Viop phone - Voice Over IP

Although we’re presenting some typical numbers here, you should run the numbers using your own particular configuration. The most beneficial comparisons of a VPN occur when compared to a dedicated, line−based network or one that makes extensive use of long distance dial−up lines. If you are already using a shared network (Frame Relay or ATM), the cost savings are not so striking. Consider that a VPN box at each location might cost $5,000 including installation; multiplied by seven sites is equal to $35,000. Now, how long will it take to save this cost if you substitute your ISP charges for each location and subtract the cost of your existing T1 or Frame Relay network? If you had six T1s at $5,000/month, you might now have seven T1 access lines from your ISP at $3,000 or $4,000/month. The $7,000/month savings will pay off the $35,000 investment in 5 months. If your Frame Relay service is costing $1,000/month per location, the break−even point doesn’t happen in any reasonable period. Using remote access server and dial−up lines is cheaper to install, costing about $6,000 to $7,000 for about 20 users to install at the central location. Now comes the big bite, which is the long distance charge from all the remote locations. This could easily grow to $5,000/month if each of the users spent two hours online. Each working day at $0.10/minute is about $8,000/month. Plug in your own assumptions as to duration and cost of telephone calls here. (Even at 1 hr/day and
$0.06/minute, that is $2,000/month for 20 users). A VPN system might cost $14,000 to install, including licenses for PC software at each location. The ISP charges that are $20/user/month, plus an ISDN line at the home shop for $100/month, means that we are saving $1,500 in monthly charges. We can pay off the system in 10 months. Again, do not assume that it will pay off in all cases. But, in all cases, it is worth the effort to perform the calculations. viop Your VPN will definitely require more network management than a dial−up system, so the cost of perhaps an additional system administrator may have to be added.

Proprietary Protocols
Most VPN products are designed strictly around IP. They will often handle other protocols, such as AppleTalk and IPX, by tunneling them inside of IP packets. This introduces both overhead and delay. If the amount of “foreign” protocol traffic is small, then this is not significant. If the bulk of your network is IPX or Apple talk, we recommend you investigate VPN vendors who will support these protocols in native mode.

VoIP VPN
The justification for doing VoIP on a VPN is primarily security, along with the reduced cost of VoIP. Depending on usage, voice generates relatively large amounts of traffic. Be sure to include this additional traffic in your sizing estimates. Our discussion of VoIP applies to whether we have a VPN or not. With a VPN, the delays due to encryption are larger, and therefore we would expect that the performance of voice over the VPN would be worse than VoIP. If we have chosen a network provider who will offer a SLA with QoS, there is a better chance for success, but the delays due to encryption and basic packet switching will still be there. With the exception of international calling, one must have a very large calling volume to make it worthwhile to put voice over the Internet and suffer the attendant quality
reduction.

Summary

VPNs can provide a cost−effective solution to have secure communications across the Internet. Performance can be improved by utilizing a national/international ISP that will offer SLAs and QoS. Choosing hardware−based over software−based VPN equipment will generally provide better performance. Choosing VPN vendors who embrace standards and support multiple standards increases your flexibility to your vendor/equipment choices. Knowing your current and anticipated traffic volumes permits you to make improved cost performance studies.

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VPN specific boxes are the recommended solution for high volume, large networks. Several vendors offer these solutions in both hardware and software incarnations. The general rule is that hardware boxes will outperform software boxes and are theoretically more secure because they are based on proprietary technology that is harder to hack than publicly available operating systems. (A hardened Unix−based system is also extremely difficult to hack.) Traffic volume and feature support for remote terminals and industry compatibility will guide your decision here. These boxes set up secure tunneling by using IPSec encryption and certificates as described previously. They are typically installed in parallel with your firewall. The firewall handles web (HTTP) requests, while the VPN box handles access to your internal database. Because we now have two “holes” into our network, it is imperative that we have the permissions and access rights set up correctly. The firewall should not let users in who would be required to authenticate via the VPN box. The integrated solution that some vendors are offering is an integrated custom box that does routing, firewall, and VPN all under one roof. This is an attractive option where traffic volume and performance is not going to be an issue.

