What is Least Cost Routing?
Least 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.
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.
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 Challenges
Not too long ago, optimizing least cost routing was a relatively straight-forward exercise that could be managed part time by an industrious billing or switch technician. This is no longer the case.
Routing Table Size
Seven digit routing based on 1000 block partitions is more complicated than routing on six digit NPA-NXX blocks. In the Local Exchange Routing Guide (LERG) there are 166,431 six digit NPA-NXX dial codes. In contrast, there are 644,327 dial codes when routing based on seven digit one thousand blocks.
In telephone routing tables, a dial code matched with a destination (IP address or trunk group) is called a translation. Most least cost routing tables have an average of three destinations per dial code. This means that a basic optimized least cost routing tables for domestic US routing can have more than one and half million translations. Some TransNexus customers have 50 million translations in their routing table.
For a service provider to optimize their least cost routing, they must have two routing tables, one for intra-state calls and a second for inter-state call. Jurisdictional routing is determined by the ANI (Automatic Number Identification), or telephone number, of the calling party. With VoIP calls, it is common for the ANI to be an invalid value,which are rated at the higher intra-state rate if they are completed. In addition, most major carriers will block calls that do not have a valid ANI. However, some service providers will accept calls with an invalid ANI so this creates an optimization for a third least cost routing table. One for inter-state, one for intra-state and a third for calls with invalid ANIs.
Deciphering Rates by LATA, OCN and Tier
Least cost routing is concerned with analyzing dial codes and the rates carriers charge to complete calls to those dial codes. Unfortunately, most carriers to not quote rates for US termination by dial code. Instead they quotes rate in terms of OCN, LATA and Tier.
Technicians must normalize carrier rates from OCN, LATA and Tier to E.164 dial codes. Carriers often have six to eight rate tiers per LATA. Tiers are not standard and every carrier’s tier structure is different. Manually normalizing carrier rates using the LERG is too big a task for even the most industrious technician.
Number Portability Correction
Today there are 197 million ported telephone numbers in North America. TransNexus customers report that 40% of their calls are to ported telephone numbers. This development has a dramatic impact on least cost routing. If least cost routing is based on the dialed telephone number, up to 40% of all calls will not be routed to the lowest cost provider.
Optimized least cost routing requires software that can handle the complications of today’s VoIP industry. With TransNexus solutions, you can easily copy and paste rate provisioning from carrier rate plans, Support up to 100,000,000 different VoIP routes, base LCR tables on inter-state rates, intra-state rates and customized local calling areas, and convert rate plans based on LATAs, OCNs and Tiers into a routing table and rate plans based on NPA-NXX-X breakouts.