What is Least Cost Routing?
Least cost routing is the analysis and selection of routes for outbound and inbound communications traffic, based on which route has the best rate at that time.
How it was before automation
For many years, providers implemented least cost routing using the following method:
- They negotiate rates with suppliers.
- Spreadsheets are used to calculate and compare termination costs.
- The best routes are selected based on cost.
- The rates are manually input into routing tables, which export the data to the telecom switches.
- The new call routes are activated.
- The providers monitor all incoming and outgoing traffic.
- Any losses are investigated and action is taken to prevent future losses.
Today, most providers use software to automate these steps.
How Least Cost Routing Works
Least cost routing of telephone calls uses a routing table that matches telephone dialing codes with destination networks ordered by cost. Rates from suppliers are loaded into a database and specialized software quickly builds an optimized least-cost routing table that may have millions of routes.
When a switch receives a call, it sends a query to a routing engine for routing instructions. The routing engine uses the table to send real-time least cost routing instructions back to the switch based on the call’s destination, the caller ID and the time of day. If the quality of a route is poor or it appears to be unstable, it may be ignored. Usually several routes are returned ordered by best price. If a route fails, the call will be sent over the next one in the list. Alternatively, the caller will get a busy signal. Excluding the network delay, the routing response is often returned in less than a few milliseconds.
These routing engines are implemented entirely in software and run on conventional Linux servers with sufficient RAM to host tens of millions of routes.
The main factor that determines how a call is routed is not always cost, since quality is increasingly important in how providers approach least cost routing. The quality of the routes to a destination can vary significantly between providers and even at different times of the day for the same provider.
Routes between providers are not fixed, so service quality depends on regular maintenance and analysis. A route’s integrity is assessed using various metrics, such as answer-seizure ratio (ASR), post-dial delay (PDD) and average call duration (ACD).