A few days ago, I shared an article arguing that the cloud was great for UCaaS, but for traditional class 5 deployments, an on-site switch was generally a better option.
One of our long-time readers wrote back to me with an interesting question (slightly edited for confidentiality):
Over the past year, SS7 rates have increased dramatically (by thousands per month) for an A-Link pair. The SS7 providers blame the underlying infrastructure providers (e.g. AT&T, Lumen, etc.) who blame the cost of maintaining legacy TDM networks.
Because of these rate increases, many companies are now evaluating UCaaS or Class 5 replacement solutions to soften the impact. Does that change the thinking in your article?
This is a great question, so I figured I’d share my response with the entire list.
SS7 Cost Increases are Egregious
We started seeing these price increases a couple of years ago, and at the time we encouraged people to move to SIGTRAN (which sometimes helps, but not as much as you would think). We’ve heard of people seeing 10X increases in the cost of their SS7 links, which is just outrageous.
The underlying providers are trying to claim that this is your fault for wanting to use TDM, but the truth is that most RBOCs only offer tandem connections over TDM – so if they want you to switch to IP connectivity then all they have to do is to offer SIP tandem connections. But they haven’t. And now they’re penalizing you for using TDM, which is your only option. (Note: The FCC is doing some work in this area, and I’ll be sharing my thoughts on that soon – but don’t expect anything to change quickly.)
Can I resolve this issue by moving to a cloud platform?
That’s actually a misleading question. Providing voice services from the cloud or on-prem is fairly irrelevant here.
You can “solve” this issue by moving all your PSTN connectivity to SIP. But that may not be a good idea.
If your tandem happens to offer connectivity over SIP (which is rare, but not unheard of), then you may be able to move those tandem connections to SIP, and continue to operate as an ILEC in the normal way. [Please check with a regulatory consultant – we’re not experts in the laws here.] You may still need to figure out TCAP services (e.g. LNP) but we’ve done some work recently with IP-based LNP services, and we can help with that if you need it.
However, if your tandem only offers TDM interconnect (which is the most common situation), then the only way to become a VoIP-only operator (and avoid these SS7 link fees) is to port all your numbers away to someone like Bandwidth or Sinch, and then send and receive calls via those SIP trunks. However, this fundamentally changes everything about your voice business – you no longer own your numbers, you no longer receive CABS or inter-carrier compensation, you’re no longer NECA compliant, you pay per-minute for originating and terminating calls, you pay to lease your own DIDs… it’s a huge change.
I’m not saying it might not make sense in some cases – but there’s some complicated financial modeling and regulatory review required before you consider this. The SS7 link charges may be painful, but probably not as painful as making this change.
What about the cloud?
If you move to a cloud platform, most of the cloud solutions offer their own carrier services, which basically means that you can make this change (to SIP only carriers) as part of their solution – but all those consequences I mentioned above are still true.
In fact, every time we’ve worked with an ILEC to move their services to the cloud, they have actually gone to great lengths to maintain the existing TDM connectivity (for the compliance and financial reasons mentioned above).
So while this SS7 link pricing issue is very real, moving to the cloud is more or less irrelevant in terms of the solution. If you want SS7 links to go away, you need to move to SIP-only carrier services – whether your voice is provided at your location or in the cloud – and this is a usually very complex and costly change for ILECs, and I don’t think we’ve ever seen anyone completely go down this path.
So there’s no solution?
I recognize that nothing in this message provides a solution to the rising cost of SS7 links. I do think moving to SIGTRAN sometimes helps, and I wonder if some of the lobbying groups can try to apply political pressure here. I would have imagined that the RBOCs have some regulatory obligation to provide SS7 links at a reasonable price, but that seems not to be the case, based on the scale of recent price hikes. If there’s anyone reading this who has insight on what pressure is being / could be applied on the political / regulatory side, feel free to reach out and share what you know.
