[asterisk-users] What are the various models of DID providers

[Alex Balashov]

Hi Randulo,

I think this topic is probably more appropriate for asterisk-biz, as was 
the aforementioned rant about one particular DID provider.  But, 
whatever - it is what it is.

I assume that by "DID providers" you are referring to "origination" - 
that is, picking up calls on PSTN numbers and converting them to VoIP 
media and signaling and sending them to someone who wants to get numbers 
that ordinary PSTN users can call on a VoIP system of some kind.  The 
reason for the disambiguation is that many "DID providers" also provide 
"termination" - that is, the delivery of calls from VoIP into the PSTN. 
  There are also many companies that specialise in only origination or 
termination.  The two are closely related from a technical perspective 
but are characterised by rather different economics.

At the end of the day--on a technical and a regulatory level--telephone 
numbers can only belong to a carrier.  A carrier is a network operator 
that is interconnected with other carriers and operates some form of 
switch, and usually interfaces via SS7 (or CSS7, as it is known outside 
North America) to the other carriers that they connect to.

(Aside/digression about carriers:

Of course, there are different types of carriers, depending on the 
jurisdiction.

In the US, there are - broadly speaking - two different types: 
"incumbents" and "competitive" carriers involved in local service. 
Incumbents are either Bell system entities that were divested from the 
former AT&T monopoly in 1984 when AT&T was ordered to break itself up by 
the federal government, or various local-yokel independent telephone 
companies that were never acquired by AT&T during the 20th century (as 
well as various types of conglomerates that have bought some of these 
independents before, or since divestiture).  The latter type of 
incumbent is usually in small towns and/or rural areas, whereas the 
former is prevalent in metropolitan areas.

The defining feature of an incumbent is that it tends to own the 
physical plant related to local telephone service delivery in a given 
area -- copper, fiber, central offices ("telephone exchanges"), remote 
terminals, junction boxes, conduit, and so on.   That's why it's an 
"incumbent."

Examples of incumbents in the US include the former BellSouth (now 
AT&T), Ameritech, Qwest, Southwestern Bell (now AT&T), Verizon, GTE (now 
Verizon), and so on.  Independent incumbents include something like 
Ellijay Telephone Company here in Georgia, or Windstream (formerly 
Alltel).  This space has undergone a dizzying array of consolidation in 
the postmillenial years, so keeping accurate track of who is who even 
for pedagogical purposes is difficult.

The Telecommunications Act of 1996 created "local loop" competition in 
the US and introduced the category of "competitive" carrier, or a CLEC 
(Competitive Local Exchange Carrier).  These are carriers that can 
interconnect with the incumbent (and in fact, the incumbent is legally 
required to interconnect with them) and have the right to lease certain 
parts of the incumbent's infrastructure at regulated rates in order to 
provide subscriber services - this pricing and resale discipline is 
known as UNE (Unbundled Network Element) in the parlance.  For example, 
a CLEC here in Atlanta in former BellSouth territory (now AT&T) connects 
their network to BellSouth and can rent the copper going back to my 
residence from BellSouth and generate all the services, features and 
routing from its own equipment and use BellSouth's plant to reach me 
over the "last mile."  CLECs can do other things as well;  they have 
various rights-of-way that let them build private networks across 
conduits in public spaces, they can lease dark fiber laid by electrical 
and gas utilities, etc.  But the defining feature of a CLEC is that they 
don't own the existing physical plant in place before, although they are 
welcome to overlay their own - in fact, that was very much the point of 
the Telecommunications Act.

Most CLECs are small, but some are quite large and have a regional, 
national and even international footprint.  Examples of the large ones 
include Level3, Global Crossing, XO, McLeod USA, Paetec, Nuvox, etc. -- 
these network operators all have CLEC status in many different 
incumbents' operating areas, if not necessarily all of them.

Some CLECs neither do UNE nor really build networks nor lease anything, 
but exist for some specialised purpose to reap some economic or 
logistical advantage, like supporting the back side of a VoIP product or 
providing dedicated private transport between various large 
interconnection / peering points.  There are many different niches for 
the sort of thing that they are.  Nor does a CLEC have to have an 
imposing physical presence;  it is quite possible, with the right 
equipment, to stuff a fully operational CLEC into half a cabinet in a 
data center.  But at a minimum, a CLEC must run *some* kind of switch 
and interconnect with one or more incumbents in their LATA (Local Access 
and Transport Area) and perhaps other CLECs.  Some kind of physical 
network facilities and interconnection is required, although for certain 
applications it can be quite minimal.

