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Next-Generation Exchange-Based IP Interconnection Next-Generation Exchange-Based IP Interconnection by Brian Partridge | March 2011 I. The IP Era Requires an Evolved Interconnect Model Network Effect: The phenomenon whereby a service becomes more valuable as more people use it, thus encouraging ever-increasing numbers of adopters. The IP era of networks and services is advancing so fast it’s become hard to keep up with end-user demand. Network service providers, IP product and service vendors, and enterprise IT/network managers alike are scrambling to respond to their stakeholders’ increasing demand for ubiquitous access to rich IP services. From its VoIP, NGN and IMS beginnings to the current landscape of IP services—including fixed and mobile high-definition (HD) voice, unified communications (UC), HD video calling, video conferencing and telepresence, collaboration, presence, IM, rich communication suite (RCS) and RCS-e, combining the best the Web and communications services have to offer—the IP network platform for advanced services has limitless possibilities we are just beginning to fully comprehend. After the initial invention and establishment of the utility possible with advanced IP services, the next critical step is expanding the reach of those services on a fully interconnected cross-network basis to maximize their overall value to their communities of interest. This is where we find ourselves today. The power of network effects has been an underlying pillar of the telecommunications industry since its invention: The value of the telephone network rose as more people had access to telephones and the ability to communicate over a common network—the PSTN. Fast-forward to 2010 and it’s a bit of déjà vu. Service providers, vendors and enterprises must now make critical decisions on the most economical choices to expand their communities of interest to match the network effect that allows us to pick up a telephone and reach anyone, anywhere in the world. There is no PSTN equivalent for the NGN, VoIP and IMS worlds; instead, we have “islands of IP” that limit the overall value of an IP service to the on-net community of interest. The magnitude of this challenge has attracted several ancillary service providers to build hub-based IP peering communities to reduce the complexities associated with bridging islands of IP. The choices made around IP interconnection architecture are critical to ensure a smooth handoff between disparate IP networks and deliver true service mobility, regardless of user location or access method. The advantages of exchange-based interconnection based on electronic number mapping (ENUM) directories are real and achievable today. Providers all around the world are beginning to embrace exchange-based interconnection in order to enhance their innovative services, reduce operational expenses, increase security and distinguish their brand position. In this whitepaper, Yankee Group reviews: • The concept of multilateral exchange-based IP interconnection models • Current market adoption and opportunity for advanced IP services • Critical decision-making criteria for choosing a hub-based interconnect solution provider • The current market landscape of hub-based interconnect solutions • An exchange-based interconnect study This custom publication has been sponsored by XConnect. © Copyright 2011. Yankee Group Research, Inc. All rights reserved. Next-Generation Exchange-Based IP Interconnection NOTE ON TERMINOLOGY • Limited reach: Advanced services are limited in their ability to drive network effects because they cannot rely on the traditional The terms “exchange,” “IPX,” “federation” and “hub” are often used interchangeably to describe a hub-and-spoke-based PSTN for interconnection among service providers. Without an approach to facilitate scalable and efficient interconnection interconnection among different networks, revenue and margin between multiple communications entities (e.g., operators, opportunities will be limited to their home subscriber footprint. enterprises). This approach involves a central entity (e.g., hub, exchange, federation provider), thereby reducing the technical • Revenue potential: These services will become an increasingly and commercial overhead and costs of multiple direct bilateral/ large portion of telecom operator revenue as legacy services peering arrangements. We have predominately used the word such as POTS and SMS give way to services such as voice over “exchange” in this report. The services offered by the exchange broadband (VoBB) and Rich Communication Suite (RCS). can vary enormously, as outlined in this document. Network operators that have made money selling TDM-based voice services are at the beginning stages of a multi-year transition II. IP Services Will Dominate the to the all-IP networks of the future. As networks evolve to IP, New Services Landscape so do the services. These new services cannot rely on the PSTN for interconnection, creating a strategic need for multi-layered IP It is not news that circuit-switched networks designed for high- federation services. quality voice are giving way to the next generation of networks built on IP. Network traffic patterns will shift from predominantly TDM III. Multilateral Exchange-Based to all-IP over the next several years, providing opportunities for Interconnect: A Technology Review service providers that provide hub-based interconnect capabilities. This is true for both the fixed and wireless access markets, where To replicate the success of TDM services in an IP world, service much of today’s traffic is TDM but where mobile broadband providers and enterprises must consider how they will interconnect adoption, mobile soft switching, IMS services and over-the-top their islands of IP through bilateral, multilateral or hub-based (OTT) services are gaining momentum. It also holds true in interconnection arrangements. While the earliest attempts at IP enterprise markets, where UC and videoconferencing vendors are peering were focused squarely on connecting disparate islands of actively working with peering federation providers to bridge their VoIP, NGN and IMS the next wave of solutions must expand their communities of users. purview to include a much fuller list of short- and long-tail services. An important difference between VoIP peering and advanced all-IP New IP Services Call for New service interconnection is that VoIP services could pass from IP to Interworking Arrangements TDM and back to IP through the use of TDM-to-IP gateways, but for advanced services such as video calling or UC, a session must The proliferation of broadband access networks has fueled adoption remain on IP to maintain service continuity between different access of advanced services such as instant messaging (IM), HD voice, networks and endpoints. social media, HD and LD video calling and conferencing, and OTT IP communications services such as Vonage, Google Talk and Skype. We are entering a period of time in which next-generation hub-based These services represent the next generation of revenue drivers IP interconnection models will become a critical success factor and for service providers as the PSTN is retired, and fixed and mobile TDM interconnections will become a dead end. Next-generation broadband IP networks become ubiquitous. hub-based IP interconnect exchanges should not be confused with Internet peering or Internet eXchange (IX) peering points where These new services are all characterized by the following attributes: Internet networks are interconnected. An IP IX only provides • Appeal: The services are highly appealing to enterprises and standard IP/Ethernet Layer 1/2/3 network layer interconnects where consumers based on their prolific use of IP, enabling rich real- IP packets are exchanged. An interconnect exchange will provide time voice, video and messaging capabilities and support for additional services beyond the network layer, such as service-aware mobile payments, Web 2.0 mash-up services and services that protocol interworking and interoperability, ENUM registry, security, include telecom operator APIs such as location and presence. identity and commercial/clearinghouse functions. 2 © Copyright 2011. Yankee Group Research, Inc. All rights reserved. March 2011 The benefits of IP services come with new security risks such as toll A hub-based provider of ENUM registries and multi-protocol, fraud, identity theft, spam over IP telephony (SPIT) and denial-of- multi-vendor VoIP/NGN interconnection infrastructure can service (DoS) attacks. Traditional network security measures like enable communications service providers to join multilateral firewalls and intrusion prevention systems (IPSs) mitigate some of those interconnection relationships with IP service providers, either at the risks, but they are not designed to handle complex signaling/media regional level or around the globe. sessions using protocols such as SIP. IP-to-IP interconnect requires some interworking in cases where different SIP signaling variants or the How Multilateral Hub-Based Interconnect Works legacy H.323 protocol are used by IP network elements. Multilateral hub-based federations operated by neutral third parties, Soon, consumers and enterprises alike will require critical services infrastructure vendors or wholesale service providers enable delivered over IP. The inevitable adoption of IP services is good for service providers to more intelligently route sessions in the most service providers, who will reap economic value from the services’ cost-effective manner and increase the reach of
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