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SIP PeeringA Business Model For ISPs
Jim Dalton
16 October 2007
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Environmental Scan• Years of growth ahead for VoIP market.
– Consolidation with New Niches Emerging
• A lot of competition– Telcos– Cable Company’s– New entrants: Skype, Ooma, Google, Gizmo
• Some disasters: SunRocket, • Plenty of profit opportunities and success
stories: CBeyond, Covad, Packet8
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Target Markets• Individuals
– Anyone with broadband access– Tough to compete with Cable triple play
• Small Businesses (up to 250 employees)– Unserved by Cable companies– Underserved by Telcos
• Large Businesses – ISPs cannot compete against Telcos
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General Strategy• VoIP services must be a complement to existing
services• Deploy services incrementally to limit risk• Use technical skills as a competitive advantage• Use Open Source platforms offer major cost
advantage• Leverage existing sales and marketing channels• Be relentless about conserving cash
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Selling Proposition
High Speed Internet AccessDomain ServicesIP AddressesNetwork ConfigurationManaged Firewall ServicesVPN
E-mail with Spam and Virus ProtectionFile Backup & SharingFax to E-mailWeb Hosting
Connectivity Applications
Dat
aV
oic
e IP Access to PSTN (outbound calls)Direct Inward Dial Services (DID or inbound calls)
Long Distance Resale800 Number ServicesLocal Service (CLEC License) CALEA, CallerID, Voice Mail E911, LNP, Operator ServicesHosted PBX Services
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IP Access to PSTN• Target Market
– Special situations where IP access to PSTN has a major cost advantage.
• ISP provides the network plumbing to access traditional telco services.
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IP Access to PSTN• Enterprise with three
branch offices.
• Eight phone lines (DS0s) per office
• $50 per DS0/month
• $1200/month
LECLocal
ExchangeCarrier
PBX
PBX PBX
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IP Access to PSTN
IntergratedAccessDevice
(ISP Equipment)
VoIP - PSTNGateway
(ISP Equipment)
GlobalPSTN
Internet
SIP Trunk
PRITrunk
PRI Trunk = Primary Rate Interface (23 Voice Channels) $300 -$600 per month
PBX
PBXPBX
IAD Cost = $800 - $3600 eachGateway Cost = $40 - $100 per voice port
LocalTelco
Switch
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IP Access to PSTN
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
SIP Trunk
PRITrunk
PRI Trunk = Primary Rate Interface (23 Voice Channels) $300 -$600 per month
Gateway Cost = $40 - $100 per voice port
LocalTelco
Switch
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DID Services
IPPBX
VoIP - PSTNGateway
LocalTelco
Switch
GlobalPSTN
Internet
SIP Trunk
PRITrunk
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11
Selling Proposition
High Speed Internet AccessDomain ServicesIP AddressesNetwork ConfigurationManaged Firewall ServicesVPN
E-mail with Spam and Virus ProtectionFile Backup & SharingFax to E-mailWeb Hosting
Connectivity Applications
Dat
aV
oic
e IP Access to PSTN (outbound calls)Direct Inward Dial Services (DID or inbound calls)
Long Distance Resale800 Number ServicesLocal Service (CLEC License) CALEA, CallerID, Voice Mail E911, LNP, Operator ServicesHosted PBX Services
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Long Distance Resale
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
SIP Trunk
PRITrunk LD
CarrierSwitch
Internet Telephony Service Provider operates theVoIP to PSTN Gateway to resell Long Distance Services
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Long Distance Resale
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
SIP Trunk
LDCarrier
• Long Distance Service Provider operates the VoIP to PSTN Gateway
• Similar to traditional switchless resale of LD Services
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Long Distance Resale
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
SIP Trunk
LDCarrier
SIP Trunking to the LD Carrier Eliminates: - Cost of PRI ($200-$600/month, 23 channels) - Gateway Investment ($40-$100 per channel)
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Long Distance Resale
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
SIP Trunk
LDCarrier
How does an ISP Control and Profit from VoIP whenCustomer can have SIP Trunks directly to the Carrier?
