Next Generation Switching Solutions Explored Brad Miller NexTone, Vice President of Business Development bmiller@nextone.com

Who is NexTone? NexTone provides Session Controller technology that enables carriers to control, route and manage real time IP traffic (Voice and Video) in a way that is secure, seamless and enabled for QoS

Softswitch Architecture SIP Softswitch Network Softswitch MG PSTN MG TDM MG TDM H.323 Network PSTN Orig/Term TDM Enterprise Architecture results in VoIP islands TDM is used to normalize traffic signaling and media: easy to implement, but cumbersome to operate and expensive Adequate voice centric solution How will Carriers implement future real time services?

Economics for NextGen Solutions Multi-switch TDM networks: Most calls typically traverse 4-6 TDM ports per call VoIP Tandem solutions: Offers a reduction to 2 ports 1 Ingress port and 1 egress port, plus call control VoIP Interconnects: Carrier may achieve less than 2 ports per call Ingress or Egress Media Gateway port, but not both where the call interconnects VoIP with a 3rd party customer or supplier Some calls stay all IP Maximize CAPEX reductions

Economic Comparison Scenario TDM Ports/Call Cost/TDM Port Cost/Call Savings TDM 4 $150 $600 Softswitch 2 $190 $380 37% Softswitch-SC 1 $240 60% SC-SC $100 83%

VoIP Obstacles to Overcome Using VoIP interconnects creates some challenges TDM is an implicit firewall and normalizes VoIP traffic. Security How do calls traverse existing firewalls and NATs? Interoperability How do calls go off-net? How can SIP applications be leveraged? What are the pain points?

VoIP Security Carriers concerns with VoIP peering Desire to hide network topology from partners Need to secure their voice infrastructure from traditional internet security threats Firewall implementations are a barrier to real-time services for the enterprise Security policies prevent promiscuous and ad hoc connectivity Lack protocol awareness for H.323 and SIP Firewall traversal needed to reach the corporate IP PBX IP Centrex requires Multiple NAT traversals to reach SOHO users

VoIP Incompatibilities Applications are SIP based while network infrastructure and IP PBXs continue to be H.323 dominated 90% of VoIP Networks are H.323 while 90% of VoIP Apps are SIP Prevents enterprises from leveraging SIP apps from Carriers Standards are subject to vendor interpretation Problem areas: message formats, message order, timing Other problem areas arise because of endpoint limitations Codec mismatch Mismatch of DTMF transport methods T.38 fax

Session Controllers to the Rescue AKA Border Controller or Session Border Controller Rapidly emerging networking technology that provides layer 5 routing and control to manage real-time traffic flows in IP networks Technology addresses issues of: Session routing Network security Call admission control Signaling interoperability Service quality

Session Controller Architecture ASP SIP Softswitch Network Core Session Controller ESC Softswitch PSTN Carrier Peering ESC Edge Session Controller ESC H.323 Network PSTN Orig/Term Broadband Enterprise Peering Broadband NAT Traversal

NextGen Evolution Session Controllers and softswitch technology are synergistic and must co-exist to bridge between the PSTN and emerging IP based networks The solution blueprint for all real-time services: Core Session Controllers for routing of sessions Softswitch and Edge Session Controller technologies at the edge for traffic adaptation VoIP carriers have rapidly adopted Session Controllers while TDM carriers are slowly migrating to VoIP technologies driven by cost containment strategies (e.g. limit or delay CAPEX for large TDM switches)

Session Controllers Core Session Controller (CSC): Deployed in the network core; used for signaling only Programmable route engine Centralized CDR collection Call Admission Control on a network basis Edge Session Controller (ESC): Deployed at the network edge to manage interconnects (both media and signaling) NAT and Media Routing for network security Signaling Interoperability and interworking (abstraction layer) Call Admission Control on a local basis Media processing for specialized applications such as transcoding

