Why is LCR – Least Cost Routing required in IP PBX/ IP Telephony for Companies?


LCR refers to Least Cost Routing. LCR is actually a set of mathematical algorithms that work from within the PBX or form outside the PBX to route all the outgoing calls to their destination using the most cost effective routes automatically, without much user intervention. Least Cost Routing feature should be available in many IP PBX/ IP Telephony solutions for enterprise/ corporate customers who have a high number of telephone calls going out of their network.

LCR (Least Cost Routing) – Architecture Diagram:

LCR (Least Cost Routing) - Architecture Diagram

As you can see in the above architecture diagram for Least Cost Routing, there are three components. 1. The IP PBX / IP Telephony Server, 2. IP Phones that connect to the IP Telephony Server (over the LAN) to call outbound destinations and 3. The Trunk Lines.

There can be various types of trunk lines going out of an organization that can be accessed by the IP Phones. But how can an IP Phone decide on which trunk to use for its current call? That’s where the PBX helps, as all the trunk lines are directly connected to the PBX.

PBX may have some call rules that can be set manually. The administrator can program the PBX to send all the calls going out to a particular country (by identifying its country code) to SIP Trunks from a specific service provider, for example. But, its a cumbersome process to manually identify all the trunks and manually program all the preferred routes.

And besides, there maybe different service providers who offer different rates for the same service (SIP Trunks, for example). So, the PBX needs to decide between the two. But these rates may be frequently changing, sometimes even based on the time of the day. Its very difficult to keep track of multiple such parameters while setting up manual call routing preferences. Further, they need to be updated frequently as well!

That’s where an LCR – Least Cost Routing software/ appliance proves to be very useful. In most cases, this feature comes in-built within the IP PBX itself.

Let us consider the example diagram provided above.

If the IP phones are calling other phones within the same company (but in different locations) and the PBX in each location is trunked with others using SIP Trunking, then the call can be routed through these Inter-branch SIP Trunks as they do not incur any additional charges.

If the IP phones are calling outbound numbers in other countries / other states, either SIP Trunk 1 or SIP Trunk 2 that are provided by two different service providers can be selected based on which one has lowest cost associated with it at that time.

If the IP Phones are calling local numbers/ other state numbers, the PRI/E1/T1 lines can be used or analog trunk lines can be used to route the calls.

If the IP phones are calling cell phone numbers / cell phone numbers of their own employees, the call could be routed through a FCT – Fixed Cellular Terminal as they use the cell phone network to make and receive calls. Cell phone to Cell phone calls may be cheaper and there is no charge for calling between CUG (Closed User Group) Numbers. So, a few CUG SIM cards can be attached to the FCT and calls to all internal cell phone numbers can be routed through these numbers, if the company has a CUG plan with a service provider.

LCR systems can continuously receive call charge information from multiple trunks and frequently update their database using the  latest call charge information. But, updating information about some type of trunks may require user input.

LCR systems can also monitor if the call charges vary depending on the time of the day, number of free calls left, etc. and re-route the calls appropriately taking multiple such factors into consideration. Of course, not all PBX models can provide all the LCR features.

Over a longer term, LCR – Least Cost Routing can actually save a lot of call charges to the company and the telephone system can pay for itself if this feature is properly utilized. So, you might want to investigate if your PBX has this facility (most of them have) and might want to start using it immediately to start saving on the recurring call charges.

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