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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