Fundamentals of Interconnection and Convergence Prepared for: Contact: Gary Richenaker Chief Architect Telcordia Technologies Interconnection Solutions 732 699.3264 grichena@telcordia.com Copyright 2007 Telcordia Technologies. All Rights Reserved. TELCORDIA TECHNOLOGIES, INC. RESTRICTED ACCESS This document contains proprietary information that shall be distributed, routed or made available only within Telcordia Technologies, except with written permission of Telcordia Technologies.
Agenda What is interconnection? Why is it important? Interconnection in Legislation Licence Conditions The Reference Interconnection Offer Interconnection and Numbering Access to services Number portability Regulator s Role in Interconnection Carrier Impacts 2
1 2 3 4 5 6 7 8 9 8 # * 1 2 3 4 5 6 7 8 9 8 # * What is Interconnection? A Interconnection B 3
Why do we need Interconnection? When only one incumbent operator, we didn t Drivers for change Government Policy, WTO etc Market liberalisation brings new operators Mobile, maybe first Fixed, later.. Users of each network need to communicate with each other So networks need to be interconnected According to interconnection rules set by regulator Technical Commercial i.e. charges 4
Interconnection The Incumbent s View Initially Resistant Lost customers Lost revenue Sees tortuous regulatory requirements Reference Interconnect Offer Price Control New Services e.g. CPS, Number Portability But eventually.competitors become large customers Regain lost revenue Wholesale business.as usual 5
Interconnection The New Entrant s View Market entry depends on robust business plan Interconnect critical to their business Need sight of interconnect terms and conditions and costs to develop business plan Costs of Interconnection as much as 60% of new entrant s operating costs Have fewer resources Rely on Regulator to police incumbent Wants flexibility in its interconnection arrangements Build Vs Buy Would like the option to resell incumbent services (e.g. Directory Enquiries, broadband access) 6
Characteristics of Best-In-Class Interconnection Enable fair & equitable trade across all operators Create venue to encourage open discussions among participants Implement transparent & easily auditable processes and records Simplify implementation and operations processes Facilitate accurate ordering, billing & settlements, and tariff filings Standardize information exchange processes, interfaces, and data formats Provide accurate and current interconnect information Enable implementation of differentiated business relationships Facilitate mechanized information exchange Common Interconnect Rule-Making, Operational Processes, & Information Infrastructure Promote a Robust and Profitable Competitive Environment 7
Scope of Interconnection Processes How to Interconnect as a New Entrant? Establish Identifier(s) Publicize Own Information: ID, TN served, switch locations, etc. Set up Interconnection Infrastructure with All Trading Partners (Ordering) Inter-Circle -> Intra-Circle Interconnect for Real-Time Service Delivery Dial Code (Numbering Block) assignment and management Common formats to identify network locations, services, connection types Pre-order planning to determine options Identify interconnection points Place firm order for interconnect facilities and services from Trading Partner specify numbers to be reached (routing) For each call/session, based on Called Number, determine the route and terminating Element/Switch Apply Number Portability data as needed Rate and bill the session accordingly 8
Key Topics to Consider on Interconnection Regulatory mandates Establishment of interconnect networks Where? With whom? How? With what services? Deliver services across networks Routing of services Numbering and number portability Rating, billing, and settlement 9
Regulator s Role in Interconnection Recommend Policy Define markets and and analyse for SMP Determine guidelines for interconnection Determine guidelines for methodology to calculate interconnect charges Request production and publication of a RIO from obligated operators Oversee and approve the development of cost models to support cost oriented charges Manage and resolve disputes Promote Industry working groups 10
Legislating Interconnection National Telecoms Law may refer to interconnection in high level terms Significant Market Power Rights and obligations of operators Basis for charges Little detail in the Law allows for flexibility Secondary Legislation Set by National Regulatory Authority (NRA) if it has the power Outlines more detailed rules (guidelines) on interconnection Published after consultation with the industry Reviewed and modified as required Licenses can contain conditions for interconnection and related issues 11
Licence Conditions/ Interconnection Guidelines Provision of certain services Interconnection services Directory Enquiries Carrier Preselection Number Portability Technical Rules for interconnection Location and number of Points of Interconnection Commercial Rules for interconnection Calculation of service costs Recovery of costs from other parties 12
