Wholesale Termination Services or Carrier Services has been a big business for telecommunications carriers for over 25 years. Telecommunications carriers fall into two categories and can either be a 1) Retail carrier or 2) Wholesale carrier of 3) both. While wholesale carriers offer 100% of their network or services for resale or lease, retail carriers may offer none or only a portion of their own network for wholesale business. Gross margins on wholesale services are typically much lower than those of retail services but revenues generated on wholesale services can be much higher.
The increased reliability and popularity of VoIP technology has resulted in a significant reduction of rates and gross margins of all voice traffic over the last ten years but has also driven traffic volumes exponentially especially with international long distance calling because it is now much more affordable for businesses and consumers.
VoIP has also eliminated geographic boundaries and made it much easier and faster for carriers to interconnect to one another. Installation intervals for international services has been reduced from 2-3 months to 2-3 days because of VoIP technology. In addition, it is much less expensive to connect to other carriers today. Back in the 90's, it would would literally cost thousands of dollars to connect to an overseas carrier for wholesale purposes while today, the only cost might be an incremental cost in the bandiwdth at your switch site.
Finally the cost of softswitches, routers and gateways that are used to buy or trade carrier services are literally a fraction of the costs of TDM swithches that were required in the past.
However, due to the virtual, networked and real-time nature of carrier services, the entire sector of call termination is subject to a number of business risks. Unmet commitments, payment and credit frauds and quality inconsistencies are rampant in the sector specially in the lower domain of Tier 3 carriers. Accordingly, branding and image building is typically tough and is prized. When a company achieves a certain positive brand image, it becomes extremely important to protect which is not always financially and administratively easy due to fast fluctuation in the market. Carrier services business and customers are also not considered to be considered to be "sticky" as volumes of traffic can quickly shift from one carrier to another because of better pricing or a valued sales rep moving from one carrie to another.
In most of the Middle East, African and Asian countries, voice termination services are generally subject to strict and long drawn regulations by the governments and telecommunication regulators. One of the reasons for this strict behavior is the desire of these overseeing bodies to keep the voice termination rates in their respective country at a certain high level. Generally, this is due to a situation where a sizable population of a country moves abroad to other countries for work opportunities. This population is usually financially stronger than their family connections back in the home countries. Close and well-knit family structure of these regions and the financial advantage results in an asymmetric flow of more calls coming to that home country than the number of calls being originated from that country to other parts of the world. In such a situation, governments and their regulatory agencies spot a financial opportunity to maintain a termination rate much higher than the actual cost of termination thereby generating extra revenues for their country.
Wholesale termination services are here to stay but we will continue to see rate compression for years to come. GWT is a terrific forum for you to find and do business with carriers as both customers and suppliers all over the world. This process is much faster and cheaper with GWT. Our search filters are a convenient way to find carriers in a given country or with specific routes for your needs.