Enabling Business Class VoIP with A Carrier Class Network

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1 Enabling Business Class VoIP with A Carrier Class Network David Clark Co-Founder & CEO CommPartners 1 CommPartners Date: 01/14/05

2 Voice over IP (VoIP) has emerged as one of the most exciting, potentially transformative and eagerly pursued services in both the enterprise and residential communications markets. The maturation of underlying IP-based and networking technologies and dramatic increase in broadband penetration have pushed VoIP from its one-time status as vaguely promising experiment to highly practical communication strategy in less than a decade s time. Enterprises of all size, as well as residential consumers, are actively examining and adopting VoIP solutions to lower telephony costs and, in the case of businesses, reduce overhead on networks while increasing their features, functionality and productivity through convergence. With the rise of VoIP, communications service providers of all stripes data integrators, Internet Service Providers (ISPs), local and long distance carriers, sales and marketing organizations and cable companies are finding themselves at a high-stakes crossroads. Mindful of the pronounced interest in, and demand for, VoIP services, and desirous of outpacing competitors, communications service providers want to offer VoIP as quickly as possible. But, as many communications service providers and early VoIP adopters learned the hard way, rapidity should never come at quality s cost. A VoIP solution that doesn t meet customers quality demands, even if it s rolled out at the speed of light, is worse than no offering at all. Nowhere has this been more apparent than in the small and mid-size enterprise space (SME). Firstgeneration VoIP solutions have, in general, been ill-suited to the needs of this significant market segment. Sophisticated, high-quality, end-to-end corporate solutions have been available in first-generation offerings, but at cost and maintenance levels far out of reach of typical SMEs. And consumer-class offerings have been prevalent as well, but they came without the voice quality and reliability assurances critical to business customers. The high level of voice quality and reliability that SMEs need, at a cost they can afford, has largely been absent from VoIP providers until now. The second wave of VoIP has brought with it a noticeable shift in some solutions providers approaches that promises to help communications service providers tap into significant new market opportunities. VoIP service partners such as CommPartners are advancing the migration from network models built around hardware to technology models that embrace software as a key component. As a result, communications service providers are in an unprecedented position to rapidly roll out a broad range of high quality services to all their customer segments and solidify their own competitive positioning while building out critical new revenue streams. But not every VoIP service provider has embraced this fundamental shift. As a result, it s important for communications service providers, who put their reputations and brands on the line when allying with VoIP partners, to understand that not all VoIP providers have adequately addressed all salient market issues. VoIP services still require careful and thorough individual assessment and not just of quality and cost issues, as critical as those are. Provisions for E-911 service, CALEA requirements, tax and fee models, operational and billing services and number portability will continue to vary by VoIP partners. Communications service providers need assurances that their VoIP partners have solutions that effectively address each of these concerns to ensure customer satisfaction as well as healthy market development. They need a partner that offers the highquality VoIP services at affordable rates. A partner that has not only architected for E-911 and CALEA solutions but is working to ensure the entire industry follows suit, and a partner that demonstrates an understanding of the regulatory landscape. And certainly, a partner that is working with the FCC and other legislative and regulatory bodies to ensure the adoption of a workable fee and tax outcome and that is designed to accommodate any and all regulatory outcomes. They need CommPartners. Business Class Customers Require Carrier Class Networks In CommPartners view, much of VoIP industry s attention has been focused on the wrong half of the IP equation. Unlike the majority of VoIP players, CommPartners approach to VoIP is to embrace the protocol portion of Internet Protocol rather than the Internet aspect that directs most of our colleagues solutions. Why? The Internet, in CommPartners estimation, might be a marvelous information cloud, but it s an inefficient transport device. 2 CommPartners Date: 01/14/05

