1 VoIP Peering and Federations - the New Paradigm Session 2: Innovation Dynamics in the Telecommunication/ICT Sector Eli Katz Founder & CEO, XConnect Co-Founder and Chairman, Internet Telephony Service Provider Association (ITSPA) ITU : Future of Voice; Jan 2007

2 Consumer VoBB Transition Underway IP Communications Service Provider MSOs (UPC-Liberty, CableVision) Telcos (AT&T, Sprint, BT, FT) ISPs (Earthlink); MNOs (T-Mobile) New Entrants (Vonage, SunRocket) PC (Skype, MSN, Yahoo) Q million 1 st /2 nd line users 100+ million PC-based IM users, % using VoIP Over 900 VSPs in 40+ countries <1% - 10% market penetration million line replacement users 200+ million PC-based VoIP users 70+ million dual-mode handsets supporting VoIP 1000s of VSPs in 90+ Countries C. 35% penetration “It was the industry’s bread and butter for over a century. But the end is now in sight for traditional telephone service, which will soon be overtaken by VoIP calls in terms of usage, and displaced by broadband internet access as the core revenue- earning service offered over fixed line by telecoms firms. And if the traditional telephone is not quite dead yet, its business model certainly is: metered telephone alls whose cost depends on the length of the call and the distance covered are becoming an anachronism.” The Economist, Oct

3 Lost on the IP Islands ? MSO VoIP provider 1 VoBB Provider 2 NGN / IMS Enterprise VoBB Provider 1 Enterprise X

4 REQUIRES END TO END IP – IP TODAY “IP on-net” calls – within a single VoIP network (Island) How do we Connect the Islands ? Inevitability of VoIP Peering Advanced IP Services & Features Video Presence, Instant Messaging Conference/N-way Calling Wideband audio-codecs Push-to-talk, Push-to-show Fixed-Mobile Convergence Enhanced Security End-to-end encryption

5 Interconnection :- SMS Case Study Lessons – Interconnection of networks to support new services is inevitable – But that doesn’t stop large operators being short-sighted. – It’s early for many Tier 1 operators, but not all… SMS/person/ annum In-NetworkCross- Network Change-Year UK3400 (2000)1998 USA4300 (2004)2003

6 VoIP Peering: On-Net to the World Cost Reduction Disintermediate the PSTN & associated costs Revenue Generation – new IP Services Enable Mass Market adoption of new IP Services Video, Wideband, IM/Presence, Encryption

7 Building Blocks of Peering Discovery / Location (ENUM Registry) Signalling Interoperability Policy, Trust & Security Physical Transport Which calls terminate to another VSP, and where should they be routed? Standard IP Peering / Connectivity - Public, Private, Ethernet How can signalling interoperability be ensured with different protocols, variants & implementations? Who should calls be received from & on what basis? How to protect subscribers from abuse (SPIT, vishing)? NAT traversal and codec incompatibility Media Handling Commercial Based on policy and traffic profiles, should calls be settlement-based or settlement-free (Bill & Keep)? VoIP Peering is more than IP Peering

8 ENUM 2.0 – Bridge from PSTN# to IP ENUM 1.0 User/Public ENUM ( Limited Market Acceptance ) ENUM 2.0 Private / Operator ENUM ( Internal ) Carrier ENUM ( Bi-Lateral Exchange ) Federation ENUM ( Multi-Lateral Exchange ) Infrastructure ENUM ( Non-Standard & Interim ) Included in all NGN Standards CableLabs, 3GPP, IMS, Speermint

9 How to Peer: Bilateral or Federated Bilateral VoIP Peering For small # of direct Interconnects Non-scalable due to Trust, Signalling, Security, Commercial concerns IP Paradigm : Federation Model Scalable Direct Interconnection Neutral, Trusted Provider for ENUM Registry, Security, Identity, Policy Signalling Interoperability New Commercial Paradigms

10 A Neutral, Trusted Federation Provider Protects Sensitive Data Eliminate need for open sharing of subscriber data between peers Guard security of sensitive data Resolves the N 2 Interoperability Problem A single interoperability test to access to hundreds of peers Insulate VSP from changes made by peers Ensure highest level of feature-preservation on all calls Ensures Security Protect VSP and its subscribers from SPIT, vishing or other threats Management of the settlement-free relationship to avoid abuse Simplifies Contractual Issues A single contract Avoid billing and reconciliation nightmare Gives VSP Control Ability to set peering policies

11 Federations – Industry Perspective Key Findings from Heavy Reading’s 8/13/06 report "VOIP Peering & the Future of Telecom Network Interconnection" “A federated peering model will emerge as natural trading partners come together in peering communities or federations…” “We expect the industry to emerge… in a federated peering model with ENUM directories to support the community.” IETF (The Internet Standards Body) WG on SIP Peering “SPEERMINT Terminology” 8/11/06 “a federation is a group of Service Providers which agree: To receive calls from each other via SIP On a set of administrative rules for such calls (settlement, abuse- handling,...), and On specific rules for the technical details of the interconnection.” GSM Operators Association (GSMA) Development of “IPX”, a federation for interconnection and exchange of IP Communication services between IP Operators.

12 Federations - A Tier One Perspective Recent conclusions of internal review by a world leading Service Provider We must launch new services, e.g. video We cannot launch services successfully if only available in-network Scalable Cross-network Interconnection can only be multi-laterally (federation) We must involve mobile (3G) operators in addition to other large fixed operators

13 Federation & ENUM Activity MMS Routing in USA Neustar, Verisign Global VoIP Peering & ENUM Registry Providers XConnect, Telcordia, Neustar, Verisign, Arbinet National Peering Netherlands JCC ( October 2005) – full MSO Peering CableLabs RFI ( October 2006 ) Multiple In-Country & Private Federations emerging GSMA IPX & ENUM (in all its 9 flavours) National Local Number Portability - LNP Changes in international markets - e.g UK

14 Federation System Architecture

15 XConnect – Background Info World’s leading neutral provider of VoIP Peering & Federation services History Established in 2005, a pioneer in the federated Enum & Peering services 400 IP Communication SPs in >35 Countries, 180 Million TNs in Registry Awarded world’s 1 st (& Only) National VoIP Peering contract Market Consolidator - IPeerX Inc. (USA) and e164.info (Europe) Industry Strengths ENUM Registries, Signalling Inter-op, Private & Global Federations IPR on ENUM Privacy & SPIT protection Advisory Board includes leaders in IETF ENUM & SIP WGs. Awards 2006 Frost & Sullivan Award for VoIP Peering Services

16 ITU : Future of Voice, Jan 2007 Eli Katz Founder & CEO, XConnect Co-Founder and Chairman, Internet Telephony Service Provider Association (ITSPA)