Considering the burgeoning rise of IP networks over the last few years, IP interconnect between operators is expected to have become by now the default method for all new interconnect in developed next-generation network (NGN) markets. However, this is not the case, and it is causing a high degree of uncertainty and frustration particularly among established and new-entrant operators that have invested heavily in IP‑based NGNs.
For operators investing in VoIP, it makes sense that they would want to interconnect with other operators using an IP interconnect. An IP interconnect deployment is also more cost effective and scalable than traditional TDM-based interconnect, and reduces the need for transcoding, which reduces voice quality.
So while some operators are using IP interconnect in a limited way, why isn’t NGN interconnect more prevalent, and does it matter?
Incumbent operators are suffering from falling voice revenue and have been distracted by an ever-increasing pressure for next-generation access (NGA) investment. This has resulted in NGN voice investment being delayed. This is evidenced by the case of BT in the UK, as well as other incumbent European operators. In such cases, NGN voice investment is likely to be driven by issues of equipment obsolescence rather than a desire to realise the operational benefits of a converged NGN. The same is true for established alternative operators with large TDM networks, who are taking a similar approach to incumbents – they see no need to rush towards IP interconnect. However, the same cannot be said for new players.
Operators offering voice services on the back of new NGN local loop unbundling (LLUB) investment and operators who have taken the plunge and embarked on a core NGN voice upgrade are frustrated by the lack of IP interconnect options. For such operators, the economic advantages of IP interconnect are unquestionable, but there are issues in implementing their desired IP interconnect strategy – if the incumbent does not offer IP interconnect, a traditional and more expensive TDM interconnect solution has to be used, or alternative methods need to be explored.
One such alternative method is to channel interconnect via an alternative operator that can offer IP interconnect and has TDM interconnect to the incumbent. This has been the chosen route for small Internet telephony providers, but is now being actively considered and implemented by larger operators that offer ‘fully featured’ primary telephony services. In embarking on this route, operators need to weigh the risks involved, such as possible reduced voice quality, lower levels of resilience in their interconnect partner’s network compared to the incumbent, and the impact of a reduced range of voice features available across the interconnect (e.g. ‘ring back when free’).
As economic and competitive pressures cause incumbents to delay investment in IP interconnect, operators striving to take full advantage of the costs and services of NGNs need to look at the economic benefits and potential risks when considering their approach to NGN voice solutions, especially regarding interconnect, and increasingly find alternative ways to implement it. This may be by increasing the amount of direct IP interconnect with like-minded operators, or by using IP interconnect aggregators. Whichever method is implemented, the net result of this could be a reduced reliance on future regulated IP interconnect products, and the interconnect world may look significantly different to the way it appears today.
Figure 1: IP interconnect trade-off [Source: Analysys Mason]
Analysys Mason advises operators and regulators worldwide on strategies to overcome NGN interconnect issues. Our work ranges from building network cost models to advising on technology deployment issues and is supported by our in-house research business.