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April 1999


OSP Settles The Score On Internet Telephony Billing Practices

BY MARK BAKIES

What image comes to mind when you think about how telephone companies - at the end of each month - figure out who owes how much to whom? Do you see big computers crunching away in the background, counting calls and how long they lasted? Or, do you see a couple of guys sitting at a table with stacks of call record printouts in front of them?

The second scenario is far closer to the truth, and for the most part, it occurs because telephone networks existed long before there were computers. Real-time interactive exchange of billing records and the rating and reconciliation of those records just wasn't feasible. Manual methods prevailed, and still do today.

But what if you could have settlements occur in real time? You could examine the under-utilized segments of your network, and in short, you would be able to quickly grow the amount of traffic you carry and attract additional revenues. That is what the Open Settlements Protocol (OSP) is all about.

OPENING BILLING SYSTEMS
OSP is a protocol specification that allows the exchange of all the information necessary to rate, reconcile, and bill an Internet telephony call. OSP permits two different service providers to exchange information securely regarding the details of a telephone call that traverses both of their networks.

With OSP, providers are able to ensure that settlements occur accurately and efficiently. Just as importantly, OSP helps providers build a next generation voice/data network and rapidly grow the amount of traffic carried from smaller, regional players. OSP can also track international traffic. With these capabilities, the protocol allows companies to make business decisions quickly based on real-time data about traffic flow and the utilization of capacity.

In the coming months and years, OSP will play a vital role in the adoption of Internet telephony by providers. It will also help companies quickly enter and grow the new, exciting market for Internet telephony products and services. In turn, customers will be better served, and providers will be able to leverage a vast new source of revenue.

THE SETTLEMENTS CLEARINGHOUSE
In the multipolar telco world, there are far more players and networks than ever before. Therefore, it is nearly impossible to have settlement agreements with a majority of the network players. Simply put, companies - even with automated billing - cannot afford to draw up agreements with each and every other player on the network and ensure that all players receive their piece of each call.

To solve this problem, many providers will choose to negotiate with a central player called a settlements clearinghouse. Using OSP, a settlements clearinghouse provides services that enable the exchange of voice traffic and revenues among service providers using the clearinghouse. Therefore, providers do not have to deal with dozens of network players and complicated, pricey negotiations.

Two business models are currently emerging around OSP: The Internet Business Model and the Managed Network Service Provider Business Model.

The Internet Business Model is fairly straightforward. When an Internet telephony call is initiated, the originating carrier queries a settlements clearinghouse. The settlements house then determines which terminating carriers are capable of completing the call. Selection of the terminating carrier can be based on many criteria, such as delay, packet loss rates, quality of service, cost, availability, or even random selection. In most cases, the originating carrier never knows the identity of the terminating carrier. This identification is not necessary, since the settlements house handles the selection of the carrier and the billing.

For example, using cost as the primary criteria, a simple auction may be used to calculate the rate of the call. Bidding and asking prices could be matched together or an average of the bid and ask prices could be used as the rate for the call.

The Managed Network Service Provider Model does not rely on a settlements house to complete calls and provide settlement services. Instead, this model entrusts service providers with joining together their own managed networks.

In essence, managed network service providers agree to interwork their networks. Service providers administer their systems ahead of time to know which terminating service providers to use for specific calls. The network's usage is then tracked, allowing all providers in the network to know exactly how much they owe or are owed. In this example, OSP is used as an administrative tool to collect detailed call records for rating and reconciliation.

This model can also be used to support roaming, which occurs whenever the user of a regional service provider travels outside the coverage area. The user then must gain access through an affiliate. To facilitate roaming, the affiliate will use OSP to locate the home carrier and speed up the exchange of billing information.

OSP SECURITY
Without a doubt, security is one of the most important aspects of the settlements issue. After all, providers must ensure that their communications cannot be compromised. A combination of Secure Sockets Layer (SSL) and digital certification technology is used to achieve the necessary level of security.

