As the telecom industry contemplates the TDM-to-IP transition aimed at replacing traditional voice service with VoIP, some of the biggest challenges will center on interconnection. The move to IP will require rethinking how service providers exchange traffic with one another from a business, regulatory and technology standpoint.
Business and regulatory components
“We want IP interconnection,” said Maggie McCready, executive director for public policy at Verizon, at a Comptel event last month. The event, titled “IP Transition– An Evolution of the Network, Regulatory Environment or Both?” was also webcast.
McCready said half of Verizon’s 13 million voice customers are now served over FiOS. And potentially those customers could be interconnected with other service providers more economically using IP.
McCready noted, however, that some nationwide service providers say they will only negotiate with Verizon if Verizon agrees to abide by “backstops” that help regulate pricing in the TDM world. And Verizon does not believe that is the appropriate path.
“They have to come to the table and talk,” said McCready about other service providers. “We’ve done it, it can work . . . and if it doesn’t work, what’s the harm in trying?”
Another IP interconnection issue that could be challenging to resolve is pricing transparency. While the nation’s Tier 2 and Tier 3 carriers would like to have some idea about what other carriers are paying for interconnection, powerful Tier 1 carriers may be reluctant to disclose that information.
“Would a small company get the same rate [as a larger company]? I don’t know,” said McCready.
And although it wasn’t discussed much at the Comptel event, another thorny issue is that rural carriers traditionally have relied on per-minute access charges for completing calls from other carriers to their network to help cover some of their costs of delivering service, which are higher in rural areas. Rural carriers may be reluctant to enter into IP interconnection agreements unless those revenue streams are retained or replaced.
The technology component
IP interconnection also will change the physical infrastructure through which calls are exchanged.
A carrier like Verizon might exchange traffic at 12 interconnection points nationwide, McCready said. And that reality also may impact regulatory and business issues.
For example, McCready asked, “If state arbitration is the backstop and I have 12 interconnection points, how does the state play a role?”
FCC Chief Technology Officer Henning Schulzrinne noted another change that will occur as carriers move to the sort of infrastructure McCready described.
“A small network in Iowa won’t exchange with [other carriers] at every exchange point,” Schulzrinne said. As a result, he said the smaller carriers may need to use an intermediate provider to provide transport to some exchange points.
Schulzrinne made his comments at an Internet Engineering Task Force Technical Plenary session about “The end of POTS: Transitioning the PSTN to IP.”
Schulzrinne said he knows of at least one carrier that is exchanging voice traffic with other carriers using VPNs. “Voice is such a small portion [of total IP traffic] it will be difficult to maintain separate interconnections with smaller networks,” he said.