The evolution of the public switched telephone network (PSTN) is VOIP Peering. It has been developing slowly over the years. Now it is becoming widely available around the world, creating new economic models that will revolutionize phone-based communications.

Basically a mix of the PSTN and Internet Protocol (IP), VOIP peering allows enterprises and carriers to avoid the public network altogether and are quickly driving the costs of voice calls to zero.

VOIP peering is made up of two key building blocks, VOIP and wide-area Ethernet.

The combination of VOIP and Ethernet is driving the VOIP Peering revolution for carriers and enterprises worldwide. The addition of two supporting technologies -- electronic number mapping (ENUM) and session initiation protocol (SIP) -- enables true end-to-end IP-based calling, over the public Internet or a private network, eliminating the need for an intervening carrier.

Table 1: VOIP and Ethernet Growth Statistics

General Terms and Basics of Peering

The history of the formation of the physical layer interconnection points of the public Internet provides a case study for what is happening today with VOIP Peering. During the commercial growth phase of the public cloud, common interconnection points known as Metropolitan Area Exchanges (MAE) and Network Access Points (NAP) were established. At these physical locations ISP’s located routers and switches and interconnect to each other. This process of interconnection -- including a physical component as well as an a priori business case -- came to be known as “peering.”

From a network perspective the interconnection took place within this physical geographic location (MAE, or NAP), which ultimately became known as a Peering Point. Having a defined location (a specific address, floor or suite number) allowed the elimination of Bell local loops for disparate router connections, creating an “on-net” situation and saving the ISP’s a great deal of money and time.

In addition, the proximity also allowed the ISP’s to use the new developing standard of Ethernet to interconnect their routers. At this time, Ethernet use was limited by a distance of 300 feet between nodes. This process provided the foundation on which the ISP’s and all future IP packet-based networks were built.

The business case component of these developments gave rise to the term “peer.” Peers in this case are IP networks of comparable size or significance. Once the comparability criteria were met, the ISPs agreed to a free exchange of traffic; if not, one ISP charged the other a “transit” fee.

There are two main types of ISP peering, bilateral and multilateral, and there are two ways to establish the interconnection: private peering and public peeri