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The very same issues exist here as with routers. One needs to have compatible (preferably the same vendor’s) firewalls at each location. Mobile users or telecommuters must have compatible VPN software. Firewalls are always potential bottlenecks, so asking them to perform VPN encryption can adversely affect all other access to your network. Here again, there is no substitute for traffic analysis. We only recommend this solution for small networks where the traffic through the firewall can easily be handled by the firewall hardware.

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The layman’s version (don’t try this at home because it won’t work as described here) is that each of us thinks up a couple of prime numbers (the bigger the better). One number we keep for ourselves and the other number we publish on our web site along with the product of the two prime numbers as our public key. Anyone wanting to send us something will use the public key to encrypt it with the public key, and only we can decrypt the message with our private key. We can authenticate the source if the sender used his private key to encrypt his signature because only his public key will decrypt his signature.

This system is secure because of the tremendous amount of processing power it takes to factor large prime numbers. (For example, if we could factor the product, we could determine the private key.) Unfortunately, performing the encryption and decryption are also processor intensive (slow). But it sure solves the key distribution problem. Therefore, we could use public key cryptography to
encrypt and distribute the keys to all our VPN boxes.
Authentication
Authentication is the process of verifying that this is the party to whom I am speaking, and that they have authorized access. There are several ways of doing this; however, the most common way is to provide an authentication server that passes out authenticated certificates based on something the user has or knows. User Level Authentication The user has or knows his/her account code (name) and password. User names are public, and passwords can be compromised. A more secure system is to use a type of secure ID card. These credit card sized devices are based on an internal clock that generates a different pseudo random code every minute. The authentication server is time synchronized with the card and therefore generates the same number at the same time. When the user calls in, he/she must enter his/her account code and the code from the card as the password. The IP has embedded in it a set of layer 2 protocols called the Point−to−Point Protocol (PPP). In PPP, the basic security methods used are Password Authentication Procedure (PAP) and the
Challenge Handshake Authentication Protocol (CHAP). PAP and CHAP do little for security. In fact, PAP and CHAP are part of the basic PPP protocol suite and fall short in providing a true security procedure. These schemes do not address issues of ironclad authentication and integrity, oreavesdropping. The PAP and CHAP are rudimentary procedures used to log on to a network, but
hackers and crackers easily defeat both.

Tunnel Protocol (L2TP) is another variation of an IP encapsulation protocol as shown in Figure 4−6. An L2TP tunnel is created by encapsulating an L2TP frame inside a UDP packet, which in turn is encapsulated inside an IP packet, whose source and destination addresses define the tunnel’s ends. Because the outer encapsulating protocol is IP, clearly IPSec protocols can be applied to this composite IP packet, thus protecting the data that flows within the L2TP tunnel. Authentication Header (AH), Encapsulated Security Payload (ESP), and Internet Security Association and Key Management Protocol (ISAKMP) can all be applied in a straightforward way.

L2TPs are an excellent way of providing cost−effective remote access, multiprotocol transport, and remote LAN access. It does not provide cryptographic robust security. L2TP should, therefore, be used in conjunction with IPSec for providing secure remote access. L2TP supports both host−created and ISP−created tunnels. A remote host that implements L2TP should use IPSec to protect any protocol that can be carried within a PPP packet. Integrated at the VPN point of access, user authentication establishes the identity of the person using the VPN node, and this is because an encrypted session is established between the two locations. The user authentication mechanism enables the authorized user of the VPN system access to the system, while preventing the attacker from accessing the system. Some of the common user authentication schemes are

• Operating system username/password
• S/Key (one time) password
• Remote Authentication Dial−In User Service (RADIUS)
• Strong two−factor token−based scheme

The strongest user authentication schemes available on the market are two−factor authentication schemes. These require two elements to verify a user’s identity: a physical element in their possession (a hardware electronic token), and a code that is memorized (a PIN). Some cutting−edge solutions are beginning to use biometrics mechanisms such as fingerprints, voiceprints, and retinal scans. However, these are still relatively unproven. When evaluating VPN solutions, it is important to consider a solution that has both data authentication and user authentication mechanisms. Currently, there are VPN viop solutions that provide only one form of authentication.
Because of this, VPN solution providers that only support one of the two authentication mechanisms will typically refer to authentication generically, without qualification of whether they support data authentication, user authentication, or both. A complete VPN solution will support both data authentication (also known as the digital signature process or data integrity) as well as user authentication (the process of verifying VPN user identity).

