Alex, <br>I must say "wow", great explanation. It was a wonderful reading. <br>Best,<br>-Jai<br><br><br><div class="gmail_quote">On Tue, Jan 13, 2009 at 1:49 AM, Alex Balashov <span dir="ltr"><<a href="mailto:abalashov@evaristesys.com">abalashov@evaristesys.com</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">Hi Randulo,<br>
<br>
I think this topic is probably more appropriate for asterisk-biz, as was<br>
the aforementioned rant about one particular DID provider. But,<br>
whatever - it is what it is.<br>
<br>
I assume that by "DID providers" you are referring to "origination" -<br>
that is, picking up calls on PSTN numbers and converting them to VoIP<br>
media and signaling and sending them to someone who wants to get numbers<br>
that ordinary PSTN users can call on a VoIP system of some kind. The<br>
reason for the disambiguation is that many "DID providers" also provide<br>
"termination" - that is, the delivery of calls from VoIP into the PSTN.<br>
There are also many companies that specialise in only origination or<br>
termination. The two are closely related from a technical perspective<br>
but are characterised by rather different economics.<br>
<br>
At the end of the day--on a technical and a regulatory level--telephone<br>
numbers can only belong to a carrier. A carrier is a network operator<br>
that is interconnected with other carriers and operates some form of<br>
switch, and usually interfaces via SS7 (or CSS7, as it is known outside<br>
North America) to the other carriers that they connect to.<br>
<br>
(Aside/digression about carriers:<br>
<br>
Of course, there are different types of carriers, depending on the<br>
jurisdiction.<br>
<br>
In the US, there are - broadly speaking - two different types:<br>
"incumbents" and "competitive" carriers involved in local service.<br>
Incumbents are either Bell system entities that were divested from the<br>
former AT&T monopoly in 1984 when AT&T was ordered to break itself up by<br>
the federal government, or various local-yokel independent telephone<br>
companies that were never acquired by AT&T during the 20th century (as<br>
well as various types of conglomerates that have bought some of these<br>
independents before, or since divestiture). The latter type of<br>
incumbent is usually in small towns and/or rural areas, whereas the<br>
former is prevalent in metropolitan areas.<br>
<br>
The defining feature of an incumbent is that it tends to own the<br>
physical plant related to local telephone service delivery in a given<br>
area -- copper, fiber, central offices ("telephone exchanges"), remote<br>
terminals, junction boxes, conduit, and so on. That's why it's an<br>
"incumbent."<br>
<br>
Examples of incumbents in the US include the former BellSouth (now<br>
AT&T), Ameritech, Qwest, Southwestern Bell (now AT&T), Verizon, GTE (now<br>
Verizon), and so on. Independent incumbents include something like<br>
Ellijay Telephone Company here in Georgia, or Windstream (formerly<br>
Alltel). This space has undergone a dizzying array of consolidation in<br>
the postmillenial years, so keeping accurate track of who is who even<br>
for pedagogical purposes is difficult.<br>
<br>
The Telecommunications Act of 1996 created "local loop" competition in<br>
the US and introduced the category of "competitive" carrier, or a CLEC<br>
(Competitive Local Exchange Carrier). These are carriers that can<br>
interconnect with the incumbent (and in fact, the incumbent is legally<br>
required to interconnect with them) and have the right to lease certain<br>
parts of the incumbent's infrastructure at regulated rates in order to<br>
provide subscriber services - this pricing and resale discipline is<br>
known as UNE (Unbundled Network Element) in the parlance. For example,<br>
a CLEC here in Atlanta in former BellSouth territory (now AT&T) connects<br>
their network to BellSouth and can rent the copper going back to my<br>
residence from BellSouth and generate all the services, features and<br>
routing from its own equipment and use BellSouth's plant to reach me<br>
over the "last mile." CLECs can do other things as well; they have<br>
various rights-of-way that let them build private networks across<br>
conduits in public spaces, they can lease dark fiber laid by electrical<br>
and gas utilities, etc. But the defining feature of a CLEC is that they<br>
don't own the existing physical plant in place before, although they are<br>
welcome to overlay their own - in fact, that was very much the point of<br>
the Telecommunications Act.<br>
<br>
Most CLECs are small, but some are quite large and have a regional,<br>
national and even international footprint. Examples of the large ones<br>
include Level3, Global Crossing, XO, McLeod USA, Paetec, Nuvox, etc. --<br>
these network operators all have CLEC status in many different<br>
incumbents' operating areas, if not necessarily all of them.<br>
<br>
Some CLECs neither do UNE nor really build networks nor lease anything,<br>
but exist for some specialised purpose to reap some economic or<br>
logistical advantage, like supporting the back side of a VoIP product or<br>
providing dedicated private transport between various large<br>
interconnection / peering points. There are many different niches for<br>
the sort of thing that they are. Nor does a CLEC have to have an<br>
imposing physical presence; it is quite possible, with the right<br>
equipment, to stuff a fully operational CLEC into half a cabinet in a<br>
data center. But at a minimum, a CLEC must run *some* kind of switch<br>
and interconnect with one or more incumbents in their LATA (Local Access<br>
and Transport Area) and perhaps other CLECs. Some kind of physical<br>
