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

[Alex Balashov]

I will add that the model of the VoIP ITSP (be it a DID provider or a 
termination provider) is inherently a squeezed one.

The original niche of these providers was to simply provide VoIP in the 
first place;  established carriers were used to dealing with TDM (hard, 
synchronous circuits using ISDN or SS7) and had a lot invested in 
equipment and plant to do traditional telco stuff.  So, someone had to 
be doing the TDM<->VoIP conversion work by buying the equipment and 
getting the facilities in place.  There was a point where if you didn't 
want to order physical PRIs yourself and buy equipment to terminate 
them, but instead just wanted straight VoIP right to you, you 
practically had to go to a VoIP provider to get that.  It took the 
carriers a while to upgrade their networks to the sorts of softswitch 
platforms that can generate SIP trunks out to you.  Many carriers still 
can't do it.  Big fish have very big, lumbering, slow-moving processes.

But the purpose of ITSPs has now shifted more to providing cost and 
scalability advantages rather than exclusively infrastructural and 
technological ones.  Maybe you can get SIP trunks from carriers now, but 
for them to deal with you or offer you any sort of attractive pricing, 
you have to be pushing a lot of minutes and buying a lot of numbers.

This will only get more true as carriers develop business processes and 
technology platforms that make it more economical for them to 
accommodate a wider range of customer size directly.  It's sort of the 
same thing that happened to independent ISPs providing dialup Internet 
access when the telcos themselves got into that game.

But there are places where ITSPs can offer a lot of value, even for 
large amounts of traffic.  Sometimes there's a pricing advantage, other 
times it's good service and solid backoffice tools and processes that 
streamline the experience for the customer.  It still takes some work to 
enter into a wholesale agreement with a carrier, even though it's gotten 
a lot easier now as evidenced by the mushrooming number of small 
providers.  Big carriers are very slow-moving organisations, so it often 
helps to have an ITSP on your side dealing with provisioning processes 
and change orders in a way that insulates you from the responsibility. 
Good ITSPs maintain standing DID inventories and make it easy for you to 
just point and click yourself another number, configure many different 
destination gateways for those numbers, etc, etc.  These are all things 
underlying carriers are in a worse position to provide, especially with 
anything that might be described as speed or ease.  It can be very 
beneficial to have someone aggregate that stuff and package it up into a 
product and service delivery platform oriented toward ordinary users.

So, like I said, it's not too different from the reasons for which 
distribution channels exist in other types of supply chains in other 
industries.


Alex Balashov wrote:

> 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
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