Channel Partners

June 1, 2001

14 Min Read
Softswitch Evolution

Posted: 06/2001

Softswitch Evolution
It Took a While, but Softswitches are Making

Their Mark on Local Service
By Charlotte Wolter

After a long gestation period of hype and refinement, softswitches finally are coming into commercial play in support of a handful of carrier rollouts of local services.

If the initial experiences of these service providers are any indication, this could be the beginning of something big. The technology reduces service costs and enables the integration of compelling new features and data services into the service package.

But there’s still a long way to go before the value proposition is confirmed, starting with the ability of these initial users to demonstrate that it can scale as they move from thousands to tens or even hundreds of thousands of customers.

Softswitch and related packet voice technology, some in pure IP mode and some in cell-based ATM, “is enabling a lot of new players to enter the market, because they don’t have to build a whole network and wait for customers,” says Laurie Gooding, a senior analyst for Pioneer Consulting LLC ( “They can target a specific segment and package services that are specific to that segment.”

For the end user, she adds, “It means more choices in what services are available; in whom they buy from and how much they pay. Many small businesses have not had a real choice in services and no selection of providers, and that is still more often the case than not.”

Softswitches have evolved rapidly from their starting points as tandem switch replacements with trunking ports for switching packet-based long-distance traffic to where, today, they include the line-side Class 5 switch features, such as 911, call forwarding and call waiting, that make them viable replacements to Class 5 circuit switches. Carriers that use IP gateway interfaces with PSTNs in low-cost backhaul transport of VoIP links now can create local PoPs equipped with softswitches, thereby supporting entry into local voice by ISPs and resellers who traditionally have not offered local voice services.

“We are thinking we would provide (IP-based SPs) an access medium so they can access our long-distance services and get into the voice business,” says John Chapman, senior director of product development for IP voice services at Global Crossing Ltd. ( “We say, ‘Don’t spend your capital figuring out trunking gateways and softswitches and how to connect to an SS7 network. We will build a suite of services around you.'”

The softswitch permits creation of a distributed switching network that provides support for Class-4 and -5 switching functionality on a pay-as-you-go basis that allows service providers to start at minimal levels of investment. The distributed network is a “great model if you can scale it,” Chapman says.

If softswitch technology lowers the costs of entry, it doesn’t necessarily lower the complexity. In fact, it requires new skills beyond what traditional carriers have needed, notes Deb Mielke, president of Treillage Network Strategies Inc. (

The customer side is challenging insofar as it requires getting people used to using customer premises equipment as gateways to the network.

Gooding points to the history of Centrex as a lesson in how daunting the notion of CPE as the network gateway can be. “It

wasn’t technically flexible enough to be employed consistently on a broad scale,” she says. “That is one of the things that held it back, and the pricing models weren’t no-brainers. However, this is like the next phase of what used to be called central office-based services, though now we could call them PoP-based services.”

These services cut costs and add innovative features; they also provide a one-stop source of telecommunications services for businesses, simplifying ordering and provisioning.

Two of the new packet-based voice service rollouts are based on ATM rather than pure IP networks, though all have left the door open to IP once QoS performance is assured. “We believe, obviously, that IP will ultimately rule, because it is the Internet and you can ship it off to other networks more easily,” says Kevin Schoen, CEO of (, a provider of converged services over DSL that is using an ATM softswitch supplied by Convergent Networks Inc. ( “At some point, Convergent and others will have an IP blade (for their softswitch) so it can take calls in ATM and translate to IP.”

Success is far from assured for the ventures taking the plunge into packet telephony. One pioneer that has struggled is 2nd Century Communications Inc. (, which was one of the first to roll out the new model of a softswitch-based PoP with converged services all on a packet network.

2nd Century uses an ATM network with call control by TeraBridge Technologies’ ( Pathminder Media Gateway Controller, media gateways from Alcatel ( and system integration by Siemens Carrier Networks LLC ( VINA Technologies Inc. ( was first among a number of IAD vendors.

However, 2nd Century experienced management turmoil and revised its business plan several times. The company also paid the price for being first to market with new technology.

Nevertheless, 2nd Century celebrated its first anniversary Feb. 1, and has attracted $155 million so far, including investments by Microsoft Corp. (, Dell Computer Corp. ( and Intel Corp. (

Bandwidth Power

The experience of CTC Communications Group Inc. ( in establishing a converged phone and data service for enterprises could make the established CLEC the poster child for next-generation networking. CTC set out more than a year ago to deploy a converged service that would offer local voice, long distance and data services completely over a packet network, including switching of local voice.

