Gregory Massel gregswitchtel.co.za

1
Interconnectiona practical guide
Gregory Masselgreg_at_switchtel.co.za
3 September 2009
2
Target Audience

• All providers of telephone network services
• Next Generation Network Operators
• (ex-VANS)
• Mobile Network Operators
• PSTN Operators
• SAME issues, DIFFERENT perspectives
• Understanding key to agreement

3
Overview

• Objectives
• Reality check
• Barriers to entry
• Considerations
• Practical
• Financial
• Technical

• Practical Solutions
• Questions

4
Objectives

• Bidirectional call traffic to/from the global
  PSTN
• Fair and competitive rates
• Origination
• Termination
• Reliable and dependable communications
• Restriction-free (within reason)
• Limit dependence on competitors or 3rd parties

5
Reality Check

• 087 numbers allocated to 111 i-ECS operators
• (Source ICASA, Aug 2009)
• 25 of those networks are reachable from Telkom's
  network (Source Telkom, Aug 2009)
• Even fewer are reachable from other key networks
• (Vodacom, MTN, Cell C, Neotel)
• Direct interconnection between new operators is
  extremely limited however, many can do reach
  each other via transit
• Interconnection regulations still pending
• (gt 2 Years since 1st draft. 3rd Draft dilutes
  protections.)

6
Barriers to Entry

• Cost
• Volume obligations
• Security deposits
• Equipment
• POILs
• Unwillingness to interconnect
• Anti-competitive attitude
• Difficulty securing meetings, follow-up,
  contracts
• Unnecessary delays
• Disproportionate terms
• Unfair constraints

• Time Frames
• Negotiation signing
• Regulatory compliance
• Lodging agreements
• Lodging tariffs
• Routing, change control, testing
• Transit and 3rd parties
• International
• No simple inbound transit
• Transit may be discretionary ?
• Conflict over transit costs

7
Financial Considerations

• Rates
• Origination
• Termination
• Cash flow
• Billing cycle
• Payment terms
• Net offset
• Volume Commitments
• Credit Risk
• Guarantees and security
• Currency exposure
• Arbitrage

• Billing and settlement
• Systems for invoicing
• Transit
• Foreign currency
• Reconciliation
• Accurate time
• Flexible reporting
• Source Destination
• Changes and re-rating

8
Technical Considerations

• Interconnect Type
• VoIP (SIP)
• Codecs used / supported
• Fax (T.38 support)
• TDM (SS7)
• Equipment Interoperability
• SPC
• Scalability
• POILS
• ATM / Ethernet (VoIP)
• E1 (TDM)
• Common POI (e.g. JINX)

• Routing
• Number portability
• Transit Failover
• New number ranges
• International
• Caller ID
• Fax
• Roaming
• New number prefixes
• Number pooling
• Delay / Latency
• Testing

9
Practical Considerations

• Direct interconnection between all licensees
  entirely impractical
• gt 100 Licensees with number ranges
• Mesh requires minimum 4,950 interconnects!
  (Metcalfe's law)
• VoIP and common POI's (exchange points)
  alleviates technical burden and POIL cost, but
  not admin and HR
• Neither financially nor technically feasible
• Negotiations and implementation would take eons
• Transit not always ideal
• Some operators not always willing to route via a
  3rd party
• More expensive above a volume threshold
• May give a competitor insight into traffic volume

10
Practical SolutionsInterconnection Seekers

• Negotiate transit arrangements
• 1st Interconnect partner should transit outbound
  to everywhere
• Ensure major operators are willing to route to
  your numbers via that party do not assume!
• Consider newer entrants and ISPA members they
  are likely to be more flexible, particularly with
  credit, volume requirements and VoIP
• Consider using a sub-allocation of numbers
  pending routing of your own ranges
• Number portability may be a reality next year
• Alternatively, sell outbound products pending
  successful routing of numbers

• Avoid foreign carriers until volumes high
• take into account forex costs, complications and
  risks
• Try secure local and international on the same
  local agreement in ZAR
• Be realistic about direct interconnects
• If you don't have sufficient volume, start
  building it first
• Expect delays Start negotiations early
• Try build inbound call revenue
• Two-way flow reduces exposure and credit risk
• Test extensively
• Purchase prepaid SIMs on all MNO networks, land
  lines, VoIP services

11
Questions
Gregory Masselgreg_at_switchtel.co.za
3 September 2009