VoIP Peering

1
VoIP Peering
Comptel Plus 2006 San Diego

• Jim.Dalton_at_TransNexus.com

2
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
Calling Party Network Pays
Bill Keep
versus
4
The Interconnect Debate
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
versus
5
The Interconnect Debate
Youre a Dinosaur!
Your Nuts!
versus
6
Access Tandem Interconnect
Local Area or LATA
CMRS Switch out MTA
CLEC2 Tandem Switch
CLEC1 Tandem Switch
CMRS Switch in MTA
CLEC1 End Office
CLEC2 End Office
ILEC Incumbent Local Exchange Carrier CLEC
Competitive Local Exchange Carrier IXC
Inter-Exchange Carrier
CMRS Commercial Mobile Radio Service LATA
Local Access Transport Area MTA Metropolitan
Trading Area
7
Interconnect Comparison
Local Area or LATA
CMRS Switch out MTA
CLEC2 Tandem Switch
CLEC1 Tandem Switch
CMRS Switch in MTA
CLEC1 End Office
CLEC2 End Office
8
Intercarrier Compensation Rates
9
Interconnect Fraud
Local Area or LATA
CMRS Switch out MTA
CLEC2 Tandem Switch
CLEC1 Tandem Switch
CMRS Switch in MTA
CLEC1 End Office
CLEC2 End Office
10
In the beginning of IP
Web Browser

• 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.

MAE East
11
IP Peering Develops
Web Browser

• 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

MAE East
12
IP Transit Develops
Web Browser

• 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.

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VoIP Peering NetworkNeuStar Example
Seattle
SIX
TorIX
Toronto
New York
Chicago
Silicon Valley
Ashburn, VA
Los Angeles
Atlanta
Dallas
Miami
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Legacy
PSTN Routing Info (NPAC, NANPA, ETNS, T-NPAC)
Peering Infrastructure Replaces Access Tandem
Signaling Functions
Registry Services
SIP-IX OSS
Provisioning Transactions
IP packets (all network-to-network)
IP/BGP Peering Services Layer 1-3
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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/Coasi
  anAlternative040901b.pdf
• Executive Summary of Intercarrier Compensation
  and Universal Service Reform Plan published by
  the Intercarrier Compensation 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 ATT, Sprint and
  Level3. http//web.si.umich.edu/tprc/papers/2004/3
  48/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.cfm
• US Code governing common carrier interconnection
  Title 47, Chapter 5, Subchapter II, Part II
   251.
• http//www4.law.cornell.edu/uscode/search/display.
  html?termsInterconnect20Obligationsurl/uscode/
  html/uscode47/usc_sec_47_00000251----000-.html
• http//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
  ATT 7 November 2005 http//www.businessweek.com
  /_at__at_n34hIUQu7KtOwgA/magazine/content/05_45/b395809
  2.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?arc
  hiveId7687
• Intercarrier Compensation A Balancing Act by
  Susan Schwartz, Billing World -
  http//www.billingworld.com/archive-detail.cfm?arc
  hiveId7704