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Long Distance Resale
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
SIP Trunk
LDCarrier
Open Source VoIP platforms provide the technicallysavvy ISP with a cost advantage for SIP call control
SIPProxy
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Open Source VoIP Platforms• Two types of SIP call control platforms
– SIP Proxy• High scale, Hundreds of calls per second
– Back to Back User Agent (B2BUA)• Less scale, more control
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SIP Proxy• Forwards SIP messages from Source to Destination• Audio packets stream directly from the source to the
destination• No IP masking between the Source and Destination
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
LDCarrier
SIPProxy
Invite
Invite
Audio
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B2BUA• Forwards SIP messages from Source to Destination• Audio packets stream through the B2BUA• IP addresses are masked between the Source and
Destination
IPPBX
VoIP - PSTNGateway
GlobalPSTN
Internet
LDCarrier
SIPB2BUA
Invite
Invite
Audio
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Open Source VoIP Platforms• SIP Proxies:
– SIP Express Router (SER)– OpenSER
• Back to Back User Agents (B2BUA)– Asterisk: Popular PBX– FreeSwitch: Softswitch for Carriers– YATE: VoIP Softswitch
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Example Deployment
IPPBX
VoIP - PSTNGateway
GlobalPSTNSIP Trunk
LDCarrier
OpenSER
CustomerAuthentication
MySQL CallDetail
Records
BillingSystem
OpenSER
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LD Resale Business Case
• Investment and S, G & A:– Server Hardware: $3k to $10k– Billing, taxes: Outsourced services limit risk– Systems Integration: 0.5 – 2 Man Years– Sales & Marketing: Can be low to existing customer
base
Revenue
PSTNTermination
DIDServices
Cost of Sales
1.5 – 2.5 cents/minute $1-$12 per month
0.7 - 1.6+ cents/minute $0.2 - $0.5 per month0.3 - 1.2 cents/minute
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Marketing• Selling to existing customers that already
SIP enabled is no-brainer– Don’t let other ITSP poach your customers
• Partner with IP-PBX resellers– They need you! – You need them to provide fulfillment of
products that enable SIP Peering– Growing number of Asterisk Resellers
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Increasing your Gross Margin• Least Cost Routing inter & intra-state calls
will reduce your Cost of Sales by 50%• Use LERG analysis to optimize routing
IPPBX Global
PSTNSIP TrunkOpenSER
CustomerAuthentication
MySQL
OpenSER
CallDetail
RecordsBillingSystem
Carrier1
Carrier2
Carrier3
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Increasing your Gross Margin• SIP carriers also provide 800 number services • 800 services are special case SIP DID calls
IPPBX Global
PSTNSIP Trunk
OpenSER
CustomerAuthentication
MySQL
OpenSER
CallDetail
RecordsBillingSystem
Carrier1
Carrier2
Carrier3
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Increasing your Gross Margin• 800 Number Services can be combined with
Least Cost Routing to serve PSTN customers
IPPBX Global
PSTNSIP Trunk
OpenSER
CustomerAuthentication
MySQL
OpenSER
CallDetail
RecordsBillingSystem
Carrier1
Carrier2
Carrier3
PBX
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Increasing your Gross Margin• SIP infrastructure has the flexibility to provide
innovative, high margin niche services:– High volume calling for short promotion campaigns
GlobalPSTNOpen
SER
CustomerAuthentication
MySQL
OpenSER
CallDetail
RecordsBillingSystem
Carrier1
Carrier2
Carrier3
PBX
SIP Trunks
VoicePromoServer
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What About Local Services?• Local Telephone Services offer the highest
margins
• It can be done using Open Source.
• But, Local Telephone Service is difficult:– CLEC Regulatory Requirements– CALEA, E-911, Local Number Portability
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What About Hosted PBX Services?
• Hosting a VoIP PBX is a lot like hosting a Web Server.– A good fit for ISPs when reselling Local
Telephone Service
• Hosting a VoIP PBX and providing Local Services with carrier requirements is an expensive challenge.
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Conclusion• SIP trunking enables ISP to offer their customers
new applications with low risk and low investment.
• In-house technical skills and open source software offer an important cost advantage
• Start small and grow incrementally• Partner with Sales Channels selling VoIP Apps
– VoIP PBXs– VXML and IVR applications