network facilities and interconnection is required, although for certain<br>
applications it can be quite minimal.<br>
<br>
There is, of course, a third type of carrier - an IXC (Inter-exchange<br>
Carrier). Their traditional purpose is to move traffic between local<br>
operating areas (LATAs), which is the traditional definition of "long<br>
distance." VoIP and various networking technologies have sort of<br>
muddied the explicit understanding of what is and isn't an IXC and when,<br>
but technically, anyone hauling inter-LATA traffic is behaving as an<br>
IXC. I am not really discussing them here because IXCs aren't where<br>
DIDs come from (although they are sometimes involved in toll-free);<br>
DIDs are homed to a particular area.<br>
<br>
In non-US jurisdictions, it varies. Many countries have a single<br>
state-operated (public) or state-chartered (private) telecommunications<br>
monopoly and it is the only incumbent. Some countries, such as the UK,<br>
also have local loop deregulation and an equivalent to the US concept of<br>
a CLEC. (The UK is actually arguably a lot more progressive in how it<br>
has implemented this type of deregulation.) In all cases, however,<br>
carriers are the ones that actually move PSTN traffic and have numbers,<br>
and always build out some sort of facilities for that purpose.<br>
<br>
Aside about carriers over.<br>
<br>
)<br>
<br>
There are no exceptions to this rule; numbers are assigned to carriers<br>
and are switched and routed by carriers. Where anyone is providing<br>
DIDs, there is a UC (Underlying Carrier) involved that is actually doing<br>
the hauling relative to the PSTN side.<br>
<br>
VoIP providers are known by various names - a common one is ITSP<br>
(Internet Telephony Service Provider) Some carriers are certainly VoIP<br>
providers as well, but here I'll use the term to distinguish them from<br>
entities that are also carriers. ITSPs/VoIP providers retailing VoIP<br>
services (be it wholesale origination trunking, or full-featured<br>
end-user oriented services like hosted PBX, or whatever) are customers<br>
of carriers, not carriers themselves.<br>
<br>
This key fact is often obscured by the marketing language of VoIP<br>
providers, which are NOT carriers (although most carriers certainly<br>
provide VoIP services like DID origination too). Some claim to be<br>
"carriers" in some sense of the term; this is false, they are not<br>
"carriers" as per the definition I have outlined. Some seem to imply<br>
"ownership" of numbers; they do not own them, they buy them from<br>
carriers.<br>
<br>
Number portability also confuses this discussion because people often<br>
talk about porting numbers "into" and "out" of VoIP providers as such.<br>
It doesn't actually work like that. Only carriers port numbers amongst<br>
themselves. You have to be a carrier to participate in the portability<br>
regime. When a VoIP provider ports "in" a number from a customer of<br>
some other VoIP provider, this process is accomplished through<br>
backoffice channels to their respective underlying carriers. For<br>
example, when a customer leaves provider A for provider B, provider B<br>
has its underlying carrier (or one of them) port the number from<br>
provider A's underlying carrier on behalf of the customer. Porting,<br>
like PSTN trunking itself, is a derivative process.<br>
<br>
(Of course, there do exist some regulatory guidelines for protecting<br>
customers to a certain extent from the fact that their VoIP provider<br>
doesn't really "own" numbers, and also serve to convey to the<br>
end-customer a rudimentary "ownership" of their numbers. Specifically,<br>
end-customers have the right to have their number ported to a different<br>
provider and in theory, compliance from the underlying provider and<br>
carrier is mandatory. In theory. It doesn't always work that way in<br>
practise.)<br>
<br>
Wholesale DID providers are resellers of carrier services and the<br>
general purpose they serve in that value chain is very similar to that<br>
of other types of VARs, distributors, and other middle-men. The essence<br>
of their rationale in the market has to do with the same sorts of<br>
economies of scale as wholesale in other industries; it is not,<br>
traditionally, economical for carriers to sell small amounts of DIDs,<br>
push small amounts of traffic, provide technical support and<br>
interoperability with relatively low-end customer premise equipment, or<br>
market to and acquire those types of customers. Carriers want large<br>
commitments and traffic volumes from organisations that know what<br>
they're doing in this space, so if you've got a small business Asterisk<br>
PBX going and need 20 numbers, you go to companies that specialise in<br>
that sort of thing and not the carriers themselves. The carriers aren't<br>
interested in trying to work with your Asterisk, deal with such beans<br>
in revenue terms, or market to you. That's the general picture, anyway.<br>
Some of this is changing, and some carriers are approaching smaller<br>
users increasingly for direct VoIP trunking. And of course, customers<br>
with very large volumes of traffic can go to the carrier directly and<br>
often do, if the business case for it is right.<br>
<br>
The VoIP wholesale DID providers traditionally interfaced with the<br>
carriers via hard TDM links such as ISDN PRIs or, less commonly, SS7,<br>
and often order very large links (i.e. channelised DS3s worth of PRIs<br>
and up). The DID provider's equipment would then spit out VoIP on the<br>
other side to you, and they would provide a variety of value-added<br>
