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The Transformation Continues...

By Hunter Newby


VoIP Peering has its segments which are commonly known as carrier and user. Within the user segment there are two groups, end user and enterprise. Aside from the international, wholesale carrier version of VoIP Peering, which might be better described as SIP Peering, its impact on every aspect of the domestic carrier networks is substantial and has an effect on the user side of VoIP Peering as well. This massive network transformation is occurring simultaneously across the country and world and it is causing most people (end users, businesses, and carriers) to completely change the way they think about networks and the business of voice communications.

As if the retail side of the telecom business knew what direction it was heading in with broadband voice and flat rate offerings, it seems it might get broadsided by gaming services that allow multiple users to play each other and speak in real time as they do it. Now gaming services, such as Xbox Live, will be in a position to enable VoIP calls, a.k.a. end user VoIP peering, as a separate function not tied to any game being played. So, the users of this service are now all on the same network platform and can call each other for free. It may seem small and niche today, but those 1318 year olds are tomorrows 25+ crowd and they wont know their telephonic lives any other way. The one downside to this is (and other Internet VoIP offerings such as Skype) is that they ride the public cloud and therefore quality and security are major concerns, but thats nothing a private VoIP network cant fix.

Other than that the MSOs and VoBBs seem to being doing quite well getting new subscribers. They are also further down the line with ENUM VoIP Peering than any other service provider group. As slow as the ILEC/RBOCs may seem to be, did anyone notice the Verizon announcement at SuperComm calling for video competition? The MSOs might need to get some Windex on their rear-view mirrors. Imagine the ILECs beating the MSOs to video peering!

The corporate side of things in VoIP Peering is moving along nicely as more and more small, medium, and large enterprises are in various stages of learning, evaluating, and deploying VoIP in to their own private WANs. The earliest adopters are beginning to realize the benefits of peering these purpose built VoIP networks. This segment continues to show strong growth and buzz in the industry, which is driving many service providers to try and meet the demand for VoIP services.

Right now businesses are trying to figure out what to buy that will lower their costs. There is a lot to learn and analyze and many are not reaching the ultimate correct conclusion because they are seeking knowledge from service providers (and some equipment vendors) many of which dont have the right services to sell in the first place. Some of those providers are not VoIP enabled at the edge, or customer interface, so that keeps the TDM for provisioning purposes and its associated costs and delays in place. No gain there.

Many are also still trying to sell voice billed per minute. This model will carry on for a while, but its days are numbered. The reason is that the corporate IT director, who is now the voice buyer and who also took over the telecommunications managers job, has Vonage, or some other VoBB service at home and is already paying a flat rate for voice. They know nothing of the old way, 1+ contracts with loops and terms and traffic commitment levels. To them voice is a flat rate service. Its just data.

So, the old school service providers push what they have and it doesnt seem to fit the technology needs, or financial requirements and it is back to the drawing board. Now, this isnt the case with them all, but most of the legacy voice carriers that are trying to morph are stuck in-between here and there and theyre looking like it. Trying to protect the old revenue model with a VoIP marketing make-over is like putting a $5,000 paint job on a rusted out car. The end result is full of holes.

The carrier side is almost a mirror image of the buyers. Theyre all learning as they go feeling out where the demand pockets are while trying to pick the right solution at the right price. Its a juggling act. Many of the providers have launched VoIP services in response to the trends and media attention, but many are not fully cooked yet and they are only available in limited locations. This is very problematic when the sales reps get a multi-site opportunity, but can only handle a small piece. Many have VoIP enabled their core, but not the edge. It is the edge that enables the provisioning and trunking benefits out to the customer. That needs to be IP (Ethernet really), or else were still dealing with yesterdays problems to the customer premise. That said there are many who are now offering flat-rate domestic calling via SIP and an Ethernet cross connect at major carrier hotels.

Dont forget, this isnt an Internet delivery model for the mid to large size business, this is a broadband access (loop) model. Most businesses dont want to use the Internet for corporate voice traffic. In addition, the way in which the IT departments are building their VoIP WANs is a huge opportunity for the Ethernet transport providers who dont even have a VoIP service to offer. As a testament to that I want to share with you an e-mail I received from an Ethernet transport provider in response to my June column entitled The Only Constant is Change.

Hello Hunter,

It was a pleasant surprise to see your picture while flipping through Internet Telephony Magazine. Your article was very relevant and pointed. Here at American Fiber Systems we are selling quite a bit of data pipes that our customers are using for VoIP and MPLS. The tide is indeed changing and business challenge is to create new products and services on the new technology while still making money!

Hope to see you when you come back to Atlanta.

Mary Ann Galvin
American Fiber Systems

So true, and obviously AFS has got it right and they are benefiting from that. Thanks Mary Ann!

What the old school voice service providers, mainly the CLECs, should be doing is interconnecting their core networks to peer their respective VoIP traffic and eliminate the costs of hopping on and off the PSTN between and amongst each other. This is beginning to happen, but many are focused on getting services to market for the buyers and dont see what may be an even easier first step to bottom line improvement.

Carrier VoIP peering is developing from within their own internal network core out to their network edge as well as from the network interconnection points (core of the edges carrier hotels) out to the customer premise. These are two different pieces of the carrier network moving in two different directions. One is for how the carriers switches speak to each other and the other component is for how those switches speak to other carriers and enterprise VoIP networks. The users are seeing, hearing, and reading about new services being created and enabled, but brought to different markets at different times and they are reacting to it as it comes to them. If it seems like it is a bit confusing thats because it is.

These are growing pains and ones that everyone will get through, but it seems that the enterprise buyers are in certain ways more prepared than the carrier sellers at this point. They know what they want, but just cant get it across every site yet. Plus, they dont make money from voice, so they have nothing to lose in an implementation and therefore are motivated. Across the board we all need more access from the premise to the edge to the core, awareness, and a little bit of interoperability (OK, maybe more than a little) and we should be on a fast track to an on-net voice nation! IT

Hunter Newby is chief strategy officer at telx. For more information, please visit

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