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A beginner’s guide to wholesale voice termination

Internet-based voice systems are rapidly changing the telecommunications industry. This is unsurprising, as they offer many advantages for business. Not least of these is lower costs for calls, particularly international ones.

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VoIP systems are also more easily scalable and offer extra features compared with a conventional PABX. VoIP is therefore the future; indeed, BT has committed to making the national network IP-only by 2025.

How it works

You need a wholesale provider of services to use VoIP, which are known as ‘tier 1’ wholesalers. They buy connections between countries and sell them on to businesses at a rate that gives them a margin for themselves.

At tier 2 you have wholesale voice termination from a supplier such as Calls are routed from the service provider to their final destination, with the wholesaler providing the path by which the calls get routed across the internet.

How does this operate in practice? The tier 1 provider holds the rights to send calls across a physical international network. This means it bears the cost of the investment and technical equipment required to make the services work, which means that providers at the tier 1 level are usually large businesses. A tier 2 provider, on the other hand, leases a part of the network from a tier 1 provider and sells call services on to its customers. Tier 2 providers are therefore often smaller companies.

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Growth market

VoIP has become increasingly popular in recent years, which has led to a boom in the number of companies offering IP phone services. Companies at the tier 2 level can start up with a relatively small investment, which means there are many companies offering telecoms services at low prices under their own brand names.

When you are choosing a VoIP provider for your business, it is important to look closely at who you are dealing with. Look to see if they have a track record in the VoIP business and ask to see references from existing customers. You may be able to save a few pounds by going with an unknown startup; however, if your business relies on communications – as most do – you are taking a risk by doing so. An established company may cost slightly more but offers greater security, which should not be underestimated.

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