There is, of course, a third type of carrier - an IXC (Inter-exchange 
Carrier).  Their traditional purpose is to move traffic between local 
operating areas (LATAs), which is the traditional definition of "long 
distance."  VoIP and various networking technologies have sort of 
muddied the explicit understanding of what is and isn't an IXC and when, 
but technically, anyone hauling inter-LATA traffic is behaving as an 
IXC.  I am not really discussing them here because IXCs aren't where 
DIDs come from (although they are sometimes involved in toll-free); 
DIDs are homed to a particular area.

In non-US jurisdictions, it varies.  Many countries have a single 
state-operated (public) or state-chartered (private) telecommunications 
monopoly and it is the only incumbent.  Some countries, such as the UK, 
also have local loop deregulation and an equivalent to the US concept of 
a CLEC.  (The UK is actually arguably a lot more progressive in how it 
has implemented this type of deregulation.)  In all cases, however, 
carriers are the ones that actually move PSTN traffic and have numbers, 
and always build out some sort of facilities for that purpose.

Aside about carriers over.

)

There are no exceptions to this rule;  numbers are assigned to carriers 
and are switched and routed by carriers.  Where anyone is providing 
DIDs, there is a UC (Underlying Carrier) involved that is actually doing 
the hauling relative to the PSTN side.

VoIP providers are known by various names - a common one is ITSP 
(Internet Telephony Service Provider)   Some carriers are certainly VoIP 
providers as well, but here I'll use the term to distinguish them from 
entities that are also carriers.  ITSPs/VoIP providers retailing VoIP 
services (be it wholesale origination trunking, or full-featured 
end-user oriented services like hosted PBX, or whatever) are customers 
of carriers, not carriers themselves.

This key fact is often obscured by the marketing language of VoIP 
providers, which are NOT carriers (although most carriers certainly 
provide VoIP services like DID origination too).  Some claim to be 
"carriers" in some sense of the term;  this is false, they are not 
"carriers" as per the definition I have outlined.  Some seem to imply 
"ownership" of numbers;  they do not own them, they buy them from 
carriers.

Number portability also confuses this discussion because people often 
talk about porting numbers "into" and "out" of VoIP providers as such. 
It doesn't actually work like that.  Only carriers port numbers amongst 
themselves.  You have to be a carrier to participate in the portability 
regime.  When a VoIP provider ports "in" a number from a customer of 
some other VoIP provider, this process is accomplished through 
backoffice channels to their respective underlying carriers.  For 
example, when a customer leaves provider A for provider B, provider B 
has its underlying carrier (or one of them) port the number from 
provider A's underlying carrier on behalf of the customer.  Porting, 
like PSTN trunking itself, is a derivative process.

(Of course, there do exist some regulatory guidelines for protecting 
customers to a certain extent from the fact that their VoIP provider 
doesn't really "own" numbers, and also serve to convey to the 
end-customer a rudimentary "ownership" of their numbers.  Specifically, 
end-customers have the right to have their number ported to a different 
provider and in theory, compliance from the underlying provider and 
carrier is mandatory.  In theory.  It doesn't always work that way in 
practise.)

Wholesale DID providers are resellers of carrier services and the 
general purpose they serve in that value chain is very similar to that 
of other types of VARs, distributors, and other middle-men.  The essence 
of their rationale in the market has to do with the same sorts of 
economies of scale as wholesale in other industries;  it is not, 
traditionally, economical for carriers to sell small amounts of DIDs, 
push small amounts of traffic, provide technical support and 
interoperability with relatively low-end customer premise equipment, or 
market to and acquire those types of customers.  Carriers want large 
commitments and traffic volumes from organisations that know what 
they're doing in this space, so if you've got a small business Asterisk 
PBX going and need 20 numbers, you go to companies that specialise in 
that sort of thing and not the carriers themselves.  The carriers aren't 
  interested in trying to work with your Asterisk, deal with such beans 
in revenue terms, or market to you.  That's the general picture, anyway. 
  Some of this is changing, and some carriers are approaching smaller 
users increasingly for direct VoIP trunking.  And of course, customers 
with very large volumes of traffic can go to the carrier directly and 
often do, if the business case for it is right.