Reference Interconnection Offer What is It? Why Do You Need It? Offer to make an Offer Produced by and operator with an obligation not all operators Still need a signed Interconnection Agreement between the interconnecting operators RIO should be published by the operator All prospective interconnecting operators can have sight of Terms and conditions Provisioning, Operational and Billing processes Price list for interconnection services Some confidential information not included RIO written in more clear terms Agreement is the legal document 13
Reference Interconnection Offer Example Content Subjects Locations of Points of Interconnect List of Interconnection services Forecasts and Ordering procedures Including issues of confidentiality Billing and payment procedures Operational management of the network Planned outages Fault Restoration Dispute resolution process Price List 14
Introducing Interconnection Services Call termination services To geographic number ranges To non-geographic number ranges To mobile number ranges Outgoing call services Example: Outgoing calls to International gateway Calls to information or value added services on another network Interconnection Links Transmission Links Joint Interconnection services Data management amendments Number portability processes 15
More on Call Termination Originating POI Terminating 16
Call Termination Services POI Double Tandem POI Single Tandem Terminating Operator POI Local 17
Call Termination Services Local, Single Tandem & Double Tandem services depend on number of switches used to terminate the call Double Tandem may be deaveraged further by distance Mobile networks have no distinction one average termination rate Originating operator collects revenue from the customer and pays the terminating operator their termination charge 18
More On Call Origination Originating POI Terminating 19
Call Origination Services POI Double Tandem POI Single Tandem Originating Operator POI Local 20
National Call Transit Originating Incumbent usually Transit POI Transit POI Originating has no direct POI with Terminating Terminating 21
Carrier Selection and Preselection POI Originating (Incumbent) POI Carrier (Pre) (Pre) Selection Customer has line provided by incumbent Carrier Selection customer dials prefix or has preselected Carrier Call may terminate on Selected, a 3 rd party network, or back on incumbent s network 22
Access to Number Translation Services Originating POI Hosting Service Service Provider e.g. 0800 Freephone 0845 Local Rate e.g. Bank 23
Interconnection and Numbering Numbering issues affected by interconnection Accessing number specific services (free, shared cost, shared revenue) Interconnection charges between operators will depend on number dialled Interoperator processes and charges for number portability Accessing Carrier (Pre)Selection services Activating new number ranges opened on interconnected networks 24
Number Administration Considerations Opening of new number ranges to be recognised for routing of calls Rehoming of number ranges Lead times for introducing new number ranges need to be detailed Joint service between interconnected operators Charges based on processes involved 25
Number Portability Joint interconnection services dealing with Number Portability provision Interconnection services include: Per customer administration charge for Number Portability Different types of NP orders Bulk number portability Orders submitted by fax or online Orders to be completed at a certain time or date If allowed by the regulator, additional conveyance for NP can be charged Covering the transit through the donor network using onward routing 26
Number Portability Originating needs to know where Customer is connected now POI Donor POI Recipient Originating POI Number Portability Database Customer moves service from Donor to Recipient All Call Query Onward Routing 27
Interconnection Pricing Issues Basis for the determination of interconnection charges Benchmarked Revenue sharing Cost oriented Cost based Timetable for development of interconnection charges Information required to determine charges Benchmarking Cost Model Ongoing control of interconnection charges Regular re-calculation RPI-X control 28
Interconnect Billing Originating POI Terminating Call Detail Records Contain Dialled Number Identifying Terminating POI Route Duration of Call CDRs Mediation CDRs Mediation Retail Billing System Interconnect Billing System Interconnect Billing System Invoices Reconciliation 29
Settlement Model in the U.S. $ $ Subscriber pays LEC for Local Service $ Calling Party pays transit provider for long distance call Subscriber pays LEC for Local Service LEC LEC EO AT AT AT Transit Provider AT EO Transit provider pays LEC for originating access Transit provider pays LEC for terminating access 30