3 So CommPartners architected a network that minimizes reliance on the public Internet in order to lend VoIP the high level of voice quality and reliability that no business is willing to do without. CommPartners network was built according to a hub-centric topology comprising four strategically dispersed Super POP switching centers in Las Vegas, Chicago, Atlanta and New York. Each Super POP holds softswitch equipment, routers and border control devices that support the national network. Tying the four Super POPs together is an MPLS network, a highly reliable, secure and private IP network that is physically controlled by CommPartners. This network engineering allows CommPartners to minimize the use of the public Internet by running traffic one hop away from every major Internet backbone carrier. This architecture eliminates the majority of the Internetassociated latency and jitter that have given many SMEs pause in adopting VoIP solutions. Embracing the Future without Sacrificing the Present While CommPartners network clearly represents the most up-to-date VoIP engineering comprising stateof-the-art IP and data networking technologies, its design, unlike some other players offerings, doesn t give short shrift to the legacy and present communications environment in accommodating the future. Some industry pundits have taken VoIP s rise as a sure sign of the PSTN s imminent demise and structured their offerings so that the best economics hinge on traffic that originates and terminates as IP. CommPartners, however, has taken a far more measured stance that is better aligned with realistic market evolution. While we believe that traditional PSTN will eventually become a relatively minimal part of communications traffic, it certainly won t happen overnight. In fact, Forrester estimates that it will take close to two decades for that monumental shift to occur. Until then, VoIP service providers must offer solutions that allow traffic that originates as IP to flow economically and efficiently in to and out of the existing PSTN. As one of the very few VoIP service providers pursuing a CLEC footprint on a national scale, CommPartners is uniquely positioned to economically and efficiently handle any combination of call traffic IP to IP, IP to PSTN, PSTN to IP or PSTN to PSTN. As such, the company is assisting the marketplace in its migration away from the PSTN rather than predicating its value on a transformation that has yet to occur. In addition to accommodating the present and the future in equal measure, CommPartners network structure has been designed to afford communications service providers an effective solution to two of the industry s most pressing problems emergency 911 service and CALEA requirements and one of end-users top concerns number portability. Addressing the Industry s Most Critical Concerns E-911 service has confounded the majority of VoIP providers, presenting a significant obstacle to widespread adoption. Because the service uses an Internet data connection to connect a standard telephone device to another similar device, or to the public switched telephone system, it does not provide for the transmission of the caller's physical location along with the voice call. If the caller dials 911, there is no inherent protocol within the VoIP technology for routing the call to the nearest PSAP (public safety access point) or for displaying the caller's location, telephone number or other information that safety officials need to provide true 911 service. While some VoIP providers have tried to offer E-911 applications, most end up routing calls to the front desk of the nearest Public Safety Access Point rather than a true 911 emergency operator. This mechanism has received criticism from public safety organizations across the country and we believe the federal authorities will ultimately require true 911 service for VoIP at some future date. Due to our sophisticated network structure and CLEC certifications, TeleCommunications Systems, Inc., which provides 911 functionality to 40 percent of the wireless world, has agreed to adapt its cellular protocols to work within the CommPartners network, enabling us to begin offering 911 service that connects to a live operator rather than an administrative receptionist. CommPartners stands among the first VoIP service providers to offer viable E-911 functionality and as such we intend to utilize this service internally as well as market the service, in conjunction with TCS, to other VoIP wholesalers and retail providers. CommPartners true E-911 functionality will be available during the first half of CommPartners Date: 01/14/05

