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Carriers offering VoIP services are beginning to see a sharp increase in
opportunities for revenue through Session Initiation Protocol (SIP)-based
wholesale origination and termination service. The service employs an IP
peering interface to allow its customers (who are retail service
providers) to either send traffic to the origination and termination
service provider for termination to the PSTN, or to receive traffic
originating from the PSTN. In either case, SIP is used as a standard for
call control. There are several industry and technology trends that are
contributing to the attractiveness and feasibility of deploying a network
to offer origination and termination service (OATS). The attractiveness of
deploying origination and termination depends entirely on the existence of
retail providers that can make use of the service. While there has been a
continually growing pool of such providers, the pool has just become an
ocean with the entrance of Microsoft as a retail provider of VoIP
services.
Microsoft has embraced SIP to allow its communications applications and
service initiatives to interwork with ITSPs for PSTN termination. By
outsourcing PSTN termination, Microsoft is able to focus on what it does
best: enhancing the end-user experience and developing endpoint technology
and features. The details of managing gateways and performing call routing
are not important for them to own, so outsourcing is a natural direction.
In turn, the opportunity for the termination provider is very large, as
Microsoft is able to leverage its installed OS customer base and bring
VoIP services under the .NET umbrella. The adoption rate and market size
of PC-phone service is therefore greater than if either Microsoft or the
provider attempted to unilaterally build all of the vertical components
required to deliver this service.
Utilizing an origination and termination service can help eliminate
what was once a prerequisite to economically providing VoIP-based services
to end users: a complete worldwide gateway network buildout. Service
providers can preserve capital investment and maintain focus on subscriber
acquisition and service development by utilizing an origination and
termination provider for PSTN interconnection. This lowers the barrier to
entry for new service providers, and can lower operational costs for
existing PSTN-based service providers (such as unified messaging providers
and voice portals). These existing providers can simply cease paying the
high costs of PSTN interconnect and switch to the lower cost IP-based
origination and termination service. This only requires that they add an
SIP interface to their existing gear, as opposed to buying an entire
gateway network. It is clear that Microsoft has recognized the value of
focusing on subscriber acquisition, subscriber ownership, and the overall
subscriber experience, while outsourcing the execution of an application
itself. Indeed, this is the very heart of the .NET initiative.
MICROSOFT IS NOT ALONE
Other retail service providers are moving to exploit the opportunity
presented by origination and termination providers — lowering the
barriers to entry for VoIP-based services, enabling the expansion of
services to a larger subscriber base, expansion of service to wider
geographic areas, and allowing access to the rich service platforms
available on IP networks. Some areas these service providers are focusing
on include enterprise IP services, residential second line, call centers,
voice portals, conferencing, and others.
The existence of origination and termination service networks is not
the only trend that is helping to create growth in the retail VoIP
provider market. Several technology trends are making it easier than ever
to develop new, revenue-generating applications more easily and rapidly
than ever before. One trend is the integration of Web, instant messaging,
presence, and e-mail with VoIP. Many traditional telecommunications
applications are easily enhanced by adding these other components. For
example, using instant messaging to deliver notifications of people
joining and leaving a conference is a simple yet valuable enhancement to
conferencing applications. Using a buddy list to track voice mail messages
provides a way to enhance unified messaging applications. Another trend is
the growth in the availability and maturity of application development
platforms that can deliver these integrated applications. These platforms
have been built to mirror the Web-based development models, bringing to
bear a large developer community that can quickly come up to speed on
building communications applications.
This is all good news for a provider building out an origination and
termination service network — trends are indicating that there will be
customers for such networks (such as Microsoft). Fortunately, it is easier
than ever to build out an origination and termination service network. In
the past, VoIP providers were burdened with the task of integrating
equipment from several providers for a complete solution. However, with
the maturation of the industry, vendors have begun to partner in order to
complete this integration ahead of time, so that providers can purchase a
solution that is already tested in the lab. This is a substantial benefit
to the provider, since it is not an easy integration problem.
Traditionally, these networks are built using several distinct components:
firewalls, SIP proxies, billing mediation servers, gateways, and
softswitches, each of which is frequently built by a different vendor.
These components address the four key requirements to build an OATS
network:
- Security — the interface between the origination and
termination service network and the customer must protect the
facilities from unauthorized usage and denial of service attacks. It
must also ensure that only SIP messages from authorized customers are
routed within the origination and termination service network.
- Accounting — the wholesale-retail business relationship
between the provider and the customer requires a method for tracking
each customer’s resource utilization based on aggregate minutes, and
specific PSTN termination or origination points, to allow service
billing.
- Routing — to originate calls to VoIP endpoints, routing
must be able to match a telephone number to a specific customer. To
terminate calls, routing must match a telephone number to an egress
PSTN PoP using routing tables that enable least-cost route selection.
At the network level, routing must also serve to provide a level of
network scalability, redundancy, and reliability, to allow routing
around a failed or busy node, and high levels of aggregate
performance.
- Linear scalability at each functional plane — the network
must be scalable at each of the above three functional layers, so that
network investment more closely tracks growth in peering interfaces or
overall capacity.
“FUTURE PROOF” NETWORKS
Fortunately, these elements, and the four basic capabilities they
provide, are needed not just for origination and termination, but for a
variety of totally new wholesale service opportunities. No matter what
application is being offered, security, accounting, routing, and linear
scalability are all key components. This means that a provider can build
out an origination and termination network to support basic origination
and termination solutions. Breaking into a totally new market, such as
hosted applications, is only an incremental addition to their existing
network. This means that an origination and termination network is future
proof — it can support today’s origination and termination needs, and
also tomorrow’s application needs. While building “future-proof”
networks has always been a primary goal of service providers, today’s
cautious economic environment has made achieving this goal even more
significant.
Consider Microsoft termination. Initially, an origination and
termination service provider builds a network to support PC-to-phone calls
from the Windows Messenger client. As time goes on, they realize that
there is a good market opportunity for adding conferencing capabilities. A
Messenger user can get a personal conference bridge number, and when they
dial this number from their Windows client, they are connected to an
IP-based conference associated with that number. To add this capability,
the origination and termination service provider needs to add an IP
conferencing platform and SIP application server, but they can completely
reuse their proxies, billing mediation servers, softswitches, and
gateways. The result is an incremental cost for a substantially new
capability. The addition of the next application, unified messaging, for
example, might require only the addition of new application software on
the SIP application server, as the other components in the origination and
termination network are reused for the rest of the application. The result
is an even smaller incremental cost for another substantial market
opportunity.
In summary, origination and termination service is looking more
attractive than ever, thanks to the entrance of Microsoft as a potential
customer of such networks, the increasing opportunities for other service
providers to utilize and termination networks, the decreasing costs of
deploying origination and termination networks, and the increasing
opportunities for future revenue with minimal cost.
Jonathan Rosenberg is chief scientist at dynamicsoft, Inc. For more
information, please visit the company’s Web site www.dynamicsoft.com.
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