IP Telephony Clerainghouses: Feeding the VoIP Frenzy - Technology Information

Telecommunications, Nov, 2000 by Josh Benveniste

Reselling termination between carriers is proving to be a lucrative business.

VoIP's explosive growth has spawned the creation of "matchmakers," better known as IP telephony clearinghouses. Clearinghouses, which deal in the origination and termination of IP telephony minutes, are revolutionizing the way ITSPs (Internet telephony service providers) conduct business. Think of a clearinghouse as a dating service. A small ITSP joins a clearinghouse to meet other ITSPs that have coverage in areas where it doesn't. With forecasts such as IDC's predicting VoIP minutes to reach 800 million per month in 2000, the lure of huge profits from offering low-cost long distance has spawned the formation of ITSPs worldwide. Unfortunately, many lack the skills, contacts and resources to offer the "bread and butter" of any telephony service--global termination. Clearinghouses recruit IP telephony communication partners from around the world, then act as a single point of contact for call routing between providers.

Clearinghouses, however, provide more than just a means to achieve a global footprint. They also provide the foundation for offering a wide portfolio of enhanced services to their members, which can resell them to end users. Clearinghouses differentiate themselves from competitors by offering enhanced services, which they deploy quickly and cost effectively with turnkey packages from IP telephony vendors.

Clearinghouse services generally fall into two categories: business operation services provided directly to ITSPs, and resalable end-user services, which ITSPs offer their customers.

Clearinghouse business operation services lift much of the burden of deploying and managing an IP network infrastructure from ITSPs. Services include origination and termination QoS monitoring and provisioning, intelligent routing, network management and monitoring, and financial services.

A clearinghouse usually doesn't originate or terminate traffic itself: It resells termination between carriers and other service providers, giving them a comprehensive termination portfolio. By using clearinghouse services, ITSPs can immediately generate revenue by exchanging traffic with other ITSPs in any of three capacities:

* IP traffic routed from the clearinghouse is terminated over the local PSTN.

* Originators pass their own customer traffic to the clearinghouse which forwards it to destinations where IT terminating gateways.

* ITSPs may be both terminators and originators.

With intelligent routing, which maximizes call completion rates, calls can be routed based on the full 10- to 15-digit phone number or any other number of abbreviated digits. Intelligent routing also allows secondary, or fall-back, routes to be specified for instances when the primary egress gateway is unavailable or for times of high network congestion.

Many clearinghouses provide network management and monitoring services as well as QoS monitoring and provisioning. Together these services ensure that the providers' operations run smoothly, at peak quality around the dock.

Financial settlement can also be a huge headache for small ITSPs: Imagine trying to collect from or pay termination fees to hundreds of different service providers with the additional risk of not being paid by customers. Clearinghouses alleviate these hassles by taking complete control of billing among members and guaranteeing payment for any traffic that passes through their networks. An ITSP receives one monthly statement itemizing the amount of traffic it has sent to another provider, how much it has received and where the traffic has traveled. Many clearinghouses offer this information online, so ITSPs can keep track of it in real time.

Establishing trusting relationships based on complicated legal agreements with numerous vendors is one of the most daunting tasks in starting a business. Signing one or two clearinghouse contracts, however, can free ITSPs from signing bilateral agreements with multiple providers, simplifying business and legal issues.

Because enhanced services, particularly resalable end-user services, give clearinghouses an edge over competitors, ITSPs can expect to see more of these offerings. The following services are either currently deployed or under development:

* Unified messaging

* Global roaming

* Web-based conference calling

* One-number follow me

* Billing provisioning

* Video and multimedia services.

How Clearinghouses Work

A clearinghouse solution, in its basic technical configuration, is an application and a signaling protocol (such as H.323) without gateways. It provides routing instructions, service logic and billing capabilities to other networks. Adding clearinghouse capabilities requires provisioning the IN (intelligent network) layer and database. This provides other networks with the same routing and service management that the existing network control layer provides its gateways (see Figure 1).

When placing a call through a clearinghouse, the usual sequence of events is as follows:

1. The user places a call with authentication information using the PSTN to access the VoIP gateway.