The VoIP wholesale DID providers traditionally interfaced with the 
carriers via hard TDM links such as ISDN PRIs or, less commonly, SS7, 
and often order very large links (i.e. channelised DS3s worth of PRIs 
and up).  The DID provider's equipment would then spit out VoIP on the 
other side to you, and they would provide a variety of value-added 
backoffice tools and business processes to take care of provisioning 
(i.e. ordering and decommissioning numbers) and billing matters.  So, 
the VoIP providers made the capital investment in the sorts of 
equipment, circuits, and contracts required to do that on your behalf 
and just sold you the VoIP trunking and numbers that ultimately result. 
They also take care of billing and other headaches you'd also face 
dealing with carriers via an intra-industrial channel.

This is changing now as more and more carriers are offering SIP trunking 
to their wholesale customers, which means that VoIP providers themselves 
can now pick up the traffic over the Internet or via a dedicated private 
IP link without having to deal with all that TDM stuff.  This lowers the 
barriers to entry and capital requirements to become a VoIP service 
provider and has a positive impact on pricing, although it does have the 
problem of attracting a lot of fly-by-night operators who think they 
need little more than to throw up an Asterisk box and some rudimentary 
PC hardware to sell DIDs.  This makes it harder to tell the more "bricks 
and mortar" operations from something that is a purely virtual and 
possibly haphazard resale play.  Matter of opinion, I suppose.

Of course, not all the business models are this simple;  sometimes there 
are more complicated, multiple levels of resale involved.  Sometimes DID 
providers also operate private VoIP peering clearinghouses to exchange 
traffic amongst themselves entirely over IP, thus bypassing the PSTN. 
Sometimes DID providers lease numbers they buy from their respective 
carriers to each other and/or aggregate them through various third 
parties that provide some form of brokerage model, thus allowing VoIP 
providers to get DIDs in areas their underlying carriers don't service 
(like foreign countries or hard-to-penetrate rural operating territories).

To answer your question about which type of company is best for 
installations of various sizes:  it really depends on the core 
operational competencies of the consuming organisation and their 
willingness to deal with varying degrees of technical and financial 
complexity.  Of course, it also depends on the numbers--just how much 
money is saved by going directly to a carrier, for example?

Generally speaking, larger organisations are probably well served by 
going directly to a carrier and picking up either TDM or SIP trunks from 
them.  That will usually result in the best pricing, but requires some 
investment in equipment and know-how from the organisation.  It really 
depends on a lot of variables, like where the organisation might be 
willing to colocate some of its facilities, where it can "meet" the 
carrier and pick up the traffic or, otherwise, what sort of loop costs 
it would have to pay on direct circuits, if direct circuits are involved 
at all.  Otherwise, the type of Internet connectivity they have and 
their relationship to various traffic exchange points and high-tier IP 
backbones becomes a key issue.  It can get pretty complicated.  There's 
an entire industry that specialises in doing that sort of provisioning, 
technical deployment, and telecom expense management;  it's something my 
company often helps with.

"Testing and home use" and "small business" are generally best off 
purchasing numbers from a DID providers, but again, it really depends. 
What type of connectivity is involved?  Who is the DID provider?  What 
is the relationship of the DID provider's POPs to the customer 
terminating equipment as far as Internet routing topology goes?  DID 
providers most certainly, most emphatically are not created equal in 
these respects.

Hopefully that answers your key questions.  Did I miss anything?

Cheers,

-- Alex

randulo wrote:

> Hi,
> 
> Inspired by a recent rant about one particular provider, I am getting
> very curious about something I've never mastered. I'd like someone to
> explain this here or at least post a link or two that can educate me
> and probably countless others who have no knowledge in this area. I'm
> sure there are several of you reading this that know all about the
> subject.
> 
> What are the various business models of these providers, in particular
> where are they on the food chain of the DID or trunks they offer?
> 
> For example, I have accounts with several well-known providers of SIP,
> IAX trunks, hosted pbx and DID. Each of these is located in a
> different area, and I would assume they have different peering and
> rates they pay to their upstreams. Without naming names, could someone
> tackle this? It might help people know what they are getting into when
> the open an account.
> 
> What are the best *types* of companies for each category: asterisk
> testing and home use, small business, larger business, General
> Motors...
> 
> tia,
> 
> /r
> 
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-- 
Alex Balashov
Evariste Systems
Web    : http://www.evaristesys.com/
Tel    : (+1) (678) 954-0670
Direct : (+1) (678) 954-0671
Mobile : (+1) (678) 237-1775