Session Controller Applications Carrier-Carrier Peering International Voice Wholesale Carrier-Enterprise Peering IP PBX Trunking bundled with long distance Broadband NAT Traversal Consumer based applications IP Centrex or Hosted PBX

Carrier Network Evolution Carrier Applications 4 Value Add Applications ASP 2 International Gateway Class 4 Class 5 ESC IP CSC IP ESC 1 Migration to Softswitch SS/MG 3 Enterprise Trunking Class 5 Enterprise VoIP Enterprise TDM Class 4

VoIP Peering Drivers Lowering the Cost of Interconnects Lower CAPEX and OPEX cost per interconnect Increased port capacity on existing gateways and switch ports VoIP-to-VoIP requires ZERO switch or MG ports Expand Service Reach with H.323 and SIP H.323 continues to be used for trunking applications SIP Interconnects are here and growing 3rd party SIP applications and devices (Calling Card, IP PBX/Centrex, 800, etc.) Extend network seamlessly towards other services Sell retail (enterprise) customers voice VPNs, Int’l LD, etc. Using the same platform

VoIP Proof Point #1: ITXC ITXC Carries Record Voice Call Volumes for Holidays “In past years, our carrier customers used ITXC to complete their subscribers’ calls because our VoIP technology allowed us to provide them high quality at low prices. Usually, the only VoIP involved was within our network. Now carriers also choose ITXC for interconnection because they themselves are deploying VoIP equipment in their own networks or even at their subscribers’ premises. Our technology allows these carriers to connect their VoIP networks to ours at much less cost than a legacy PSTN interconnect and with much greater flexibility.” said Tom Evslin, Chairman and CEO, ITXC Corporation. In the fourth quarter of 2003, over one third of ITXC's traffic was originated or terminated through a direct VoIP interconnect between ITXC.net® and the network of another carrier. ITXC has VoIP interconnects with over 140 carriers or service providers in 60 countries and supports VoIP traffic exchange with a wide variety of network equipment vendor platforms based on either Session Initiation Protocol (SIP) or H.323 call control protocol. Source: ITXC Press Release dated January 6, 2004 (www.itxc.com)

VoIP Proof Point #2 iBasis Posts Record VoIP Call Volume During New Year's Day “In addition to setting an overall record for traffic, we are experiencing a record volume of traffic that enters or exits the iBasis Network as IP traffic,” said Ofer Gneezy, president and CEO of iBasis. “Major carriers have been deploying VoIP infrastructure to support both retail services and direct VoIP carrier interconnects. At the same time, new service providers are delivering VoIP services directly to residential and business consumers. Both can realize significant cost efficiencies by establishing direct VoIP interconnections with our proven global VoIP infrastructure.” “More than 70% of iBasis traffic either originates or terminates through our direct VoIP interconnects with service providers. Direct VoIP interconnects require significantly less capital expense in the iBasis network than legacy TDM interconnects. In addition, we are enabling our customers to more fully benefit from the efficiencies of VoIP and the public Internet for global telecommunications.” Source: iBasis Press Release dated January 7, 2004 (www.ibasis.net)

NextGen Apps Carriers Deploying - Enterprise Services Hosted PBX CSC serves as a route engine between IP platforms and service based CAC TDM Termination SS7 Media GW PBX Tieline SS7 CSC Carrier Backbone IP PBX TDM ESC ESC performs local CAC, signaling adaptation (e.g. H.323/SIP), NAT and Media Firewalling Legacy PBX PBX Tieline

NextGen Switching Solution Summary Session Controllers and softswitch technology are synergistic and must co-exist to bridge between the PSTN and emerging IP based networks The economics of VoIP peering is driving adoption by IP based Carriers, such as ITXC and iBasis, while Carriers with large investments in TDM infrastructure must first “IP enable” their networks Session Controller architecture provides the foundation for value-added IP applications in addition to a more cost-effective way to implement basic voice services

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