4 Regarding CALEA, the federal umbrella law that allows law enforcement agencies to wiretap and record phone calls, CommPartners believes it is only a matter of time before the federal government mandates that VoIP providers enable CALEA compliance in their offerings. In the analog world, in which the communication stream is serial, it is relatively easy to pick points for the so-called intercept where a law enforcement agency can perform the actual wiretap. But because VoIP is IP protocol traveling in packets, there is not necessarily a single spot where the media flows can be trapped and the call intercepted for tapping. The combination of class 4 switching capabilities, class 5 applications servers and session border control devices installed at CommPartners Super POPs, however, not only gives CommPartners a tremendous amount of control and security within its network, but also enables us to use various signaling configurations to direct the media flows to a central point where the intercept can occur. The unique architecture of the CommPartners network stands as one of the very few on the market designed to comply with any such directive. Local number portability, while not a matter of life or death or national security, is of particular and critical interest to SMEs. Having to change long-established business phone numbers can be as devastating to a brand as a poorly timed name change. So VoIP providers have to be able to work with communication service providers to port the telephone number over to VoIP service. And while a known set of procedures for moving a number from one communications carrier to another exists, it hasn t been particularly effective to date. One has only to log on to the chat rooms of standard VoIP application providers to see how troublesome and slow the current number port system is. But because CommPartners provides the VoIP application as well as the network behind it, the company can initiate, monitor and push through the porting process far more effectively than the majority of VoIP providers. It might sound like a small advantage, but for communications service providers aiming to provide the best customer service possible to their business customers, it s a critically important differentiator. Regulatory Resilience In addition to understanding how their VoIP partners will address pressing security and market concerns, communications service providers need to know that their VoIP partners are well positioned to accommodate and thrive under whichever regulations the FCC ends up imposing on VoIP services. The FCC has a VoIP regulatory proceeding in progress that will address 911 service, access for disabled persons, intercarrier compensation, and Universal Service Fund contributions, among other issues. While it is too early to know how the commission will ultimately rule on the issues, it is important for communications service providers to carefully evaluate their VoIP partners resiliency to the broad variety of legislative actions that could result from the FCC as well as the impending wholesale revamp of the 1996 Telecommunications Act. For example, one area that has generated much concern among VoIP vendors, and the service providers that contract with them, is how their partners will fare in the face of access charge reform. Industry experts agree that access charge reform is an inevitability that will likely change the economics of VoIP offerings over the long-term. While it s generally expected that IP telephony will remain far less expensive than standard telephone service, a nominal rate increase could put many of the fringe VoIP providers out of business. VoIP providers such as CommPartners that have legitimate connections to the phone companies, however, are widely expected to be the only ones to withstand these anticipated nominal rate increases. Service providers must do their due diligence in carefully evaluating which providers will be able to adapt to a shifting regulatory landscape and which ones will fall through the resulting cracks in the terrain. Backing It All Up with A Strategic Back Office System CommPartners OSS platform manages all aspects of our business from service delivery to billing and it can do all that and more for the communications service providers that partner with CommPartners to deliver VoIP to their customers. Our proprietary single platform approach enables a broad range of services for our partners encompassing everything from development of a branded Web portal to service delivery and the creation of 4 CommPartners Date: 01/14/05

5 management reports and activity analyses of end-user activity. At the end of the month we can also produce for our partners a branded electronic bill that can be sent directly to the end-user. Our OSS can even accept and process an end user s credit card transaction. Developed by one of our founding partners and modeled after the electronic reservation system he developed for ValuJet (which stands as the airline industry s first system wide ticketless reservation system); CommPartners OSS is unmatched in the VoIP industry and a significant competitive differentiator for both us and our customers. Why? The simple reality for our communications service provider partners is that no matter how good their VoIP service is, if they can t render a detailed, yet easy to understand bill to their customers, they can t get traction or offer value for their VoIP offering. And for many communications service providers, upgrading billing platforms created specifically for the old world of telephony to accommodate a technology such as VoIP is an enormous undertaking too fraught with complexities for many to openly embrace. For example, for an ISP or a data integrator billing for data is a relatively simple undertaking because the data market in most states has evolved in accordance with a billing model based on a package of X speeds for Y cost. But if that ISP or data integrator began offering VoIP services, it would find the end user demanding an entirely different accounting each month with availability to detailed break-outs for long distance calls, local calls and data services. Most service providers aren t able to make the hard left turn required by billing for innovative new services that are highly transactional in nature. But with CommPartners OSS, they don t have to. Bridging the Gap The highly competitive and rapidly evolving communications industry is increasingly being defined by two trends: bundled services and rapid response to market demand. Communications service providers that can offer new services, and can roll them out rapidly without sacrificing quality in the process, are well positioned to earn loyalty rewards from their customers and stand apart from their competitors. SMEs, for their part, are laboring under similar market forces. The current economic environment, with its razor thin margins, has encouraged those companies to seek out and leverage new technologies that will allow them to lower costs and increase efficiencies without alienating their customers or altering existing business models too dramatically. VoIP is a technology well suited for meeting the needs of both those markets. A sophisticated, highquality VoIP offering from a trusted wholesale partner can help communications service providers broaden their portfolios of offerings, expand their geographical boundaries and boost their revenue streams without significant capital investments or time commitments. That same sophisticated, high-quality VoIP offering can provide SMEs the lower telecommunications costs and enhanced network functionality they need to lower expenses without risk and carve out competitive advantages. The first generation of VoIP service providers failed to provide a solution that addressed both industries needs. With its carrier-class network architected for voice quality and its OSS designed to alleviate administrative and marketing complexities, CommPartners is well positioned to serve as the bridge that will not only pull these two markets together but advance the VoIP industry as whole. 5 CommPartners Date: 01/14/05

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