies NeuStar's holdings somewhat and, at the very least, distributes some of its risk.

— Mark Sullivan, Reporter, Light Reading

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