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Peering Into the Future

VOIP presents service providers and network operators with a more efficient way to interconnect and exchange voice traffic, but VOIP's overall impact on the industry will go far beyond physical interconnection. VOIP interconnect, a.k.a. VOIP peering, will have profound effects on the voice settlements process and pave the way for a slew of advanced services beyond basic packetized voice.

As detailed in Heavy Reading's latest report, VOIP Peering & the Future of Telecom Network Interconnection, peering is becoming a major agent of disintermediation, on several fronts. By allowing VOIP service providers to connect directly with each other, peering eliminates the need for wholesale carrier middlemen to provide the TDM trunks that have connected service provider networks in the past.

Disintermediation also will push out to another level, with large enterprises more likely to use federated peering platforms to bypass service providers altogether. The end result is a significant and permanent change in the economics of voice networks and services.

VOIP peering enables originators and terminators of traffic to interconnect their networks and terminate each other's traffic under settlement terms to which they both agree. In the traditional peering sense, service providers of similar size elect to interconnect their networks and terminate each other's traffic settlement-free, but they may also agree to other terms, such as net settlements or contracted rates.

The arrival of VOIP peering has prodded U.S. carriers to seriously pursue intercarrier compensation reform to reduce access termination rates, with the intended effect of reducing the cost advantage of VOIP interconnection and peering. But as our new report spells out, cost reduction is not the only motivator driving increased use of VOIP peering. As services move beyond basic voice communication and carriers begin to offer new converged services such as presence, high-fidelity voice, video, and multimedia, peering takes on even more importance. For such advanced services, interconnections must provide different bandwidth and quality-of-service parameters on a session-by-session basis, and service providers are turning to peering agreements to accomplish this. Advanced service capabilities may ultimately prove to be the greatest driver for VOIP peering.

VOIP Peering & the Future of Telecom Network Interconnection offers a clear view of where VOIP peering is and where it is heading in the next few years. It evaluates each of the key VOIP platform operators today and compares the services and functions provided as well as the business models employed. The report features profiles of 16 companies that provide peering services at the transport, signaling, or ENUM level, as well as the perspectives of eight operators and eight VOIP peering equipment and solution providers.

— John Longo, Senior Analyst, Heavy Reading

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