Interconnection for Wireless Providers

Watch out for your interests in achieving interconnection parity.

Today when a wireless-service provider obtains interconnection to the public network, it's obtained from an RBOC (incumbent LEC or ILEC), a CLEC or an independent telephone company (ICO). Interconnection is still a large expense for most providers, even though the cost-per-minute rates charged by the landline telcos have trended downward in the last four years. It's important for wireless providers to ensure that they're always implementing the best type of interconnection throughout their markets. Additionally, it's wise to employ a small staff of billing analysts who can decipher the interconnection bills to determine if incorrect rates are being charged. In most instances, the billing analysts can pay for their own salaries many times over by catching costly mistakes on interconnection billing.

As the RBOCs are the dominant providers in their states, they are more heavily regulated than the independent telephone companies. This is due to the unwritten mandate of ensuring that there is a level playing field in terms of the competitive landscape between CLECs, independent telcos and the RBOCs.

The technical reference for wireless interconnection to the public-switched telephone network (PSTN) is found in Telcordia General Reference 000-145. This document contains the technical definitions associated with interconnection between wireless- and landline-service providers.

Elements of Interconnection
Three basic elements of wireless interconnection to the PSTN are transport via transmission systems (DS-1, DS-3, OC-n), trunks and telephone numbers. Each DS-0 acts as a trunk in this context. Telephone numbers are allocated to wireless providers, just as with telcos, through NeuStar, the North American Numbering Plan Administrator (NANPA).

Calls originating from a landline telephone to a wireless subscriber must be routed through the telco CO where the wireless provider's interconnection was originally obtained. These calls are then routed from the telco CO to the wireless-service provider's MSC over the actual interconnection links.

Switching of wireless calls takes place at the MSC. Wireless interconnections to the PSTN can occur from either a cell-site location or an MSC location. If a desired interconnection can be accomplished from a cell site that is closer to a telco point of presence (PoP) than the MSC, it makes more sense from a cost perspective to place the interconnection into the cell site. The interconnection traffic then is backhauled to the MSC for switching.

Several types of interconnection are available to wireless-service providers. Each has its own functional characteristics. The underlying principle is to obtain the largest available geographic footprint at each point of interconnection for the lowest cost-per-minute across that footprint.

Interconnection Types
A Type 2A interconnection consists of a trunk group between a wireless-service provider's cell or MSC to a telco tandem, known as a Class 4 CO. Tandems serve as hubbing centers for two or more end offices in a local access and transport area (LATA). An end office also is known as a CO or a Class 5 CO. An example of an end office is the type of CO that offers regular home or business dial tone. The end office is the lowest link in the chain of switching systems that comprise the PSTN.

Tandems exist in the PSTN hierarchy because it's not always practical or cost effective for a LEC to link every end office in a given LATA to every other end office within a LATA. In some instances, the local calling area for Type 2A interconnections is the entire LATA. Service providers obtain an entire exchange code when procuring a Type 2A interconnection to the PSTN through the NANPA. Type 2A interconnection represents the procurement of interconnection at a wholesale rate.

Mobile-terminated calls are routed to the tandem where interconnection to the wireless-service provider takes place. The NXX code resides in the MSC, not the telco switch. Routing to the wireless network is based on the mobile's NPA/NXX code, and the actual switching of wireless calls takes place at the MSC.

A Type 2T interconnection is a trunk group to a telco-access tandem that is used to route equal-access traffic from a wireless-service provider's network to an interexchange provider's (IXC's) PoP. Equal access provides wireless subscribers the opportunity to presubscribe to a given IXC. Type 2T interconnection was required of RBOC wireless providers until recent FCC rulings exempted them of this obligation.

This type of interconnection provides wireless customers access to all long-distance providers via a Feature Group D trunk group, which carries the ANI of the calling party (wireless subscriber), the CIC code of the appropriate IXC (10-XXX) and the dialed number (information digits).

A Type 1 interconnection consists of a trunk group between a wireless-service provider's cell or MSC to a LEC end office. This interconnection handles more functions than any other type.

This interconnection could be ordered for marketing purposes, simply to obtain local-access telephone numbers or a local presence in a specific geographic area. This strategy applies especially in rural areas. The line ranges used by the wireless-service provider to serve its customers are actually owned by the telco and assigned to the wireless provider. Like other types, the switching calls takes place at the MSC.

