What is Least Cost Routing?

EscalatorsLeast Cost Routing, or LCR, is a simple practice that finds the most inexpensive way to route phone calls. It is the process of analyzing, selecting and directing the path of outbound and inbound communications traffic, depending on which path delivers the best rates.


For example, if a telecom company in Ontario is looking for a calling path to Chicago, they will assess the calling rates for a selection of telecom companies operating in Chicago, and then choose the provider that offers the cheapest rate.


How Least Cost Routing Works

Any organization with interconnections to other networks has the opportunity to lower their telecom expense by selectively routing each call to the network that will complete the call at the lowest cost.  Least Cost Routing (LCR) of telephone calls is implemented by creating a routing table that matches telephone dial codes with a list of destination networks rank ordered by cost.  Routing tables can be created manually by skilled technician, but are more typically, created by specialized least cost routing software that automates the process of quickly building an optimized least cost routing table which may have tens of millions of routes.

Least Cost Routing Diagram 1

For decades, the common practice has been to export the least cost routing table directly to a telephone switch or Private Branch eXchange (PBX).  However, this technique suffers from two limitations.  First, telecom signaling platforms such as legacy Public Switched Telephone Network (PSTN) switches or next generation softswitches have limited memory and cannot accept routing tables with more than a few million routes.  Routing tables this size are too small for complete profit optimization.  Second, the export process to the switch can be slow.  The first priority for a telephone switch is real time call signaling, not importing a new routing table.  Exporting a large Least Cost Routing table to a switch can take hours when the switch is handling a heavy traffic load.  This time is much too long to for most operators who need to update routes quickly.

Least Cost Routing Diagram 2

Today, Next Generation Networks (NGN) use a different technique to provide dynamic least cost routing with tens of millions of routes.  This technique uses an external routing engine to provide real time, least cost routing instructions to one or more switches on a call by call basis.  Least cost routing software will push optimized routing tables to a routing engine rather than directly to the switch. These NGN routing engines are typically all software and run on conventional Linux based servers with sufficient Random Access Memory (RAM) to host tens of millions of routes in addition to a number portability database with hundreds of millions of numbers.  When a NGN switch receives a call, it sends a query to the external routing engine for routing instructions.  Excluding network delay, the routing response is typically returned in a few milliseconds or less.  The communication protocol between a telecom switch and an NGN external routing server is either the Session Initiation Protocol (SIP), Open Settlement Protocol (OSP) or E.164 NUmber Mapping (ENUM) protocol.  SIP and OSP are the most useful protocols since they can support many advanced routing features such as jurisdictional routing, trunk group routing and class of service routing.  The TransNexus OSPrey server was one of the first standards based routing engine for VoIP communications.

Least Cost Routing Diagram 3


TransNexus Products

NexOSS LogoNexOSS provides VoIP operators with an easy to use web interface for provisioning routes, rates, number translation rules and monitoring traffic analysis and billing reports.  View Product Details