With the burgeoning demand for VoIP services, wholesalers, carriers, resellers and financiers alike are re-shaping the value chain.

Financing wholesale VoIP termination

The capital-intensive nature of telecoms has historically attracted major lenders willing to take a longer-term view. However, with many smaller entrants in the VoIP market, in particular in the higher tiers, there is a growing demand for agile finance solutions. Thankfully, with the explosive growth in fintech, a variety of disruptive new market entrants are poised to leverage the VoIP market.

The Wholesale VoIP market

As VoIP penetration continues at the expense of PSTN, competition between carriers is inevitably intensifying. As with any wholly or partially commoditised marketplace, there are always questions as to return on investment and longer-term profitability in the face of fierce competition. Resellers, the primary clients of wholesale VoIP providers, are themselves under enormous pressure from clients and stakeholders alike with a mandate to deliver competitive advantage at all costs.

The key choice in a wholesale context is the age-old infrastructure choice between build, buy or rent. Whilst there are merits to each of these models, the availability of turn-key VoIP services and equipment tends to drive the choice towards the lower end of the investment scale.

Back to differentiation. If the underlying infrastructure is commoditised then this can only occur through service levels and creativity in all client-facing elements, an approach clearly illustrated in IDT’s own offerings to clients.

The rise and rise of the reseller

When investors and new entrants consider the above pressure on differentiation in the wholesale space, many of them decide to focus their energies on becoming a VoIP reseller. If growing and retaining the largest possible client base is an organisational objective, the reseller role may hold considerable appeal. Wholesale VoIP can not only be sold to enterprise and even consumer clients; it can be sold to other resellers with their own market reach.

For many organisations, the reseller role is seen as offering the ideal balance between profitability, market access and control. What is notable is the emergence of an entirely new breed of VoIP reseller in the form of non-traditional firms who may hitherto have had little or no presence (or indeed interest) in telecoms but who have their own market presence and reach. In fact, any firm with an established client base may be a strong candidate in a reseller context.

Consumer demand for VoIP

As the VoIP market matures, demand-side requirements are evolving. End consumers in the enterprise market have been through a significant learning curve and can be considered literate in the technology and its business benefits, as can intermediate wholesale customers.

Today’s market is a far cry from the tariff-distance trade-off paradigm seen in PSTN. Modern VoIP solutions exhibit many of the characteristics of data and software services offerings rather than those of traditional telephony. Voice communications may be a common characteristic across a number of communications devices and applications but it may no longer be the differentiating one.