The company’s approach was determined by its traditional customer base–medium-sized to large businesses. To make sure it could maintain QoS, the network is voice over ATM, not purely IP, using the softswitch by Telcordia Technologies Inc. (, and core and edge devices by Cisco Systems Inc. ( IADs by Accelerated Networks Inc. ( and Cisco will be placed at customer locations. CTC will own and operate the IADs, managing them remotely from its NOC. The IADs will be connected to the routers for the customer’s LAN and to the existing PBX. IP phones running on the LAN are also an option.

Mielke says, “For now, an ATM IAD is probably one of the best solutions, but it doesn’t scale well, because you have to manage all those IADs, and that’s not as scalable long term.”

The deployment had to be configured on a LATA-by-LATA basis. “Mainly, we have to interconnect with the local ILEC, and we have to do that at a tandem, actually all their tandems, within the LATA,” says David Mahan, executive vice president of strategic planning and marketing for CTC. “We have to obtain, for number portability, telephone numbers for all the exchanges and then interconnect with them. We also have to be SS7 certified, and operator

services-certified, including 411 and emergency 911-certified.

Mahan says “Some of these certifications, especially e-911, took time, not because the system couldn’t do it, but it has to default to operator services if something is wrong with the E911 board. It took us about a week to get that one. We interconnect with Verizon [Communications Inc.,] in western Massachusetts, and some of their tandem cross-connects were incorrect.”

The company placed the first call on the new network Dec. 14, but still has to evaluate the software performance systematically and make changes.

CTC’s service packages will be based largely on raw bandwidth, Mahan says, in increments of 1.5mbps, to 3mbps, 5mbps and beyond. The company will look at each customer’s bandwidth requirements, including local and long-distance voice, and determine how much will be needed.

Mahan says. “Once you have a single network with broadband capacity, it doesn’t matter what the customer puts on it, because it is one network, one access. Everything is in packets, and you just direct them.”

CTC estimates that customers will see a 20 to 30 percent reduction in costs from current communication expenses.

“They will do well because they are in a small market,” says Mielke. “And they can afford to lavish attention on customers because they are not Verizon and they can cherry-pick the best of the medium [-sized] business owners who are willing to pay for quality. The 20 percent reduction in phone costs seems legitimate.”

Going Small

Some still choose to brave the DSL waters to reach a customer base of small businesses and consumers., a successful IT systems integrator for small business in East Lansing, Mich., has launched a VoDSL service using the Convergent Networks’ Cohesion softswitch.

The company will reach its customers through its own DSL connections and DSL lines of wholesale DSL providers, such as @Link Networks Inc.
( and New Path Holdings Inc. (

By going with softswitch architecture, reduced up-front infrastructure costs, says Schoen: “It eliminates the necessity for GR-303 and Class 5 switching.” Also, “The way ATM is built, we can oversubscribe the network and still get great voice quality.”

Schoen admits that “Doing hundreds of thousands of voice customers at once with VoDSL is somewhat experimental.”

His deployments are small for now, with just 1,000 paying customers in new subdivisions, and will remain so while refines the services and the infrastructure. The company plans to open up to general availability in June or July. will use VINA IADs for consumer and business deployments. The lower-cost VINA Woodwind product, with four to eight voice ports, will be used for residential customers, while VINA-brand products with 10-20 ports will be used for business. will sell service packages rather than bandwidth. A typical package is two phone lines and unlimited local phone, plus discounted regional and national long distance, plus a DSL modem and up to three dynamic IP addresses for $90 to $100 per month. Business packages are being developed, but they will be in the range of four lines plus 256kbps for data for $180 to $200, then possibly going to 768kbps for $300 to $350, and then eight line packages on top of that.

In support of the regional long distance, also is building its own fiber network because of the relative lack of fiber resources in central Michigan.

Schoen feels many DSL providers are losing money because they have underpriced their services. “I think residential DSL will be in the $50 to $60 range, though it has been $40 or $50 in the past.”

Although it has been a truism that

service providers will make money offering enhanced services, will move cautiously in that direction, Schoen says. “The more services you add to your service mix, that’s not a bad thing. But for each service, you have a certain amount of capital expense in software and management. What we think is, let’s get the basics running really well, then start to layer those services on, which gives us a reason to go back to the customer and sell more. So we keep the model simple and do what we do really well. Lots are not doing that, and they’re not making money.”

Although will delay enhanced services, the company has some ideas about the kinds of features it would like to offer when Convergent adds applications or IP networking capability.

Moving Upscale

USA Datanet Inc. ( is a provider of dial-up, low-cost long distance and voice applications that has decided to move its services up a notch to address business customers and eventually consumers via broadband connections. Known for its interactive voice response (IVR) applications that can recognize the voices of regular callers, the company now serves about 100,000 residential customers in the Northeast, from New Hampshire to Virginia, and as far west as Pennsylvania.

