March 26, 2019

Connecting With ISPhone - page 3

Into the Wayback Machine

  • May 12, 2008
  • By Gerry Blackwell
But, Von Schlegell says, terminating calls inexpensively is not enough on its own--and will become less and less lucrative as the spread of deregulation continues. Luckily for ISPhone, it was able to latch on to something else that started happening in the evolving telecom industry.

In the beginning, ISPs themselves mainly saw the opportunity as long distance arbitrage. But as deregulation took hold, it created other impacts. ISPs began to understand that there were in fact all kinds of opportunities in telephony, including offering soft phone services, and even dial tone. And any number of models for pursuing them.

Indeed, some concluded that if they wanted to compete with the phone companies moving onto their turf, if they wanted to survive long term, they would have to follow the telcos' lead and offer customers a triple play--bundled broadband Internet, telephony and pay TV.

"So service providers were starting to compete not just with the long distance arms of [incumbent telephone companies], but also with the local service arms," von Schlegell says. "In order to keep up with them, we realized we had to be in position to give them those services."

In the telephony world, it's the distinction between services offered using Class 4 switches--the fairly simple equipment used to route long distance calls--and much more sophisticated Class 5 switches that allow phone companies to do the more complex routing required of local service and to provision call management services such as voice mail and caller ID.

ISPhone has developed a complete telephony platform with Class 4 and 5 capabilities, using modern softswitch technology (software running on a computer). It's based on a mix of ingredients, mostly from Cisco, with some open source components, including SIP (session initiation protocol).

And the company has built extensive infrastructure, with points of presence (POPs) in New York, Chicago, Los Angeles, Indianapolis, Detroit, St. Louis, and Boston. Each location houses servers, PSTN gateways, and other gear. The coastal POPs provide the overseas connections.

All of this allows ISPhone to offer a range of hosted and termination services to a range of types and sizes of service providers--anywhere in the world.

Some customers choose to build some or all of their own infrastructure and may only use ISPhone for long distance termination services. The company can still save them money just because its rates from carriers are much lower than an individual service provider could ever get on its own.

Setting up to use ISPhone's interconnection services costs $250. Then the company charges per minute for usage. If the service provider uses ISPhone's billing and authentication services, per-minute charges are a couple of percentage points higher.

Other customers want to start off using ISPhone's hosted services--doing little more than the marketing themselves--and then when they've proven their business models, bring critical infrastructure inhouse. Many, though, never want to sink capital into telephony equipment, or take on the costs and headaches associated with managing it.

"A lot of them have to be in the voice business whether they like it or not," von Schlegell says. "So when they ask themselves, 'What's the least expensive, best way to do that,' usually they decide it's to use a hosted service."

ISPhone wholesales local phone service to these customers for about $12 to $18 a month per subscriber, depending on the add-on services provided, such as voice mail and caller ID. "And usually, they turn around and sell that for $20 or $25," von Schlegell says.

He claims not to be aware of competitors, which he says come and go--except one in Denver, the name of which he's forgotten (that would be Global Crossing).

"What distinguishes us," von Schlegell says, "is that we're more prepared to work with smaller service providers than [the competitors] we've known in the market in the past. They typically weren't interested in working with relatively high maintenance service providers. They were interested in lots and lots and lots of volume."

"But that was never a problem for us. We're happy to work with people who are just getting into the business, who are small and growing."

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