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Report: Carriers Turning to VOIP Peering

As network operators increasingly move to all-IP networks, voice over IP (VOIP) peering is emerging as a way for them to connect calls without using the public switched telephone network (PSTN), according to a new report from Light Reading's VOIP Services Insider.

VOIP peering was designed to eliminate VOIP "islands" by creating a place where service providers can interconnect their VOIP networks without ever traversing the PSTN.

The adoption of peering will result in reduced costs from lower interconnection fees and improved quality of service (QOS) for VOIP calls due to the elimination of translations that happen when IP calls pass through the PSTN, notes Denise Culver, research analyst with Light Reading's VOIP Services Insider, and author of the report.

"Doing so further optimizes the quality of IP voice calls by eliminating unnecessary voice-to-IP translations and enables carriers to eliminate additional termination charges," she says.

While VOIP peering will continue to interest carriers primarily as a way to lower costs or improve call quality, there are several other benefits to the technology. Culver writes, "Carriers of all types will continue to seek ways to avoid the costly PSTN while also interconnecting with new service providers and developing services beyond VOIP, including video, gaming, and multimedia collaboration."

While VOIP peering will be of interest to telcos like BT Group plc (NYSE: BT; London: BTA), Deutsche Telekom AG (NYSE: DT), and KPN Telecom NV (NYSE: KPN) -- all of which have announced plans to move to all-IP networks -- other groups are exploring the technology as well. Cable companies and enterprises are also taking a serious look at VOIP peering as a way to facilitate communications and lower costs.

Culver writes that cable industry research arm Cable Television Laboratories Inc. (CableLabs) has been exploring options for a national peering fabric since November 2005 and "is rumored to be working on a registry for its peering community."

The reasons for this are obvious: "As cable VOIP penetration increases, there is tremendous financial incentive for cable companies to directly connect their VOIP services so that they don't have to traverse the PSTN, which entails doling out termination charges to their rivals: phone companies," Culver writes.

Enterprises have a different agenda in deploying VOIP peering solutions, as they are looking to extend advanced collaboration and presence features to their workers. Microsoft Corp. (Nasdaq: MSFT) Office Communications Server 2007, for instance, will offer softphone features; on-premises, server-based Web, audio, and video conferencing; mobile instant messaging (IM) and presence; PBX integration; and VOIP integration on mobile devices.

With all of the advantages of VOIP peering, adoption is bound to increase as telcos, MSOs, and enterprises embrace lower costs and improved service creation that comes as a result.

For more information on the report, click here.

— Ryan Lawler, Reporter, Light Reading

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