Frank Caruso, founder, chairman of the board and president of USA Datanet, says, “What we are working on this year is to enable a commercial customer that has a broadband connection and an IAD installed. With IADs in place, they could have a voice network–using PBX or VoIP phone–with access to the network on an IP-to-IP basis. Commercial customers could use it just by pointing their router to our router. We think [this] would make our products much more accessible to the commercial world.”

The company is “in circuit-to-IP conversion,” Caruso says, and has purchased a Sonus Networks Inc. ( softswitch. The company felt that it could go with a Class 4-oriented softswitch because it already has a suite of voice applications that it created itself. “We use the Sonus as an operating system,” Caruso says.

To support applications, USA Datanet is working with Pactolus, which has a SIP application and media server and works closely with Sonus. It also has purchased the Philips Electronics N.V. ( EVAD (electronic voice-activated dialing) system. The company is evaluating IADs for business and residential customers, but has not yet made any choices.

USA Datanet has been testing a number of voice applications in recent months. Caruso says voice-activated dialing was a major hit. Another strong area has been applications that aid business communications, such as converged fax and voice, but information content “got a lukewarm reception. People [are] more interested in getting business done and getting phone calls made,” Caruso says.

USA Datanet is moving deliberately into packet services for consumers because the installed base of broadband connections is still a small percentage of the population. The company has limited itself to dial-up because, “The demand is there, but the method of access has not been there,” Caruso says. “Now it is picking up steam, because we are seeing the local-loop problem getting rectified.”

Business has a greater ability to access networks and may be an earlier focus for broadband packet services, he says.

In preparation for offering converged services over broadband, USA Datanet has introduced a low-cost international calling plan for businesses, which tend to make shorter calls, at 10 cents per minute and no call more than $3.99.

The company also is preparing a broad package of business applications, starting with what it calls “virtual PBX,” a kind of IP Centrex. There also will be a find-me/follow-me type of service and links from calling lists to speed dialing. Two vendors are under consideration, including Sylantro Systems Corp. (www.sylantro.
com). Sylantro is a good choice, Mielke says, because “they are really smart, and they understand users and how to make applications attractive, and their stuff is hot.”

USA Datanet also is looking at part-nerships to grow its footprint beyond

the Northeast.

The Wholesale Channel

Next-generation service provider
bConvergent Inc. ( is offering converged voice, data and fax services that are being sold by CLECs, regional cable companies and ISPs to end users, usually small and medium-sized businesses. “The vast majority of our sales are to resellers,” says Joe Paiva, CEO of bConvergent. “Some of them are resellers who have their own networks and facilities, and some use our network.” The company will do little in the way of direct sales to avoid channel conflicts, but will take

on an occasional large customer, such as office furniture maker Haworth Furniture (

The resellers develop their own packages and prices from basic bConvergent products. A typical package, Paiva says, would be “$500 a month for 500kbps of data and a 500kps VPN plus three ports unlimited local calling and long distance. Generally, they offer reduced long distance with unlimited local calling, or reduced long distance with unlimited local calls and a data VPN.”

The company has three products: the bLine, aimed at small offices, which offers unlimited long distance, plus data and fax; the V3PN, which includes local and long-

distance telephone, as well as VPN; and the bVirtual PBX, which replaces an on-site PBX serving up to 100 telephones.

These products are supported by

software and applications and, in certain cases, hardware created by bConvergent. The company will use Cisco routers/gateways as CPE, configured with bConvergent’s software. The company does not use a softswitch now, but it has tested and confirmed interoperability of its routers with the Salix softswitch, a Tellabs Inc. ( product. That situation, understandably, could change if bConvergent is a Cisco-powered network, as that company now has softswitch technology with its acquisition of IPCell.

bConvergent has been bucking conventional wisdom by developing its own IP phones and even its own gateways, using cards by Brooktrout Technology Inc. ( However, at press time, the company was hoping to fall into the friendly arms of Cisco and a Cisco-powered network. The phones the company developed were based on H.323, but Paiva says the company will migrate the phones to SIP when the technology is more mature.

IP phones enable the company to provide much of its service using only routers. Where calls are terminated to the public network, bConvergent is now interconnecting to the ILEC’s Class 5 switch at its collocation sites. In the future, as its customer base grows, Paiva says, bConvergent will activate a softswitch. “But we don’t want to buy switches. Why should we?” Paiva asks. “The basic premise of the company is to eliminate hardware. It makes sense not to have switches if they are not needed and to do as much as we can with software.” Also, he says, “Today there are enough smarts in gateways.”

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