Packet Level Authentication The IPSec standard provides for packet level authentication to prevent man−in−the−middle attacks. (This is where someone intercepts your packets and substitutes his/her own.) IPSec is a layer 3 protocol that enhances the use of the layer 2 underlying checksum is calculated and encrypted with the data. If the checksum calculated by the recipient doesn’t match the one sent by the originator, someone has tampered with the data. The IPSec standard specifies two different algorithms for doing this MD−5 and SHA−1. If your vendor’s equipment supports both algorithms, it improves the chances for intervendor compatibility. The other alternative is to simply not use packet level authentication. In order to guarantee authenticity of the packets, a digital signature is required to authenticate the devices to one another. IPSec has included the X.509 digital certificate standard. Essentially, the X.509 certificate server keeps a list of certificates for each user. When you want to receive data from another device, you first ask for the certificate from the certificate server. The sender stamps all data with that certificate. Because this process is secure, you may be sure that these packets are
authentic. Your vendor then ideally supports both authentication algorithms and X.509. In any case, it is essential that someone in your organization understands in detail how each vendor supports the various levels of security that you intend to use. These authentication and encryption systems all have to work together flawlessly. If the vendors you choose stick to the standards, it improves the chances of, but does not guarantee, an integrated working environment.

IPSec offers a variety of advantages. Chief among those are

• IPSec is widely supported by the industry including Cisco, Microsoft, Nortel Networks, and so on.
• This universal presence ensures interoperability and availability of secure solutions for all types of end users. In addition, all IPSec−compliant products from different vendors are required to be compatible.
• IPSec provides for transparent security, irrespective of the applica−tions used.
• IPSec is not limited to operating system−specific solutions. It will be ubiquitous with IP. It will also be a mandatory part of the forthcoming Internet Protocol Version 6 (IPv6) standard.
• IPSec offers a variety of strong encryption standards. The key design decision to support an open architecture allows for easy adaptability of newer, stronger cryptographic algorithms.
• IPSec includes a secure key−management solution with digital certificate support. IPSec guarantees the ease of management and use. This reduces deployment costs in large−scale corporate networks

IPSec used in conjunction with L2TP provides secure remote−access client−to−server communication. L2TP alone cannot provide for a totally secure communication channel due to its failure to provide per packet integrity, inability to encrypt the user datagram, and the limited security coverage only at the ends of the established tunnel. The major drawback to packet−filtering techniques is that they require access to clear text, both in packet headers and in the packet payloads.
There are two major drafts in IPSec: AH and ESP. They are defined as follows:

• AH is used to provide connectionless integrity and data origin authentication for an entire IP datagram (hereafter referred to as authentication).
• ESP provides authentication and encryption for IP datagrams with the encryption algorithm determined by the user. In ESP authentication, the actual message digest is now inserted at the end of the packet (whereas in AH the digest is inside the authentication).

AH provides data integrity only and ESP, formerly encryption only, now provides both encryption and data integrity. The difference between AH data integrity and ESP data integrity is the scope of the data being authenticated. AH authenticates the entire packet, while ESP doesn’t authenticate the outer IP header. In ESP authentication, the actual message digest is now inserted at the end of the packet, whereas in AH the digest is inside the authentication header. The IPSec standard dictates that prior to any data transfer occurring, a Security Association (SA) must be negotiated between the two VPN nodes (gateways or clients). The SA contains all the information required for execution of various network security services such as the IP layer services (header authentication and payload encapsulation), transport or application layer services, and self−protection of negotiation traffic. These formats provide a consistent framework for transferring key and authentication data that is independent of the key generation technique, encryption algorithm, and authentication mechanism. One of the major benefits of the IPSec efforts is that the standardized packet structure and security association within the IPSec standard will facilitate third−party VPN solutions that interoperate at the data transmission level. However, it does not provide an automatic mechanism to exchange the encryption and data authentication keys needed to establish the encrypted session, which introduces the second major benefit of the IPSec standard: key management infrastructure or Public Key Infrastructure (PKI).
The IPSec working group is in the development and adoption stages of a standardized key management mechanism that enables safe and secure negotiation, distribution, and storage of encryption and authentication keys. A standardized packet structure and key management mechanism will facilitate fully interoperable third−party VPN solutions. Other VPN technologies that are being proposed or implemented as alternatives to the IPSec standard are not true IP security standards at all. Instead, they are encapsulation protocols that tunnel higher level protocols into a link layer protocols. When encryption is applied, some or all of the information needed by the packet filters may no longer be available.

