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VoIP is rapidly becoming the gold standard for voice termination and telephony, both for businesses and individuals, but there are a lot of terms relating to it that few people outside of the sector understand.

For example, when we talk about VoIP providers, there are multiple distinct groups: Tier 1 Carriers, Tier 2 Carriers, Tier 3 Carriers, and Wholesalers. Each tier provides a distinctly different level of service, even if the end result is identical to the user.

Despite an apparently similar product, it is important to know exactly what you are buying. This article will, therefore, quickly review the different tiers of VoIP carriers and outline the differences between them.

Wholesale VoIP

Entirely distinct from the ‘tiered’ carriers are VoIP wholesalers, such as IDT. Wholesalers do not provide infrastructure or maintain networks. Instead, they buy large amounts of ‘time’ on tiered carrier networks, enabling them to obtain the best possible prices and put together a wide variety of packages to suit client needs.

The potential downside of a wholesaler is the lack of direct control over the infrastructure upon which they rely, but they make up for this by providing routes using many different carriers, enabling them to deliver incredibly resilient voice termination.

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Tier 1 Carriers

Tier 1 Carriers are the largest organisations, typically those who own, operate, and control substantial infrastructure and large, robust networks. Tier 1 carriers are typically defined as carriers who can provide routing to any network on the internet without additional charge. They maintain reciprocal tariff-free agreements with all other Tier 1 carriers globally.

Tier 1 carriers include large companies such as Liberty Global in the UK, Tata Communications in India, and Germany’s Deutsche Telekom AG. In many cases, Tier 1 carriers do not provide carriage directly, instead focusing on maintaining their infrastructure for use by Tier 2 and 3 carriers.

Tier 2 Carriers

Tier 2 Carriers include most larger ISP and Telecom providers, including Vodafone, Virgin Media, and Sprint Communications.

Tier 2 carriers maintain their own networks on a far smaller scale than Tier 1 Carriers. They will have reciprocal peering agreements with some carriers, but will need to purchase transit through a Tier 1 carrier for some or most of their traffic.

Tier 3 Carriers

The smallest and usually most specialized carriers are Tier 3 carriers. They do not tend to be large scale ISPs, instead providing specialist connectivity – usually enterprise data connectivity and data centers.

Tier 3 Carriers purchase IP transit to the internet from other providers, only maintaining the specialist networks they provide for themselves.

Which tier of carrier you select will almost certainly be a result of the type of service you need: those looking for enterprise data connections will usually end up with a Tier 3 provider, and you certainly won’t find a Tier 1 home broadband provider. The tiers are not a ‘ranking,’ more a classification of the services they provide. For VoIP, for example, a wholesaler may provide better VoIP service, but will not provide internet connectivity.