Lower interconnect rates have made LCR irrelevant, says IS.

Least Cost Routing (LCR) is dead, according to . While VoIP didn’t kill it, says Wayne  Speechly, Business Development Manager, Communication Services at , it is there to fill the need moving forward. “LCR in itself is no longer relevant. VoIP is the way to go,” he says.

LCR in this context is a telecommunications option that utilises “GSM SIMs” to get the lowest call rate. These “SIM farms” contain SIM cards from all the mobile networks, so a call could be routed through the same network as the caller was trying to reach, effectively making all calls on-net. “Historically, the cost of an on-net call from SIM to SIM was cheaper. This incentivised companies to put down SIM farms,” says
Speechly. However, these farms have peripheral complexities, he explains. “Who would manage the SIMs? Are they being rotated effectively?

Companies had to make sure it would not impact their end business.” Another consideration of LCR, says Speechly, is call quality. The quality is not the equivalent of a VoIP call as it is effectively GSM to GSM. One of the constraints for the network operators is that this depleted base station capacity, says Speechly. “The challenge was that the base stations were being used for the A and B leg of the call.”


Recently, ruled that mobile operators must lower their interconnect rates, which would lower the rate that network operators charge each other to terminate calls on their network. “The drop in interconnect rates levels the playing  eld between SIM-based calls and VoIP,” says Speechly. “VoIP providers have data network infrastructure.

Instead of initiating a call from the SIM, you initiate the call from an IP network, and transit it through this network to terminate directly on the mobile operator network. In doing this you’ve eliminated half of the call being on GSM, which would otherwise contribute to lower quality.” This means, Speechly explains, that  VoIP providers can offer a better quality service, at an equivalent, or better cost.

“The factors that allowed LCR to exist were primarily cost related. Since the cost aspect has been  marginalised, there’s no reason to continue with LCR,” he explains. “High call charges and lack of  in the telecoms space have articially allowed SIM based LCR models to exist. The regulator coming to the party has taken the unfair advantage that these solutions had over VoIP offerings away, which means VoIP is now a mainstream substitute for businesses. Any effort by the regulator is really what’s driven the death of LCR,” he says. For this reason, has begun an awareness campaign declaring “LCR is dead”.

“This campaign is really educating the market,” says Speechly. He says it is important for businesses to understand the other options available and ensure they employ technologies best suited from a cost and quality perspective.

The other intention of the campaign is to spur IP voice adoption. He says VoIP has been available for five years, but uptake has been slow. “Businesses need to take a serious view on when they migrate.” He says,  “We haven’t seen a drop in price from . In the fixed-line market, still has 95%.  Businesses should act assertively to pressure , as increased should assist in driving telecoms prices to go down.”