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2006: The Year of VoIP Peering

By Eli Katz


VoIP peering has become recognized as the catalyst towards the true IP communications revolution where calls are end-to-end IP. As Rich Tehrani, publisher of Internet Telephony, has proclaimed, 2006 will be the Year of VoIP Peering. This year is when we can state with confidence that VoIP peering industry has finally migrated to the mainstream with the associated technology, infrastructure, services, and solutions reaching a level of sophistication and robustness that provide the foundation to this revolution.

As often happens with new technology, there is some confusion about what VoIP peering actually is. Simply put, VoIP peering is the complete bypass of the legacy Public Switch Telephony Network (PSTN) (define - news -alerts). The VoIP Peering motto is Keep Calls on Net.

While conventional wisdom would suggest that calls that start on IP and finish on IP should remain on IP, surprisingly, this is not the case. With the proliferation of VoIP on various networks, many of which compete with each other for subscribers, interconnecting would mean sleeping with the enemy.

The vast majority of all Voice over Broadband service providers today exchange call traffic with each other only via the global telephony network. For example, calls originating from Tokyo via SoftBanks Yahoo! BB Phone, and terminating on Telio take the tortuous journey from IP to PSTN via a PSTN Gateway, travel over the PSTN (incurring all the usual PSTN charges, and limited to PSTN-only functionality), are translated back via another gateway from the PSTN to IP, and are finally delivered to Mom in Norway.

There are two principal drawbacks of utilizing the PSTN for transiting these calls. First, every PSTN call incurs a per minute charge due to legacy PSTN settlement fees and accounting charges. Second, all the richness of IP communications is lost by connecting via the lowest common denominator, the PSTN.

VoIP peering allows a service provider to offer on-net calls, thereby reducing the transit cost to near zero and delivering IP rich multimedia communications services to not only their own customers on their own IP service, but to any other providers customer. Thus, the number of calls a provider can provide on-net is a direct function of the number of other providers with whom it peers.

Bridging the hundreds of islands of voice over broadband service providers to ensure that multimodal communications remain entirely in the IP universe is a necessity for the VoIP industry. End-to-end IP communications enables the full spectrum of benefits of high-fidelity codecs, encryption, video telephony, and widespread presence.

Independent providers that wish to peer together can either create and manage multiple even hundreds of bilateral peering relationships (technically, operationally, and commercially), or can have one relationship with a federated VoIP peering service provider. This service would typically deliver:

Federated ENUM-based Number Directory system with added security, privacy, and provisioning capabilities together with policy management;
Advanced call signaling management;
Security features, including Spam over Internet Telephony (SPIT) prevention;
Support for various types of commercial agreements between the VoIP parties.

While VoIP peering requires underlying IP connectivity (i.e., Layers 1, 2, 3), either public Internet or private meeting points, and connectivity, this is IP peering and not VoIP peering. VoIP peering is, in the OSI model, from layers 5 onwards..

VoIP peering is a vital step in the fundamental migration from an all-PSTN communications world to an all-IP communications world. A recent iLocus report stated that 14.5 million customers (as of June 05) worldwide are using a VoIP phone line, with service being provided by 300 providers. Analysts predict that, by 2008, that number will grow to more than 200 million customers being served by thousands of ITSPs. This will represent, in many countries, 15 to 20 percent migration from PSTN to VoIP.

A number of significant events in the VoIP peering space have driven this process in the past few months. The key foundations of rapid deployment of an IP technology are usually:

Global standards
Market demand
Available service and products based on the standards.

E-mail is a classic example. The POP3 and SMTP standard was defined at the IETF, e-mail software based on these standards was developed, and, finally, an increasing demand by businesses and consumers for e-mail services has led to the almost ubiquitous, interoperable, and interconnected nature of e-mail today. VoIP peering, despite being in its embryonic phase, now has all three elements in place.

Many of the key standards for VoIP peering, such as the basic signaling protocols SIP and H323, and ENUM for numbering and addressing have been around for many years. In the last six months, major developments have occurred in ENUM. In addition, a new IETF working group Session PEERing for Multimedia INTerconnect (SPEERMINT) is in the process of being chartered, focused exclusively on VoIP peering.

Also in the IETF world, Spam over Internet Telephony (SPIT) is recognized as a serious potential nuisance and already there are proposals for its prevention.

Market Demand
In November 2005, CableLabs issued an RFI for VoIP peering with U.S. cable operators as well as with other service providers. The MSOs, with their millions of VoIP customers, have collectively more digital voice subscribers than the rest of the sector combined, and they are rapidly gaining additional market share. VoIP telephony is a key strategic component of cable operators future business models, both for inducing customer retention and as a revenue generator.

In fact, on a global level, CableLabs was pipped to the post by an initiative called Sip-Exchange, which was announced in October. The consortium of cable operators (UPC, Essent, Casema, Multikabel, and CaiW) in the Netherlands, where cable penetration is almost 95 percent, announced the intention to set up a VoIP peering system to enable all the Dutch cable operators VoIP traffic to bypass the PSTN and remain on-net.

Likewise, a growing number of in-country ITSPs globally have demonstrated a clear desire to peer and respond to the positioning of global brands like Skype, Yahoo!, MSN, and Google. These initiatives by the leading VoIP service providers demonstrate that the demand for VoIP peering has arrived and is being recognized worldwide.

Services and Products
In the past year, companies like as Neustar, Verisign, XConnect, and have launched VoIP peering services for the global market, covering various elements of VoIP peering. The new year will undoubtedly bring significant research and development, largely focused on security, identity, provisioning, and global architecture.

Driven by new research, costumer needs, and product developments, VoIP peering is certainly ready to take off in 2006. Indeed, it would only be appropriate to label the coming year, VoIP Peering Ready for Mainstream Launch. IT

Eli Katz is Founder and CEO of XConnect a provider of Plug and Peer VoIP interconnection services dedicated to connecting IP communications providersand by-passing the legacy PSTN. For more information, please visit the company online at (news - alerts).


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