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The goal of any network is to support users in a flexible, reliable, secure, and inexpensive manner:

• Network managers want the network to be flexible.
• Users want the network to be reliable and secure.
• Management wants the network to be inexpensive.

A balance of these often−competing goals can be achieved, provided a good dialog is maintained among the participants. It is an exercise left to the reader to select from the list those applications and users who are to be served. The network list indicates that these users and applications could be interconnected by any of these network technologies. As indicated previously, dedicated networks are expensive and rarely fit the need perfectly. Frame Relay and Asynchronous Transfer Mode (ATM) are shared network technologies that can be very cost effective, depending on the geography and traffic volume. Dial−up telephony can be a networking technology for highly mobile, low−volume users. Normally, we would like to have a backbone network with direct access for various users and dial−up remote access for infrequent users. We will discuss these alternatives in the following sections.

Shared Networks

The advantage of shared networks is that organizations do not have to incur the entire cost of the infrastructure. For that reason, Frame Relay has been extremely popular. Because it (like X.25 before it) is virtual circuit based, there is little concern about misdirected or intercepted traffic. Still, Frame Relay service is not universally available and access charges to a point−of−presence (POP) can be expensive. However, compared to the cost of dedicated networks, shared networks offer equivalent performance and a much lower cost.

Internet

The next logical step is to use the Internet as the private network. It is almost universally accessible, minimizing access charges. From our discussion of the Internet in Chapter 29, “Synchronous Optical Network (SONET),” two things are clear

• No one is watching the traffic or performance of the Net as a whole.
• The path our data takes across the network is quite unpredictable.

This leads to the conclusion that performance will be unpredictable and that our precious corporate data may pass through a router on the campus of “Den−of−Hackers University.” (It is not the intent here to malign university students, but only to offer the observation that they are bright, curious, love a challenge, and may have time on their hands and access opportunity to do a little extra curricular research on the vulnerability of data on the Internet.) There are then two problems: performance and security.

Performance

The performance issue poses the problem of sizing the bandwidth on each link, which becomes a major task as the network grows. Unfortunately, few network managers have a good handle on the amount of traffic flowing between any given pair of locations. Typically, they are too busy handling moves and additions to the network, which frequently leads to performance problems. Because the network grew without the benefit of a design plan, invariably, it means that portions of the network, including servers, become overloaded.

A dedicated line network is expensive, requires maintenance, and necessitates a backup plan should a line or two fail. Using a shared network does not alleviate the problem of traffic analysis. On the contrary, we now have to worry about the capability of the Internet to provide the bandwidth we need when we need it. Selecting our ISP to provide the performance we need becomes an important issue.

Outsourcing

One solution is to outsource the network to a network provider (the analogy to a voice VPN here is strong). The most popular previous solution was to lease Frame Relay service. The benefit was that the network provider took care of the management of the network and even provided levels of redundancy (for which you paid) within its network. Unfortunately, to make most efficient use of this service, one still needed to have a handle on traffic volumes. For example, a committed information rate (CIR) that was too low resulted in lost data and retransmission, while a CIR set too high was a waste of money.
A national or international carrier with its own Internet backbone then becomes a good choice as a VPN provider. One negotiates service level agreements (SLA), which include quality of service (QoS) guarantees. Some ISPs even provide Virtual IP Routing (VIPR) in which they permit you to use internal, unregistered IP addresses. If one builds a completely independent, internal (intranet) network, one could use any set of IP addresses one might choose. This alternative is attractive to large corporations that are constrained to using class C addresses. If these private addresses were to get out onto the Internet, chaos would quickly ensue. VIPR permits the flexibility to continue to use this unregistered set of addresses transparently across the Internet. This is strongly analogous to having one’s own dialing
plan on a voice VPN. There are many possibilities and choices here. We can outsource the whole network, including the VPN equipment on each site, or outsource pieces.
Standard Outsourcing Issues A few points are worth making about outsourcing. One must take a realistic look at the task at hand:

• If the internal staff possesses the capability to implement the VPN, do they have the time?
• If you outsource the whole network, how permanent will the relationship be?
• To what extent will the internal staff become involved in the design and maintenance of the VPN?

