Peering Nirvana?

Spider Registry Inc., launched earlier this month, is looking to catch every VoIP service provider in the world in its web and create the ultimate address information exchange service to enable universal VoIP peering. It’s a lofty ambition. How well this “registry of registries” succeeds will depend on a number of factors not entirely within its control. But if it does succeed, it will certainly help put the VoIP industry on a more solid footing.

Peering is the business of interconnecting VoIP service providers so that calls placed between customers of different providers don’t get switched to the PSTN (public switched telephone network) and then back to an IP network to be completed—which is what happens in most cases today.

Peering advocates point out that routing VoIP calls on IP fabric from end to end will eliminate a layer of costs—providers currently pay traditional phone companies to carry their calls. It should also improve call quality. Going through IP telephony gateways to the PSTN and then back through a gateway to an IP network introduces latency and jitter.

“I’m pretty confident costs will be lower with peering,” says consultant Lov Kher, a solution partner at BusinessEdge Solutions Inc., who specializes in Tier 1 carrier VoIP implementations. “I’m a little more hesitant about the QoS [quality of service]. If you don’t have a dedicated IP network, if you’re going through the Internet cloud, I’m not sure how much [quality] can be improved.”

Balancing risks and benefits
Most VoIP providers don’t question the value of peering, but they do see risks.

Some are entering into bilateral peering relationships in which they exchange customer telephone numbers and addressing information. When a customer places a call, an address server automatically looks up the number dialed to see if it belongs to one of the provider’s peering partners. If it does, the call is routed over the IP fabric through a network interconnection rather than going out to the PSTN.

Peering partners may charge each other a call completion fee, or there may be no fee. In the case of calls from non-partners, usually delivered via the PSTN, big VoIP providers do typically charge a call completion fee.

Bilateral peering is part of the answer but only part. It works where providers are not competing for the same customers. If they are direct competitors, they’re not going to want to give a rival their customer contact information.

Connecting the dots
“So let’s say you have 10, 20, even 30 of these bilateral peering relationships,” says Steve Heap, chief technology officer at Arbinet-thexchange Inc. and one the driving forces behind Spider. “The question then is, how do you get to the customers of the other 200 or 300 VoIP providers through peering?”

Another partial answer is peering-solutions companies that create registries of phone numbers belonging to many VoIP provider members who do not have or want bilateral relationships. When an end customer dials a number, it’s sent to the peering company’s registry. If the number belongs to one of its other members, it routes the call over its own or leased facilities to an interconnection point. Where there are call completion charges involved, the company provides settlement services—billing or paying members for all calls originating with other members.

The key is that the originating VoIP provider never knows whether the call is going to another VoIP provider or if it is, to which one.

Douglas Ranalli, founder and chief strategy officer at NetNumber Inc., the other prime mover behind Spider and supplier of the addressing infrastructure the registry is using, estimates there are about 20 companies providing such peering services today—mostly to smaller VoIP providers. They include relatively big players such as XConnect Global Networks Ltd., NeuStar Inc., and Stealth Communications Inc., and several smaller ones.

But the commercial peering services are just the tip of the iceberg, Ranalli says. There are also smaller communities of VoIP users—institutions, governments, enterprises—that want to peer to save money and improve quality. “It seems this is the way it’s going to evolve,” he says. “Lots and lots of local communities, cobbling together addressing infrastructures to get started [with peering].”

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