Clearing and Peering

1
Clearing and Peering
Business Models and Technologies Jim.Dalton_at_Trans
Nexus.com
2
Agenda

• Definitions
• Interconnect Models and Technologies
• Traditional Telephone (The early days)
• VoIP (What is the future?)
• Summary and Conclusions

3
Definitions

• Peering
• Bilateral interconnection
• No Financial Implications (Bill and Keep)
• Settlement (Interconnect Billing)
• Clearing
• Multilateral Interconnection
• Settlement (Interconnect Billing)

4
Interconnect Business Model Drivers

• Market Factors
• Fair allocation of costs (free resources get
  abused)
• Big is better (network externalities)
• Competition / Regulation

• Technical Factors
• Route Discovery (Scalability, Bilateral vs
  Multi-Lateral)
• Access Control
• Accounting

5
Interconnect in the Early Days

• Market Factors
• High growth
• Lots of new entrants
• Fragmented market
• Highly competitive
• Unregulated
• Interconnect Model
• Bill and Keep

6
LEC Interconnect Bill and Keep
Local Telco
Local Telco
Local Telco
Local Telco

7
LEC Bill and Keep

• LECs bill their subscribers and keep all the
  money
• Interconnect trunks among LECs
• Simple low overhead
• Works well for rural ILECs (no competition)
• Lack of settlement can lead to economic
  distortions
• Does not scale

8
The Telephone Market Matures

• Bill Keep model does not scale.
• Market Consolidation.
• Regulation and market stability
• Interconnect is managed by a dominant
  inter-exchange carrier

9
Inter-Exchange Carrier
Local Telco
Local Telco

Inter- exchange Carrier

Interconnect access billing occurs at adjacent
networks
10
Inter-Exchange Carrier

• IXC has Bilateral Settlement agreements with many
  networks
• Interconnect to IXC provides global routing
• Tandem switch provides total call control
• Access control and accounting
• Tandem switch creates a network bottleneck

11
Interconnect Future for VoIP?

• Market Factors
• High growth
• Lots of new entrants
• Fragmented market
• Highly competitive
• Unregulated
• Trend toward deregulation
• Natural trunking of IP mesh different from
  switched star network
• Interconnect Model?

12
ITSP Bill and Keep
Directory Server
ENUM
ITSP
ITSP
Route Look-up
IP Network
IP Phone
PC Phone

13
ITSP Bill and Keep

• Removes network bottlenecks enables peer to
  peer routing
• Excellent technical solution for route discovery
  and scalability (DNS works!)
• No access control or accounting free resources
  could be abused.
• Best for equal sized networks or in a regulated
  environment.

14
DUNDi Bill and Keep


15
DUNDi Bill and Keep

• New interconnect model being used by Asterisk
  users
• No central authority enables peer to peer
  routing
• General Peering Agreement
• Each peer has a bilateral agreement with adjacent
  peer
• GPA links all peers for global route discovery
• No networks bottlenecks - Potential for high
  scalability
• No access control or accounting free resources
  could be abused.

16
VoIP Peering
ITSP

ITSP

IP Network
ITSP
17
VoIP Peering

• Bilateral agreement to peer VoIP networks
• Session Border Controller provides total call
  control
• Bilateral Access control and accounting
• Settlement billing or Bill and Keep
• Session Border Controller creates a network
  bottleneck
• Scalability limited by bilateral agreements

18
VoIP Clearinghouse
ISP
ITSP
OSP
Certificate Authority and Settlement Clearinghouse
19
VoIP Clearinghouse

• Similar to ENUM - Removes network bottlenecks
• Excellent technical solution for route discovery
  and scalability (DNS works!)
• Public Key Infrastructure (PKI) services ensure
  secure multi-lateral peer to peer access control
• Standards based accounting records ensure simple,
  real time settlement (no monthly CDR disputes)

20
Summary of Interconnect Models
21
Conclusions
OSP
Tandem Switch
How Interconnect Technologies Compare
Inter- Office Trunks
ENUM