Least Cost Routing, or LCR, is a simple practice that finds the most inexpensive way to route phone calls. It is the process of analyzing, selecting and directing the path of outbound and inbound communications traffic, depending on which path delivers the best rates. For example, if a telecom company in Johannesburg is looking for a calling path to Cape Town, they will assess the calling rates for a selection of telecom companies operating in Cape Town, and then choose the provider that offers the cheapest rate.
Any organization with interconnections to other networks has the opportunity to lower their telecom expense by selectively routing each call to the network that will complete the call at the lowest cost. Least Cost Routing (LCR) of telephone calls is implemented by creating a routing table that matches telephone dial codes with a list of destination networks rank ordered by cost. Routing tables can be created manually by skilled technician, but are more typically, created by specialized least cost routing software that automates the process of quickly building an optimized least cost routing table which may have tens of millions of routes.