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.
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