backoffice tools and business processes to take care of provisioning<br>
(i.e. ordering and decommissioning numbers) and billing matters. So,<br>
the VoIP providers made the capital investment in the sorts of<br>
equipment, circuits, and contracts required to do that on your behalf<br>
and just sold you the VoIP trunking and numbers that ultimately result.<br>
They also take care of billing and other headaches you'd also face<br>
dealing with carriers via an intra-industrial channel.<br>
<br>
This is changing now as more and more carriers are offering SIP trunking<br>
to their wholesale customers, which means that VoIP providers themselves<br>
can now pick up the traffic over the Internet or via a dedicated private<br>
IP link without having to deal with all that TDM stuff. This lowers the<br>
barriers to entry and capital requirements to become a VoIP service<br>
provider and has a positive impact on pricing, although it does have the<br>
problem of attracting a lot of fly-by-night operators who think they<br>
need little more than to throw up an Asterisk box and some rudimentary<br>
PC hardware to sell DIDs. This makes it harder to tell the more "bricks<br>
and mortar" operations from something that is a purely virtual and<br>
possibly haphazard resale play. Matter of opinion, I suppose.<br>
<br>
Of course, not all the business models are this simple; sometimes there<br>
are more complicated, multiple levels of resale involved. Sometimes DID<br>
providers also operate private VoIP peering clearinghouses to exchange<br>
traffic amongst themselves entirely over IP, thus bypassing the PSTN.<br>
Sometimes DID providers lease numbers they buy from their respective<br>
carriers to each other and/or aggregate them through various third<br>
parties that provide some form of brokerage model, thus allowing VoIP<br>
providers to get DIDs in areas their underlying carriers don't service<br>
(like foreign countries or hard-to-penetrate rural operating territories).<br>
<br>
To answer your question about which type of company is best for<br>
installations of various sizes: it really depends on the core<br>
operational competencies of the consuming organisation and their<br>
willingness to deal with varying degrees of technical and financial<br>
complexity. Of course, it also depends on the numbers--just how much<br>
money is saved by going directly to a carrier, for example?<br>
<br>
Generally speaking, larger organisations are probably well served by<br>
going directly to a carrier and picking up either TDM or SIP trunks from<br>
them. That will usually result in the best pricing, but requires some<br>
investment in equipment and know-how from the organisation. It really<br>
depends on a lot of variables, like where the organisation might be<br>
willing to colocate some of its facilities, where it can "meet" the<br>
carrier and pick up the traffic or, otherwise, what sort of loop costs<br>
it would have to pay on direct circuits, if direct circuits are involved<br>
at all. Otherwise, the type of Internet connectivity they have and<br>
their relationship to various traffic exchange points and high-tier IP<br>
backbones becomes a key issue. It can get pretty complicated. There's<br>
an entire industry that specialises in doing that sort of provisioning,<br>
technical deployment, and telecom expense management; it's something my<br>
company often helps with.<br>
<br>
"Testing and home use" and "small business" are generally best off<br>
purchasing numbers from a DID providers, but again, it really depends.<br>
What type of connectivity is involved? Who is the DID provider? What<br>
is the relationship of the DID provider's POPs to the customer<br>
terminating equipment as far as Internet routing topology goes? DID<br>
providers most certainly, most emphatically are not created equal in<br>
these respects.<br>
<br>
Hopefully that answers your key questions. Did I miss anything?<br>
<br>
Cheers,<br>
<br>
-- Alex<br>
<div><div></div><div class="Wj3C7c"><br>
randulo wrote:<br>
<br>
> Hi,<br>
><br>
> Inspired by a recent rant about one particular provider, I am getting<br>
> very curious about something I've never mastered. I'd like someone to<br>
> explain this here or at least post a link or two that can educate me<br>
> and probably countless others who have no knowledge in this area. I'm<br>
> sure there are several of you reading this that know all about the<br>
> subject.<br>
><br>
> What are the various business models of these providers, in particular<br>
> where are they on the food chain of the DID or trunks they offer?<br>
><br>
> For example, I have accounts with several well-known providers of SIP,<br>
> IAX trunks, hosted pbx and DID. Each of these is located in a<br>
> different area, and I would assume they have different peering and<br>
> rates they pay to their upstreams. Without naming names, could someone<br>
> tackle this? It might help people know what they are getting into when<br>
> the open an account.<br>
><br>
> What are the best *types* of companies for each category: asterisk<br>
> testing and home use, small business, larger business, General<br>
> Motors...<br>
><br>
> tia,<br>
><br>
> /r<br>
><br>
> _______________________________________________<br>
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<br>
<br>
</div></div><font color="#888888">--<br>
Alex Balashov<br>
Evariste Systems<br>
Web : <a href="http://www.evaristesys.com/" target="_blank">http://www.evaristesys.com/</a><br>
Tel : (+1) (678) 954-0670<br>
Direct : (+1) (678) 954-0671<br>
Mobile : (+1) (678) 237-1775<br>
</font><div><div></div><div class="Wj3C7c"><br>
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