Charge Flows for Carrier Selection CPS Operator Pays Incumbent Call Origination POI Customer Pays Incumbent Directly for Line Rental Originating (Incumbent) POI Customer Pays CPS Operator Directly for Calls Made Carrier (Pre) (Pre) Selection 31
Charge Flows for Calls to NTS Services Freephone Hosting Pays Originating Originating Charge Originating POI Hosting Service Customer Pays no Charge for Call Service Provider Service Provider Pays Hosting Call Charges 32
Charge Flows for Calls to NTS Services Shared Cost Originating Keeps Call Origination Charge And Forwards Remaining Call Revenue to Hosting Originating POI Hosting Service Customer Pays Orig Call Charge Eg Local Call Service Provider Service Provider Pays Hosting Call Charges (Difference Between Total Call Charge and Amount Paid by Customer) 33
Charge Flows for Calls to NTS Services Shared Revenue Originating Keeps Call Origination Charge And Forwards Remaining Call Revenue to Hosting Originating POI Hosting Service Customer Pays Orig Call Charge Service Provider Hosting Pays Service Provider Share of Call Revenue Depending on Commercial Agreement 34
Making Interconnection Work Considerations for Regulators Need clear interconnection guidelines published by the regulator Appropriate for local situation Prompt drafting of a RIO by obligated operator(s) Approval of the RIO by the regulator Management of any disputes or problems in Interconnection Agreements by regulator Regular review of interconnection guidelines, interconnection services and RIO to reflect technology and market changes Effective price control of interconnection services by regulator Ensure overall sector policy, including interconnection elements, promotes sustainable competition. 35
Current Bi-Lateral Implementations Leave Much to be Desired Resource consuming, long lead time and prone to error Inability to mechanize due to variations among bilateral agreements (formats, processes) Not scalable as number of participants increase Difficult to evolve with new technologies and services Difficult to manage with new interconnect business models Inaccurate interconnect data results in leakage of 3-4% total revenue $30-40M out of $1B! 36
Considerations for a Centralized Information Infrastructure for Interconnection Standardize and normalize information to be exchanged among interconnecting Operators Manage information from all interconnecting parties centrally and neutrally for data required to Establish interconnection network Route and rate individual service sessions Support number portability Bill for appropriate charges Facilitate information exchange transactions Offer ease access for information data by owners and query by authorized users Ensure data validity, security, and privacy with controlled access Enable mechanization and automation of infromation exchange and integration with Operator back office systems Neutral, scalable, and robust for carrier-grade operations 37
Beyond Centralized Information Infrastructure Integration with Back Office Systems Bilateral data exchange as present mode of operations often results in manual intervention Re-systemization is gaining momentum among Operators to streamline operations and automate Information to be gathered and exchanged for interconnection purposes is first to be standardized As a next step, such data should be created/modified and retrieved/used in a mechanized or automated fashion via open interfaces Example: When a subscriber sign up for VoIP service, the number portability request and the interconnect routing information can be automatically generated to communicate with the clearinghouse and routing registry Driving the need for open interface support on shared registries and clearinghouses, as well as Operators own systems such as Number Portability gateway 38
Making Interconnection Work Considerations for Operators Efficient information exchange with interconnecting partners as the first step to streamlining interconnection Standardize data format, data exchange protocols, and processes Centrally manage information used by interconnecting parties for scalability & improved control Mechanize and automate with accurate information 39
Typical Stovepipe Service Model Application Layer Push to Talk Service Video Streaming Service Interactive Gaming Service Control Layer OSS / Billing QoS Presence OSS / Billing QoS Presence... OSS / Billing QoS Presence Transport Layer Subsystem Access Layer Base Station Subsystem Common Functions are Replicated Source: Frost & Sullivan 40
Efficient Service Delivery via NGN Application Layer Control Layer Application Servers IP Multimedia Subsystem Session Mgt and Control OSS / Billing QoS Presence Transport Layer Multi-service IP Access Layer RAN WLAN... PSTN Common Functions are Re-Utilized Source: Frost & Sullivan 41
