Least Cost Routing

Least Cost Routing

Least Cost Routing, or LCR for short, is a process used to always select the least expensive telephone company when connecting a call. Least Cost Routing is typically based on the Call-by-Call function, allowing users to select the desired telephone company by dialing a specific access code. Automated Least Cost Routing is intended to eliminate the cumbersome manual selection of the least expensive provider.

Software and hardware based options for Least Cost Routing

There are different options for using Least Cost Routing with a telephone line or telephone system. We generally distinguish between hardware and software solutions. Hardware solutions typically consists of a small controller with the information required to select the telephone company and is activated every time an outgoing call is placed. It analyses the number being called, finds the least expensive provider based on current rates and its rate table, and adds the respective access number. Software solutions use the same principle but are integrated right into the telephone system.

Determining the least expensive telephone company

A Least Cost Router requires some information to determine the least expensive carrier to connect the call. Results will only be optimal if it has all the necessary information and the rate table is up to date. 
It requires the following information:

  • The time the call is being placed
  • Where you are calling
  • Expected talk time
  • Current rate information from all telephone companies including current rate terms, time units billed, connection fee per call, etc.

Least Cost Routing today

When the telephone market was first deregulated in Germany, Least Cost Routing was very important, since this process meant significant savings for telephone services. Least Cost Routing was widely used and was used by both private and commercial users. The savings potential was especially high for long-distance and international calls. The overall drop in call rates and the introduction of flat rates have significantly reduced the savings potential of Least Cost Routing.