Franklin D. .Ohrtman, Jr.
`
`Softswitch
`Architecture for VoIP
`
`San Juan Seoul Singapore Sydney Toronto
`
`McGraw-Hill
`
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`London Madrid Mexico City Milan New Delhi
`
`AT&T Exhibit 1025
`AT&T v. VoIP, IPR 2017-01382
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`AT&T Exhibit 1025
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`Chapter 11
`
`Softswitch Architecture
`
`Components
`
`Signaling Gateway H
`SGCP
`
`a 238
`
`m m M m
`Figure I 1-5
`The components of
`softswitch are
`distributed.
`
`m m m m
`
`Figure I 1-6
`A distributed
`architecture enables
`
`the dispersal of
`sowaitch solution
`
`components that
`can lower real estate
`costs.
`
`
`
`In its April 10, 1998 Report to Congress, the FCC determined that phone—
`to-phone IP telephony is an enhanced service and is not a telecommunica-
`tions service. The important distinction here is that telecommunications
`service providers are liable for access charges to local service providers both
`at the originating and terminating ends of a long-distance call. A telecom—
`munications service provider must also pay into the Universal Service
`
`Media Gateway Controller Denver
`with mirror site in Seattle
`
`SS7 Gateway
`Chicago
`
`Media Gateway
`Washington, D.C.
`
`Application Server
`Los Angeles
`
`Media Gateway
`Dailas
`
`Economic and Regulatory Issues
`Concerning Softswitch
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`-: uftswitch Economics
`
`‘ 2 3 9
`
`Fund. Long-distance providers using VoIP (and by inference, softSWitch)
`avoid paying access and Universal Service fees. Given thin margins on
`domestic long distance, this poses a significant advantage for phone-to—
`phone IP telephony service pr0viders.13
`The possibility that the FCC may rule difi'erently in the future cannot be
`discounted. Having to pay access fees to local carriers to originate and ter-
`minate a call coupled with having to pay into the Universal Service Fund
`would pose a significant financial risk to the business plan of a softswitch-
`equipped, VoIP, long—distance service provider. Just as international long-
`distance bypass previders used Vol}3 to bypass international accounting
`rates and make themselves more competitive than circuit-switched carti—
`ers, softswitch—equipped VoIP carriers can make themselves more competi-
`tive in the domestic market by bypassing access charges and avoiding
`paying into the Universal Service Fund. The service provision model set
`forth in this chapter is strongly affected by the possibility of the FCC re—
`versing itself on phone-to-phone IP telephony.
`Access fees in North American markets run from about $.01 per minute
`for origination and termination fees to upwards of $.05 per minute in some
`rural areas. That is, a call originating in Chicago, for example, would gen-
`erate an origination fee of $.01 per minute. If the call terminated in Plen—
`tywood, Montana, it may generate a $.05 per minute termination fee. This
`call would generate a total of $.06 per minute in access fees. If the carrier
`can only charge $.10 per minute, it will reap only $.04 per minute for this
`call after paying access fees to the generating and terminating local phone
`service providers.
`Table 11-4 illustrates the impact on profits and losses for a long-distance
`service provider that must pay access fees. The impact of the access fees on
`the net present value ofVoIP carriers who are exempt from access fees and
`non-VoIP carriers is addressed later in this chapter where a service
`
`provider generates 25 percent more revenue by virtue of not paying access
`fees to other carriers. It is possible that the FCC at some point could reverse
`this ruling and make VoIP carriers pay access fees.
`
`Net Present Value of Softswitch
`
`13“lii‘ederal Communications Commission Report to Congress,” April 10, 1998, paragraphs 88—93.
`
`The net present value is an engineering economics term for determining
`when the benefit of investing in a new technology outweighs the cost of
`
`
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