In some rural areas, it might be necessary to order a Type 1 because it is not cost-effective to order other types of interconnection such as Type 2A. For example, in a remote but relatively large community, a wireless provider would definitely want to order local telephone numbers. That way, calls between wireless phones and landline telephones would be carried and rated at the cheapest possible rate, while simultaneously appearing as local numbers to the local population.

As a rule, calls that terminate outside the local calling area are rated as toll traffic by the local telephone company, and might therefore be rated as toll traffic by the wireless-service provider.

Along with local traffic, Type 1 interconnections also carry 911 traffic, 411 traffic, 0+ traffic (credit-card calls), 0- traffic (calls to the operator) and 800-number traffic. Type 1 interconnections also are capable of carrying traffic to any destination LATA-wide, but Type 2A interconnections are the preferred method for transporting these calls because the rates are usually cheaper to terminate a call to a landline telephone.

Wireless subscriber 911 calls will be routed to a public-service access point for processing.

Type 1 interconnections also can be used as a pipeline for traffic that needs to be routed to an IXC when the destination of the call is inter-LATA or interstate. When the amount of traffic in a given wireless market is not great enough to justify a dedicated DS1 circuit, which ties the wireless-service provider directly to an IXC's PoP, wireless traffic is routed to the IXC over a Type 1 interconnection in switched access form.

Directory assistance, or 411 traffic, can be routed directly to a telephone-company call center over a Type 1 interconnection. But today, many wireless-service providers are routing 411 traffic to independent call-center (ICC) companies over dedicated trunks from the MSC directly to the ICC, which will charge the wireless-service provider a wholesale rate per call that is cheaper than what the local telco will charge. The wireless-service provider then will charge its subscribers at a retail rate. This scenario results in a higher profit margin per call for the wireless-service provider.

Telephone numbers are purchased with Type 1 interconnections in blocks of 100 or 1,000, depending on the telco. Type 1 interconnection represents the procurement of interconnection at a retail rate.

A Type 2B interconnection consists of a trunk group between a wireless-service provider's cell or MSC, to a specific LEC end office. These interconnections are used only for local, cost-effective connection to the PSTN to terminate high volumes of traffic to specific exchange codes. They are justified based on the very volume of traffic to exchange codes at a specific end office.

Dedicated Interconnection to an IXC
If the volume of mobile-originated long-distance traffic is low, a wireless-service provider would send all inter-LATA and interstate long-distance traffic out a Type 1 interconnection as switched-access, long-distance traffic. In this scenario, the LEC routes long-distance calls to the wireless-service provider's preferred IXC on a call-by-call basis, through the LEC end office to the IXC's PoP.

If the amount of long-distance traffic in a wireless market becomes large over a period of time, the wireless-service provider can justify the installation of a dedicated interconnection to its long-distance provider. This is done by obtaining a quote for the monthly cost of a dedicated circuit from the wireless-service provider's network to the IXC's nearest PoP. If the quote for this link is equal to or less than the monthly cost of sending switched-access traffic to the IXC over a Type 1 interconnection (number of switched access minutes of use times cost per minute), the interconnection is justified. This offers wireless-service providers lower cost-per-minute rates vs. sending traffic to the IXC through the LEC via switched access. This is because access charges per minute of traffic are assessed to the IXCs by the LECs when long-distance traffic is sent to the IXC through LEC COs. These additional costs — which may be up to 3 cents per minute — are then passed on to the wireless-service providers.

Special Construction Charges
When a wireless-service provider orders any type of interconnection, special construction charges may apply. This usually occurs when the provider has a cell or MSC in a remote or mountainous area. If the provider orders interconnection, and the LEC cable facilities are far away from the wireless provider's location, then the telco will assess whether or not other entities (residences or businesses) will be able to make use of the newly required cable facilities within a given period of time (2 to 4 years). If not, the cost to trench the cable must be borne by the wireless-service provider.

Interconnection Agreements
Every time a wireless-service provider orders a specific type of interconnection, every facet of that interconnection is subject to some type of charge, and all charges are spelled out in detail. This includes all non-recurring and monthly recurring costs for circuits and trunks.

There are three methods used by landline providers to develop interconnection agreements with wireless-service providers: tariffs, contracts or a combination of the two.

In most cases, the facilities rates are based on appropriate tariffs, and the per-minute-of-use charges are negotiated and may include tariffed elements. State public utility commissions must approve all interconnection agree ments. Both contracts and tariffs state the rates charged for services as well as the responsibilities of both the telephone company and the party that is purchasing service.

