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Converged Networks
August 2000

Scot Robertson Long-Distance Wholesaling: A Big Piece of A Big Pie

BY SCOT ROBERTSON


According to Frost & Sullivan, the long-distance wholesale voice services market is set to catapult from $19.85 billion in 1999 to $57 billion by 2005.

In last month's column, I discussed network convergence as it related to the different parts of the network as a whole. In this column, I will examine the backbone or the high-bandwidth interstates that connect the different population centers across the world and take a closer look at how the growth and availability of more and more bandwidth is enabling an environment for a potentially highly lucrative convergence application known as long-distance wholesaling.

EVER MORE BANDWIDTH
Because of the rapid developments of fiber optic technology and the installation of very high bandwidth fiber optic-based data backbones for countrywide or worldwide networks, the amount of bandwidth is doubling every nine months. It is estimated that there will be approximately 380,403 miles of long-haul fiber networks in place by 2002, up from 200,700 in 1998 in the United States, according to KMI Corporation. Wired Magazine also reported that since 1995, annual installations of long-haul fiber networks in Europe have shot up nearly 700 percent. As bandwidth continues to increase and becomes a more plentiful commodity, channels for selling the bandwidth and applications that will use the bandwidth are developing. One example is long-distance wholesaling.

Long-distance wholesaling is one of the most compelling convergence cases because the financial benefits are so clear, and because the barriers to entry are low. If you look at the pioneers in IP-based long-distance wholesaling market today (including PSINet, Level 3, iBasis, and ITXC) who are offering IP services to domestic and international carriers, corporations and services providers, you begin to see the amount of possible applications and business models that can provide new revenue streams.

ADDING VOICE TO THE DATA MIX
Becoming a long-distance wholesaler involves leveraging the data bandwidth infrastructure in order to offer voice services. Data network owners can tap into the worldwide voice market very readily with the new generations of network equipment that allow calls to be concentrated from the PSTN to the data network. The problem for network providers is using the best methods for adding voice services successfully, with high quality. The voice service must be as good as today's PSTN services. The solution lies within smart management of packet latency to ensure circuit-like behavior inside the IP network.

In order for a data network to support voice, there are a number of system elements that can be used. Trunking gateways allow connection of the data network to the PSTN to support long-haul carrying of switched calls. In addition, switching services can be added to the data networks through the use of softswitches. These can be added to an existing data network fairly easily and inexpensively to support voice services, although there are tradeoffs for each, and choosing the right flavor is critical for both short-term and long-term service and business objectives.

The key system element that allows support and processing of voice calls is the trunking gateway. The main issues with selecting the right gateway are voice quality versus bandwidth (how much bandwidth do you use to ensure quality?), connecting to the customer (how many services need to be supported?), and maintaining voice quality as bandwidth becomes more constrained.

CHOOSING THE RIGHT GATEWAY
When choosing a trunking gateway, it is important to determine what services will need to be supported, such as voice and data (dial-up modem, IDSN, fax), and which type of gateway most suits the technical requirements and business opportunities of a particular network. Today, most trunking gateways are built on RAS concentrator platforms and can provide capacity for existing data access services, as well as adding voice services. A service provider will need to decide whether to implement a gateway that supports all of their services (a universal gateway), or one that supports voice only. If voice is the only concern, then a trunking gateway dedicated to voice services can offer higher capacity at a lower per port price. If the subscription rate to each service is uncertain, then the universal equipment will be the most flexible solution.

Determining how configurable the trunking gateway needs to be for the voice service is also an important consideration. The trunking gateway can be configured to provide different levels of voice quality, bandwidth usage, and ability to add services such as dial-up modems. If a provider has excess bandwidth, a trunking gateway can be configured for the lowest cost per port using G.711 to encode speech and ensure the highest quality.

With a situation of having excess bandwidth, it is easy to provide high quality by utilizing the growing bandwidth for voice calls. There is no need to compress the voice, or to try to eliminate silent packets or other variables that could cause degradation in the voice quality. For example, G.711 could be used, which is the same speech coding used on the PSTN, providing toll-quality calls over the data network.

With the advent of multi-protocol label switching (MPLS), IP network managers can build IP-based virtual circuits with controllable QoS. The service provider can guarantee their success with MPLS by having excess bandwidth available in their networks. Because of the excess bandwidth, network owners can provide low latency for packets over their network, which is the biggest quality factor.

Without congestion on the network, latency will be very low and quality will be high. Without congestion, stresses in the system are avoided and quality and reliability can reach levels equivalent to that of the PSTN. The complexity of implementing a high-quality virtual circuit is simplified by the simple use of excess bandwidth.

Ensuring that the equipment is capable of adapting to congestion over time is also critical. It is important that the trunking gateway be able to reduce voice bandwidth while maintaining voice quality. For example, with the use of digital signal processor (DSP)-based trunking gateways, it is easy to switch to low-bandwidth speech codecs such as G.726 or G. 729a, which can reduce the data bandwidth required by up to a factor of eight. Further reduction in bandwidth without impacting quality can be achieved by eliminating silent packets.

A good feature to look for in a gateway is silent packet suppression. In this case, the gateway removes packets containing only silence, which can save considerable bandwidth since the typical conversation is only active about 40 percent of the time. Good voice quality is maintained by reproducing the background noise when a silent packet is removed to ensure the user won't think the line has gone dead or has been disconnected. If bandwidth needs to be reduced further, the gateway will need to be easily configured for compressing speech data to reduce bandwidth using G.726, G.729a or G.723.1.

The other benefit of a configurable gateway is the ability to add capacity for additional services. Many trunking gateways are based on DSPs to handle the access function and can be easily reprogrammed to add a new service if sufficient capacity is built in. A major benefit and advantage of this is that it allows the service provider to have a single piece of equipment for all of its services over the network, greatly simplifying their network administration and lowering their expenses.

CONCLUSION
Adding VoIP wholesaling services to managed data networks can be straightforward and rewarding. The relative simplicity of adding the equipment to provide the additional voice service makes a compelling business case. By only gaining a fraction of a point in the wholesaling market, a data service provider can easily add millions of dollars in revenue. Next month, multi-service access systems will be discussed as another example of network convergence. I will address this application of voice as a new service that providers are trying to deploy using their broadband data access service to tap the voice market, and explain some of the limitations and costs involved. 

Scot Robertson is the product line manager for Remote Access Products at Analog Devices, Inc., a leading manufacturer of precision high-performance integrated circuits used in analog and digital signal processing applications. Scot can be reached at scot.robertson@analog.com.

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