Friday, March 5, 2010

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.”


Matt said...

Jim, Neustar tell me that there is now download option for the NPAC database. Based on your post that does not seem correct. Is there a specific product name for a complete download? They are trying to sell me a product called Pathfinder at a cost $5K a month.

Jim Dalton said...

NeuStar offers the NPAC for download as part of its SIP-IX product.

NeuStar also offers the Pathfinder service which is an international number portability database. Unlike the NPAC, the pathfinder international number portability database cannot be downloaded. It can only be queried using ENUM. I do not have any information on pricing.

Armil@home telephone companies said...

This is great! I am really appreciating this kind of post. I am also happy to read this one. Thanks!

Unknown said...

Jim I believe you were trying to simplify the concept of Location Routing Numbers which are used to route calls for ported numbers, and made essential by Number Portability. There is however some serious errors in you explanations of what a NPAC is. You have made an NPAC and the LRN database one and the same. I can understadn if your understanding of Signalling System 7 or SS7 is as lacking as most SIP people, and will try to explain it in a fashion that shows the separation of the administration of the master copy from the many local copies, and the subsequent queries going to the local copies. The NPAC or Number Portability Administration Center can only exist as a single enitity as it is the master copy that pushes updates to all the local copies which can be hosted by the numerous local and competitive local operating companies or CLEC's. The call processing in the local orginating office must first know that at elast one number in a 6 digit range such as 214-742 has been ported, and it can no longer route all calls to that 6 digit range on the first 6 digits only as has been the case in the past, and at this point the regular ISDN User Part or ISUP protocol needs some additional help from an external database which is usually centrally located at an operating company, and no longer resides inside the local switch. The Transaction Capability Application Part or TCAP protocol is used to get the 10 digit LRN for that 10 digit number ported number, and then substitues that number and then makes the local routing decision based upon the LRN number which is a unique number assigned every switching system and part of the NPA NNX assigned in the LERG.

If the master database is no longer where the updates originate from then you will have chaos. I therefore say again that your definition of NPAC is too inclusive and by saying many companies host their own NPAC you are incorrect as they merely hosting a mirrored copy, and all updates will need to be done at the master copy level so again I caution lumping the administration and the actual database together as if they were one function because they are too different.

Nicholas Blasgen said...

LERG is still very important in VoIP, and gaining more importance even. LNP is more important, but not at the expense of LERG. LNP tells us what rate center is handling the calls so that we can properly route VoIP calls to the best provider for that rate center. But LERG tells us who controls that rate center for additional insight not related to only cost. Most recently it's become very important in knowing if the rate center is a mobile provider or not as some organizations are required to block calls to mobile numbers on some routes.