Least-Cost Routing
Wireless-service providers must ensure that all mobile-originated calls are routed to their destinations as inexpensively as possible. This process is known as least-cost routing (LCR).

The standard LCR methodology usually employs three possible routes, cheapest to most expensive, for directing mobile-originated traffic from point A (the wireless network) to point B (any landline destination). If the first trunk group is busy (the cheapest option), calls automatically will be directed to the second trunk group and then possibly to a third trunk group if the second group is also busy. The goal here is to ensure that the first trunk group always is engineered to handle the most calls, thereby avoiding overflow to the more expensive routes.

The wireless-service provider's own network should always be used as the first route for mobile-originated traffic within wireless-service-provider clusters. (A cluster is a geographically contiguous group of cellular markets). For calls within a wireless-service provider's own system — in a geographic cluster where the service provider has deployed its own STPs — interswitch SS7/IS-41 links can and should be used for LCR purposes. These links are known as intermachine trunks, using SS7 ISUP for call management.

Co-Provider Status
FCC co-provider-status rules dictate that when LECs determine interconnection rates and terms, they must treat wireless-service providers just as they would treat another LEC or IXC in terms of how those providers interconnect to the LEC's network and what rates they're charged per minute to transport calls into the LECs network (i.e. RBOC to independent LEC interconnection; independent LEC to independent LEC interconnection; or IXC to LEC).

Reciprocal compensation is a practice that was dictated by the Telecommunications Act of 1996. It specifies that for any interconnection, a wireless-service provider must receive compensation from the telephone companies for traffic that terminates to the wireless network. This compensation must be at a rate that is equal to what the telcos charge the wireless-service providers (i.e. cost per minute times number of minutes).

Current Topics in Interconnection
There are several hot topics in today's interconnection world. The cost per minute charged to wireless-service providers will continue to trend downward to less than 1 cent per minute, possibly as low as 0.5 cent per minute.

Universal access to digital features when roaming (IN development) will become a hot issue within the next two years. This especially applies to emerging wireless technologies such as WAP. The continued merging of wireless and data will bring a host of new issues to the table in terms of interconnection structure, rates and IP addressing.

Should the wireless industry be required to implement LNP in 2002, service portability could become a huge issue — especially if the wireless industry makes inroads into displacing wireline service in many American homes.

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Charges/Rating Structures

Prior to the passage of the Telecom Act of 1996, rates for all types of interconnection ranged anywhere from 2 cents per minute (Type 2B interconnections) to more than 5 cents per minute (Type 2A interconnections).

Since passage of the Telecom Act, rates for all types of interconnection have dropped to a range of less than 1 cent to 3 cents per minute.

For dedicated wholesale interconnection to IXCs, providers can obtain rates from around 3 cents to 6 cents per minute. The core contingency that drives the exact rate-per-minute charged to wireless providers for this type of interconnection is total billable minutes per year. At the same time, service providers usually are required to sign long-term contracts of up to three years in order to obtain these lower rates.

There are two structures used to determine the cost-per-minute rate that telcos charge to wireless-service providers: banded rate structures or flat-rated rate structures. Either method can apply to tariffs or contracts.

The banded rate structure is based on an incremental increase in the cost to terminate mobile-to-land calls by assigning specific rates to concentric mileage bands that emanate outward from a designated telephone company rate center (CO or tandem). In other words, if a wireless-service provider orders a Type 1 interconnection that uses a banded rate structure, all mobile-to-land calls that are transported through that Type 1 interconnect are rated as originating out of that particular end office. Mobile-to-land calls whose termination point is within a certain band are charged at X cents per minute. A telco designates anywhere from three to eight circular bands whose center is always the designated rate center. Each band encompasses a specific geographic-mileage range outward from the rate center with calls growing more expensive as they move outward. Just four or five years ago, banded tariffs were used by many landline carriers, such as Ameritech, Southwestern Bell and even IXCs such as AT&T. However, due to intense competition in today's marketplace, more providers — especially IXCs — are using flat-rate pricing where telcos charge service providers one flat rate to terminate calls across an entire LATA.

Bedell is a DePaul University part-time faculty member and the author of Cellular/PCS Management. He credits Bob Keeger, U.S. Cellular Western Region network planner, for assistance with this article.