The Industry is Moving Fast Forward Changing Disruptive technologies Changing regulations More new players Challenging Fierce competition Intense focus on customer satisfaction Demand for next generation networks and services Converging Integrated services are delivered over any access fixed, mobile, and more Services are no longer sold only by network operators Cooperation among Operators to deliver converged services with enhanced customer experience is the key to success 42
Convergence Drives the Need for Efficient Interconnection Information Exchange Reality 1: Technology advances create opportunity for more competing Operators (wireline, cable, mobile, VoIP, alternative) Reality 2: Operators require information from one another in order to interconnect and deliver services to their subscribers Result: The volume of information exchange among Operators will increase with more competition Text documents Operator A Operator B Operator A Operator B Operator C 43 Email Operator A VoIP Operator Non-standard Forms Operator B VoIP Operator Past Present Future Operator C CableCo A Spreadsheets International GW SP 1 Efficient and cost effective interconnection operations are among the most important factors for successful competition, second only to government policy and billing and settlements
Current Bi-Lateral Implementations Leave Much to be Desired Resource consuming, long lead time and prone to error Inability to mechanize due to variations among bilateral agreements (formats, processes) Not scalable as number of participants increase Difficult to evolve with new technologies and services Difficult to manage with new interconnect business models Inaccurate interconnect data results in leakage of 3-4% of total revenue $30-40M out of $1B! Centralized routing registry saves 30-40% of interconnection operations costs 44
Characteristics of Best-In-Class Interconnection Management Enable fair & equitable trade Create venue for open discussions Standardize and mechanize information exchange processes, interfaces, and data formats Access accurate and current interconnect information Implement transparent & easily auditable processes and records Facilitate accurate ordering, billing & settlements, and tariff filings Enable implementation of differentiated business relationships Common Interconnect Rule-Making, Operational Processes, & Information Infrastructure Promote a Robust and Profitable Competitive Environment 45
Interconnection in a Converged World Same Needs Interconnect physically Interconnect network Interconnect for voice Exchange network interconnect data Identify subscribers Different Implementations From TDM to IP for mobile and fixed Interconnect service sessions Interconnect beyond voice to IM, multimedia, 3D animation, and more Exchange service interconnect data to deliver service sessions Still primarily use Telephone Numbers, with other identifiers for specific applications Converged Interconnection: It s All About Services! 46
Service Interconnection for Converged s Pieces of the Puzzle Service Providers need to: Interconnect to complete each service session over IP Access accurate interconnect data to enable session completion across providers Automate provisioning for interconnect data update Reality: Large scale deployment of VoIP and IMS services are often hindered by interoperability issues among service elements Operations of converged services lag infrastructure deployment Interconnection among deployed IP service islands is mostly via PSTN 47
Considerations for IP Service Interconnection 1 2 3 4 How do I type the incoming call and confirm I should accept it? How do I ensure call integrity (i.e., required content) as it transverses my network? Am I carrying traffic efficiently within my network? How do I preserve call integrity during handoff to another carrier? Fixed Line Operator Mobile Operator 1 IP Service 2 3 4 Fixed Line Operator Mobile Operator Cable Operator IP Service (e.g., VoIP) Customers Cable Operator 48
Sample Interconnection Architecture - VoIP SS7 SS 7 Signaling Gateway Inter-Operator Signaling IWF Inter-Operator Interworking Function (IWF) SS7 Softswitch Softswitch Circuit Circuit Switch Class 5 Signaling Media Gateway Operator GNI A Packet Call Routing - Inter-Operator Bearer IWF Other Operator Service B Provider Media Gateway Signaling Circuit Switch Circuit Switch 49
Rating - The new Peering Model LEC Transit Provider LEC $ $ $ Termination Earnings Long Distance Costs Termination Costs $ Routing Registries LEC LEC Settlement Free or low Termination Cost $ Minute and distance sensitive pricing will give way to port and signaling transport fees 50
Making IP Service Interconnection Work IP is the ubiquitous transport for convergence Service interconnection via IP is more complex than TDM Key considerations Find IP route based on the called Telephone Numbers, or other user identifiers used for the converged service Select route based on service requested for the session, and interconnecting relationship Protect data privacy for Operators and end users Interwork with TDM and number portability Secure, extensible IP Service Interconnection Routing Registry is essential for Converged Services 51