IP transit... more than just another "data day" activity for carriers

21 October 2014 | Neil Kitcher

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Neil Kitcher

Blog Author | RTX; CMO


Although international voice traffic continues to grow, wholesale margins are declining fast in an intensely competitive sector. Colt’s announcement back in May that it was withdrawing 85% of its carrier voice contracts is a perfect example of this trend. With this at the forefront of mind for all carriers, maximising revenues from core telecoms services – voice, SMS and data – is a priority.

Although international voice traffic continues to grow, wholesale margins are declining fast in an intensely competitive sector. Colt’s announcement back in May that it was withdrawing 85% of its carrier voice contracts is a perfect example of this trend. With this at the forefront of mind for all carriers, maximising revenues from core telecoms services – voice, SMS and data – is a priority.

Wholesale carriers and major telcos have been utilising wholesale exchanges for voice and SMS for years, opening up traffic routes to new geographies and enabling them to sell unused capacity. It is no surprise that they are now identifying ways to take advantage of one of their most prized commodities, data, through the exchange of capacity in their fibre networks.

The opportunity here is to sell data services to businesses and other carriers. In this way, wholesale carriers and telcos can monetise their data assets by enabling enterprises or service providers to deliver or leverage VoIP, video conferencing, cloud services and the like.

As well as this, they are free to sell available or underutilised capacity to increase revenue in a market where margins remain squeezed. But this requires a new route to market.

Smaller carriers and businesses do not always have the infrastructure necessary to venture into this market, but the landscape is changing. Today’s maturing exchange market is casting these legacy issues aside with a marketplace that now offers speed, ease of use and financial security – as well as a single, reliable, financially secure platform for trading any digital commodity. This provides an immediately effective channel for smaller players to reach a wider market.

The same principles learned from commoditising voice and SMS can now be applied to data. By monetising their data assets, players of all sizes can use the exchange mechanism to access routes which were previously out of their reach. They can also optimise revenue by placing spare data capacity on the market. By doing so, ISPs, mobile operators and MVNOs can trade these commodities with the assurance they can meet surge in demand or opportunity for growth.

However, due to the characteristics of broadband capacity, it necessitates rapid responses and decisions as it cannot be stored up for use at a later date. This readily available spare capacity means operators can now make smaller, faster transactions to deal with spikes in data demand.

The exchange mechanism should ensure all of this happens simply and securely, just as it does for voice and SMS, paving the way for exciting new partnerships and opportunities throughout the industry.