Choose your vendor carefully. Evaluate responsiveness in the areas of presale support, project management, and post−sale support. As in any procurement process, writing a system specification and Request for Proposal (RFP) is essential. Also, make up the evaluation criteria ahead of time. You may (or may not) choose to publish the evaluation criteria in the RFP. Select the vendor who is most responsive to your requirements. Here is a good opportunity for the vendor to do the traffic analysis so that a traffic baseline for design can be established. Always include growth in the RFP. Ongoing support will be critical. If the network spans multiple time zones, specify the minimum support requirements. For example, 9 A.M. to 5 P.M. CST is of little use to offices located in Taiwan. What training is offered as part of the package? The more knowledgeable the internal staff can be, the better they will be able to support the VPN — even when they are outsourcing support. It is important to have a coordinated security plan so that we have an integrated and consistent view across our firewalls, proxy servers, and VPN equipment

Security

The basic concept of a VPN is to provide a secure, point−to−point connection across the network between communicating entities. A couple of questions about security are important to keep our paranoia in check. The first question is how much security is enough? To answer that question, wemust consider the impact on our business if the data we are sending is

• Simply lost. Is there a backup mechanism for sending or recovering the data?
• Found by another business (not a competitor).
• Found by a competito

In the last case, we must ask how much effort is the competitor willing to invest to get our data? The answer to these questions will help us decided how much security is enough. Note that in the foregoing example, one can equally substitute the word hacker for competitor. What About Security Issues? Turning to security, remote access to a system must have integral security to protect the network and users from unauthorized access and penetration. We have all heard about the teenaged hackers who have been creating havoc in the data processing and Internet business. These young hackers break into systems for the sheer pleasure of challenging the system and showing their prowess with the modem. And it works, because they do it every day. We, therefore, have to consider these issues before opening a door. We must start with different techniques such as VPNs, encryption, authenticating servers, and secure firewalls. The key technologies that compose the security component of a VPN are

• Access control to guarantee the security of network connections
• Encryption to protect the privacy of data
• Authentication to verify the user’s identity as well as the integrity of the data

What Can We Do to Secure the Site? Remote access users sitting in a distant site need to know how to use the system, so training is important. A company with salespersons who travel frequently would provide 800 number access. Hardware considerations vary, depending on what networking you’re using, the number of users, and whether the users need desktops or laptops at the remote location. Standardization is essential — you don’t want three or four different platforms, and you don’t want to have to support 47 varieties of software. We want to leave the variety of flavors to the ice cream manufacturers! Additionally, a firewall service will offer a bastion router capability to filter the packet, the protocol, or the user id and address. These systems will help to keep out unwanted guests. Firewalls can be in different places, as we will see. They can also be integrated or CPE solutions. Security must also be ensured while the data is in transit. Therefore, we need to use a form of encryption so that an eavesdropper cannot listen in on our data and intercept it. By using Internet Protocol Security (IPSec) techniques, we introduce up to five different forms of encryption and digital signatures. These will be sufficient to delay any access to the data and by the time the code could be broken, the data will have little value.
Authentication is also a very effective tool that challenges the caller and requests a key−coded response. In a security dynamics environment, a challenge and response can be issued by default every 30 seconds or user variable to effectively manage the logged−on users. What Are the Risks? The risks posed on data integrity and security take many forms. We usually think of data protection in terms of the corruption or total loss of data. However, other areas of concern may be from the undetected interception of the data by hackers or crackers. Moreover, the inaccessibility of our data from the denial of service attacks has become more prevalent in the security issues facing the IT manager. Lastly, there are also issues of invasions on our LANs or WANs when a promiscious device is attached to the network and picks off all data packets regardless of the addressee. These sniffers, as they are called, can capture all data packets from
the network, usually undetected.

