The LERG Is Becoming Obsolete
The LERG, or Local Exchange Routing Guide, has been the routing table for the North American telephone companies for decades. But two forces are driving the LERG toward irrelevance. First, growing numbers of subscribers are porting their landline telephone numbers to cable and wireless services providers. Second, technology and cost trends indicate that the North American number portability database will be widely available as a routing resource for enterprise and VoIP service providers.
Number portability has been an issue for telephone companies since it was mandated by the FCC in 1996. Now number portability is becoming a serious issue for enterprises and VoIP service providers as the percentage of calls to ported numbers is approaching parity with calls to un-ported number. Our customers tell us that approximately 40% of their VoIP calls to ported numbers.
Virtually all enterprises and most retail VoIP service providers route calls based on the dialed telephone number. This is a problem when the called party has ported their number to different carrier. Routing the call to the dialed number directs the call toward the carrier that owns the number, not the carrier that serves the subscriber. The call will be completed, but the enterprise or service provider originating the call will get a surprise when the termination cost is greater than expected. The reason is because most long distance providers charge for wholesale termination based on the final carrier, not the dialed telephone number.
In almost every case, call termination charges based on the dialed number are different from termination charges based on the carrier serving the ported number. The result is that long distance invoices never match what customers expect, and usually the bill is significantly larger than expected. This issue is amplified by wholesale rate plans that include a high termination fees for calls to terminating carriers not explicitly included in the rate deck. Calls to ported number may unexpectedly be routed to carriers not included on a rate deck and charged at rates as high as five cents per minute or more.
The experience of our customers indicate the rate differences between dialed and ported numbers can increase termination costs by at least 15% and the problem will only get worse as more people port their numbers. If you want to manage your costs, you have to route based on the LRN. The LRN, or Location Routing Number, looks like a telephone number, but is a special routing number that links a dialed telephone number that has been ported to its new carrier.
The FCC mandated the creation of the Number Portability Administration Center, or NPAC, to manage the database of ported numbers in the U.S. In simple terms, the NPAC is a list of 300 million ported telephone numbers and their corresponding LRN. For every call, telephone carriers query the NPAC with the dialed telephone and receive the corresponding LRN needed for call routing.
Originally access to the NPAC was expensive and limited to only telephone companies. Now, however, subscription to NPAC is affordable for enterprises and VoIP service providers who need number portability correction. Companies such as NeuStar offer the complete NPAC available for download. Enterprises and VoIP service provides can now host the NPAC database locally in their network and correctly route calls based on the LRN just like phone companies.
Ten years ago, the specialized hardware needed to host the NPAC with a telephone switch cost one million dollars. Four years ago the cost of an ENUM network appliance to host the NPAC had fallen to one hundred thousand dollars. Now TransNexus is offering a SIP based Linux based software package that reduces the cost of hosting the NPAC by another order of magnitude.
We forecast that in five years, virtually all enterprise call centers and VoIP service providers will host the NPAC in their operation. Barry Augustinsky, CEO of SipGully, a growing SIP service provider says “SIP technology changes everything in telecom. We have a lower cost structure than our competitors because we are on the front of a dramatically falling cost curve. The TransNexus server is a great example, now anybody can afford to host their own number portability database.”