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The Future of VoIP: Interconnect Models, Peering, and Clearing in a Competitive Landscape

This document explores the evolving landscape of VoIP interconnect models and peering strategies, focusing on their historical context, present innovations, and future trends. It covers definitions of key terms, traditional phone systems, and the transition towards VoIP, discussing the implications of various interconnect models such as Bill and Keep, and multilateral agreements. Key market drivers, competition dynamics, and regulatory factors influencing the landscape are also analyzed, along with an exploration of technologies supporting scalability and route discovery.

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The Future of VoIP: Interconnect Models, Peering, and Clearing in a Competitive Landscape

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  1. VoIP Clearing & Peering Agenda • Definitions • Interconnect Models and Technologies • Traditional Telephone (The early days) • VoIP (What is the future?) • Summary and Conclusions

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

  3. 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

  4. Interconnect in the Early Days • Market Factors • High growth • Lots of new entrants • Fragmented market • Highly competitive • Unregulated • Interconnect Model • Bill and Keep

  5. $ LEC Interconnect – Bill and Keep Local Telco Local Telco Local Telco Local Telco $

  6. 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

  7. 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

  8. $ Local Telco Inter-Exchange Carrier Local Telco Local Telco $ Inter- exchange Carrier $ Interconnect access & billing occurs at adjacent networks

  9. 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

  10. 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?

  11. $ ITSP ITSP – Bill and Keep ENUM Directory Server ITSP ITSP Route Look-up IP Network IP Phone PC Phone $

  12. 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.

  13. DUNDi – Bill and Keep $ $

  14. 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.

  15. Interconnect access & billing occurs at Border Controllers SBC SBC SBC VoIP Peering ITSP $ ITSP $ IP Network ITSP

  16. 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

  17. ISP $ $ IP Network CDR Route Look-up & Authorization Interconnect access & billing occurs at VoIP Domains $ CDR VoIP Clearinghouse ISP ITSP OSP Certificate Authority and Settlement Clearinghouse

  18. 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)

  19. Summary of Interconnect Models

  20. Session Border Controller DUNDi Conclusions Reliable Settlement OSP How Interconnect Technologies Compare Tandem Switch Access Control & Accounting Inter- Office Trunks ENUM Bill & Keep Bilateral Global Route Discovery

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