• Hackers
• Crackers
• Salami attackers
• Denial−of−service attacks
• Sniffer

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Without trying to throw a damper on the voice SDN/VPN, there are some conditions that may cause the end users to balk at its use. Many organizations’ telecommunications management typically try to match the needs of the organization without causing undue stress on the user. However, the special dialing procedures necessary to use a SDN/VPN often got in the way. Let’s use an example of a group with road warriors. The traveling person needs to use long distance to customers, contacts, and back to headquarters. Therefore, a special calling card is issued that has the caller go to a pay phone. From there the caller dials a special 800 number to call into the SDN/VPN (this requires 11 digits). This is nothing more than a switch that is keeping track of the traffic and usage verification. Once into the SDN/VPN, the caller then dials the 11−digit telephone number for a North American location. The number of dialed digits may be higher for international calls. Finally, the caller must dial their user calling card number to validate it for authentication and billing purposes. This may be an additional 15 digits. So all told, the customer has just dialed 37 digits to make a call. This creates frustration for the caller, especially if they make several calls during the course of a day.
Let’s complicate the above scenario a bit! After being frustrated by dialing all those digits, the caller gets a busy tone. This means that they have to start over. Now the frustration really starts to mount. Moreover, one may be reading this and saying “what is the author talking about? I can dial a number and if I get a busy tone, then I merely dial the pound key (#) and get my dial tone back.”
That may be true for some calls and some phones, but this is not a guarantee. The individual phones at airports, hotels, and along the roadside may not allow this. Many may be phones that are used by a specific vendor/carrier (we have all seen the WorldCom and AT&T phone in the lobbies of hotels that only allow the features on their own specific network). So if the caller is using a WorldCom phone and calling an AT&T network, all bets are off. The service may require that the caller hangs up and starts over. Moreover, when making a string of calls on a normal calling card, customers are able to use the # key to place the next call without entering the calling card number every time. This again is not necessarily true with the special SDN/VPN cards. Although the carriers have taken great strides in eliminating these problems, they still cannot guarantee that everything works at every phone. By the way, with the SDN/VPN, the carriers allowed stored numbers in the central switch so that a user could eliminate some of the dialing process by using a speed dialing arrangement. Corporate telecommunications personnel may have predefined calls to each office with a three− to five−digit
speed number, thus the caller could eliminate some of the digits required. This is a noble gesture, but it does not always work the way it was planned, and therefore the end users begin to rebel against the amount of time they spend dialing digits to do their job. Now back to the original purpose of the VPN—to save money and ease the process of communicating between and among users within an organization—the ease of use is not assured, as stated previously, so the goals are not met entirely. From there, however, the user can usurp the savings by doing many things:

• Reducing the amount of calls they make by refusing to dial the digits
• Calling around the VPN by using a separate calling card that is not billed under the special arrangement
• Placing operator assisted calls instead of dialing, thereby incurring a much higher cost per minut

Each of these situations complicates the overall purpose of using the VPN/SDN. One final comment here is that the users also begin to bemoan the use of the network to their superiors, who then begin a grass roots effort to override the VPN. What was planned as a cost containment tool, becomes a more expensive solution overall, and management really does not want to hear all the complaints about a system as mundane as the telephone. Bear this in mind as you look into the use of these systems. This discussion so far has only considered the case where the corporation owns the PBX and connects it to the VPN. What if a Centrex system is provided by the incumbent local exchange carrier (ILEC) or leased from a reseller? The answer is that one can still implement all the above
with a Centrex system at any or all locations. Because Centrex is essentially a PBX that is physically resident at the local central office, it too can have TIE, FX, or RCF trunks. The long distance carrier supplying the VPN will be more than happy to terminate VPN trunks on a Centrex system.

In summary, the important points are as follows:

• Calls are carried over the PSTN.
• A custom dialing plan is used.
• Pricing is dependent on the locale.
• The number of locations.
• The projected or committed traffic volumes.

This is all achieved by computer databases in the network.

