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The Current State of Global Wholesale Voice Market/ Industry
The nature of the wholesale voice business today, is comparatively simple to carry flows, either over IP with an implied quality need or with TDM switching and an overt quality need. In order to meet the quality need, the service is sized to peak capacity requirements.
Many customers have become accustomed to and use Voice over Internet Protocol (VoIP), to place long distance calls at low or zilch cost. VoIP traffic has started increasing as fast as the traditional circuit-switched telephone traffic. Traditionally, the buying and selling of international wholesale services were done at major industry events or operator-to-operator. Buyers bought termination for calls to an entire country at one price. However, after deregulation, the number of carriers increased exponentially, and the bilateral model was confronted by the concept of competitive termination. This means, that an operator in one country can buy call termination from another operator in another country, in a competitive marketplace that provides lower unit price and more price-quality choices. As the number of players increased, new carriers competing in a geographical area distinguished their prices for terminating calls below the country proper price.
Now let’s have a look at the current state of wholesale voice industry. And of course, we have both a positive side and a negative side. The positives are that now the infrastructure has completely developed in major countries of the world. Different countries from different regions are doing interconnections with each other as VoIP companies have a global reach and presence. Also, there are so many good telecom events taking place at favorable locations, that there is no dearth of platforms to find business and interconnect with tier 1 and tier 2 carriers. Companies who have good business terms are making swap deals and exchanging traffic to earn revenues and considerable profit margins. They get a new pool of traffic and cost reductions on routes, with quality, from their vendors.
On the flip side, there are challenges like quality assurance, fraud traffic, bad debts, competitive rates by vendors, an increase in the number of small carriers and low entry barriers to the VoIP industry.
Also, the voice business is coming under increasing pressure. Prices are falling, and buyer power is increasing as the retail business is combining. Both top revenue and bottom line profit are expected to drop. Specifically, the incentive structure of the market is going to shift with the end of metered telephony. The kind of complex network operations and billing systems currently used to enhance routes and the costs need to go.
There are new challenges in maintaining call quality as players in the market have headstrong incentives, and may no longer endeavor to deliver good call quality. Now VoIP providers need an unmistakable approach to commerce responsibility for any service quality issues, and to monitor and trend changes.
There is also technological change. VoIP industry is going from space multiplexing (circuits) to space-time multiplexing (packets). This is creating lasting risks for the service delivery, which can be calculated, but will be seen as unique to the existing skill base and processes.
Yet it has been recognized that International Wholesale Voice is not dead and there are noteworthy signs of life for the coming years. Besides on a global level, there will be continual growth in the volumes and revenue of voice calls carried through wholesalers for the coming five years.