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

[Jai Rangi]

Alex,
I must say "wow", great explanation. It was a wonderful reading.
Best,
-Jai


On Tue, Jan 13, 2009 at 1:49 AM, Alex Balashov <abalashov at evaristesys.com>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
> Mobile : (+1) (678) 237-1775
>
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