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Using these dedicated lines between locations, organizations created a private network. The next step in the evolution of private networks was to devise a corporate−wide numbering plan and have the now intelligent PBX determine the route to the dialed destination via its peers, just like the local telephone office does. After all, other than size, there is little difference between a PBX and a telephone company central office switch!

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As corporate communication volumes increased, organizations realized the cost of telephone service was escalating. Originally, all long distance service was charged on a per minute basis. AT&T introduced a volume discount outbound calling plan called Wide Area Telephone Service (WATS) [1] Some people refer to the term as Wide Area Telecommunications Services. For a monthly fixed payment, the organization got 240 hours of service to one of five bands across the country. Each band was priced, based on the distance from the originator’s location. A typical company usually had a band 5 line and a band 1 or 2 to cover adjacent state calls. It took some analysis to determine the most cost−effective solution for each company’s particular calling pattern. Foreign exchange (FX) service provided a fixed rate calling plan if a company had a large call volume for in−state locations. This is essentially subscribing to telephone service at the foreign central office location and leasing an extension cord from the telephone company to the home location. Originally, there were no usage charges on this line so the more you used it, the less expensive it was. Of course, long distance calls made from the foreign exchange were billed at the long−distance rate. An FX line is needed to each high volume calling location. Alternatively, a company could use a leased telephone line between locations. These lines went by several names: Terminal Interface Equipment (TIE) line, dedicated line, and a data line, when used for data. These are essentially point−to−point telephone lines that are available in two−wire or four−wire configurations. Because the difference in cost between two− and four−wire connections was small (relative to the cost of the line), the four−wire option was preferred unless the company needed many lines. The next logical step was to use these TIE lines to connect private branch exchanges (PBXs) at the various locations. Here again, there were no usage charges on these dedicated lines. A company with locations in Seattle, Phoenix, Atlanta, and headquarters in Chicago might have a “hub and spoke” arrangement of TIE lines from their headquarters to each regional office. Each location then might have FX lines to adjacent cities; for example, a company based in Seattle might have an FX
line to Tacoma, Kent, and Everett. There were corresponding inbound services where the called party paid. For example, the original Zenith operator provided toll−free calling in the days of manual switchboards. The inbound WATS service, now known as 800 service, was originally also structured in bands. Finally, for local toll service, remote call forwarding (RCF) allowed people to sign up for telephone service in a foreign exchange and have them make a long distance call from Tacoma, for example, back to Seattle at your expense. Although this was more expensive (depending on the number of calls) than FX, an advantage of RCF is that you can receive multiple calls at a time. It soon became apparent to people working in the Phoenix location that they could call their uncle in Kent by first asking the company operator (later by dialing) for the TIE line to Chicago. They would then choose the TIE line to Seattle and finally dial across the FX line to Kent. The PBX, although not smart, did allow a person to dial up the TIE and FX lines. The important fly in this otherwise ingenious solution (ointment) to high−cost long distance telephone service is that each TIE or FX line could only handle one call at a time. The challenge for the telecommunications manager was therefore to figure out the optimum number of TIE lines between locations to minimize cost and waiting time for the TIE line, while maximizing savings across the commercial long distance circuits. About this time, AT&T noticed a small drop in its long distance revenue from such business and a sharp increase in the number of leased lines it was providing. Now, clearly it is much more profitable to rent a telephone channel out at $0.25 per minute than to lease that capacity to a corporation for 1,000 per month. One should also be aware that the average corporation will not pay these prices, but smaller companies and independent contractors may! On average, 75 percent of the paying public is overpaying the cost of long distance because of the complexity and the various changes that take place. Recently, the three top providers of long distance service raised their rates by 7 percent (12/2001). The impact was primarily in the area of basic long distance service. This means that many small companies have subscribed to a plan with the carrier. The carrier selects the plan that best fits the customer’s dialing habits and number of circuits used (lines). However, the plan is current at the time of the deal and may change several times in the next year. Better pricing or packaging may become available the very next day. The consuming public may not realize that the new package is available and continue to pay the agreed to rates for the next x years, costing them hundreds to thousands of dollars extra per year. To rectify the problem, many organizations periodically call the carrier and ask for the best plan to meet their dialing habits. Once again, the best plan is selected at the time of the call, not forever adjusted automaticall.

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