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Interconnection: a practical guide Gregory Massel greg@switchtel. co. za 3 September 2009 Interconnection: a practical guide Gregory Massel [email protected] co. za 3 September 2009

Target Audience » All providers of telephone network services » Next Generation Network Operators 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

Overview » Objectives » Practical Solutions » Reality check » Questions » Barriers to Overview » Objectives » Practical Solutions » Reality check » Questions » Barriers to entry » Considerations » Practical » Financial » Technical

Objectives » Bidirectional call traffic to/from the global PSTN » Fair and competitive rates 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 3 rd parties

Reality Check » 087 numbers allocated to ~111 i-ECS operators (Source: ICASA, Aug 2009) 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 other via transit » Interconnection regulations still pending (> 2 Years since 1 st draft. 3 rd Draft dilutes protections. )

Barriers to Entry » Cost » Time Frames » Volume obligations » Negotiation & Barriers to Entry » Cost » Time Frames » Volume obligations » Negotiation & signing » Security deposits » Regulatory compliance » Equipment » Lodging agreements » POILs » Lodging tariffs » » Routing, change control, testing » Transit and 3 rd parties » Unwillingness to interconnect International » Anti-competitive attitude » Difficulty securing meetings, follow-up, contracts » Unnecessary delays » Transit may be discretionary ? » Disproportionate terms » Conflict over transit costs » Unfair constraints » No simple inbound transit

Financial Considerations » Rates » » » Origination » Billing and settlement Termination » Financial Considerations » Rates » » » Origination » Billing and settlement Termination » » Billing cycle » Payment terms » » Net offset » Volume Commitments » Credit Risk » Guarantees and security » Currency exposure » Arbitrage Transit » Cash flow » Systems for invoicing Foreign currency Reconciliation » Accurate time » Flexible reporting Source & Destination Changes and re-rating » »

Technical Considerations » Interconnect Type » » Vo. IP (SIP) Routing » Number portability Technical Considerations » Interconnect Type » » Vo. IP (SIP) Routing » Number portability » » Transit & Failover » » Codecs used / supported Fax (T. 38 support) » New number ranges TDM (SS 7) » » Equipment & Interoperability SPC Scalability POILS » E 1 (TDM) » Common POI (e. g. JINX) International » Caller ID » Fax » Roaming » New number prefixes ATM / Ethernet (Vo. IP) » » » Number pooling » Delay / Latency » Testing

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

Practical Solutions: Interconnection Seekers » Negotiate transit arrangements » Avoid foreign carriers until volumes Practical Solutions: Interconnection Seekers » Negotiate transit arrangements » Avoid foreign carriers until volumes high » » » take into account forex costs, complications and risks » » 1 st Interconnect partner should transit outbound to everywhere Ensure major operators are willing to route to your numbers via that party; do not assume! » Try secure local and international on the same local agreement in ZAR Consider newer entrants and ISPA members; they are likely to be more flexible, particularly with credit, volume requirements and Vo. IP 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 » 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, Vo. IP services

Questions Gregory Massel greg@switchtel. co. za 3 September 2009 Questions Gregory Massel [email protected] co. za 3 September 2009