OSP relies on SSL between the originating carrier and the settlements house and the terminating carrier and the settlements house. It is used to provide for the secure exchange of information, including the transaction request, call detail records, and billing information.

SSL is an industry-standard protocol based on public key technology. It provides the two necessary components for secure communications over a data network: Message privacy and message integrity. This is accomplished by using cryptography to encrypt all traffic between a client and a server. In addition, SSL makes use of digital certificates to authenticate clients and servers.

Digital certificate technology is also used between the originating and terminating carriers to ensure that the requested transaction is authentic. This technology relies on a third party to issue a certificate that each party can use to verify the authenticity of a transaction. The third party could be either the settlements house or a third-party certificate authority.

In this scenario, the originating Internet telephony carrier first uses its SSL connection to the settlements house to make a request for call completion. The settlements house receives the request, identifies a terminating carrier, and then creates a digitally-signed "token" for the call. A certificate authority typically backs the public key used to generate the digital signature. The token is then passed along to the originating carrier.

During the request to set up a call, this token is also passed to the terminating Internet telephony carrier. The terminating carrier uses the clearinghouse's public key to ensure the token is valid. If all parties are satisfied that the token is valid, the VoIP call is set up. Throughout the call cycle, the originating and terminating carrier gateways generate call detail records. The settlements house then collects these call detail records, rates and reconciles the records, and generates the billing record.

To complete the transaction, billing records are exchanged periodically with Internet telephony carriers. The carriers then either send funds to or receive funds from the settlements house. Typically, the settlements house retains a small percentage of each transaction as its fee for acting as middleman.

CONCLUSION
Certainly, OSP is a great leap forward in providing for more efficient and accurate settlements among VoIP providers. However, OSP does not settle all issues. First of all, providers must remember that the OSP protocol is a general protocol - independent of other Internet telephony protocols. A profile does exist to specify how and where to insert the token from the clearinghouse in the H.323 setup message, however, profiles for other protocols - like SIP and MGCP - have not yet been specified.

Secondly, OSP does not include all aspects of a transaction. For instance, the OSP standard does not cover the administrative interfaces that are used by settlements houses to match buyers and sellers. Therefore, the buyer must be aware of the criteria that it wishes the seller to meet, including price, quality of service levels, or even the destinations where a particular VoIP carrier can terminate calls. Of course, these are the criteria that eventually will set settlement houses apart from one another. In the end, providers will have to decide for themselves which middleman best meets their needs.

The old days of estimating settlements by comparing piles of paper are fast fading, and what used to be a small, tight club is now being opened up to any service provider wishing to stake a claim in the next generation of communications networks. This constrictive atmosphere is being pushed out by new technology and by the need for more accurate settlement processes mandated by the migration to Internet telephony. Fortunately, the OSP protocol provides for more efficient, precise assessments, thereby helping to open up a whole new world of communications for the public, and a new source of revenue for providers.

Mark Bakies is a product manager for packet voice technologies in the Network-to-User Business Unit at Cisco Systems. Prior to joining Cisco, Bakies worked as a communications industry consultant. Cisco provides end-to-end networking solutions that customers use to build a unified information infrastructure of their own, or to connect to someone else's network. An end-to-end networking solution is one that provides a common architecture that delivers consistent network services to all users. The broader the range of network services, the more capabilities a network can provide to users connected to it. For additional information, visit Cisco's Web site at www.cisco.com.


It's Official - OSP Is A European Standard

OSP became a European standard last October when the European Telecommunications Standards Institute's (ETSI) project TIPHON (Telecommunications and Internet Protocol Harmonization over Networks) approved OSP and assigned it the technical specification number TS-101321. ETSI is a non-profit organization whose mission is to determine and produce the telecommunications standards that will be used for decades to come. More information is available from the ETSI at www.etsi.org/tiphon.







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