VoIP termination is a service
provided by wholesale carriers to other service providers
to start up, add to or extend the reach of their networks.
VoIP termination service providers can typically terminate
traffic at a lower cost than traditional time-division
multiplexing (TDM) routes.
According to Internet giant Cisco,
"The main growth area for VoIP is toll arbitrage.
Toll arbitrage takes advantage of the ambiguous regulations
in termination of IP traffic within countries and localities.
Because of these regulatory disparities between regulated
TDM traffic and typically unregulated VoIP traffic,
VoIP can be terminated at a fraction of the cost of
TDM traffic (check with local regulation authority for
requirements for terminating VoIP traffic)."
small countries are starting to build packet-based
networks right from the start. They favor VoIP
termination over traditional termination since
since VoIP termination offers a lower tariff cost
and termination cost than traditional networks.
Wholesale VoIP termination providers will gather
traffic from many sources around the globe then
terminate it locally for the local market price.
Wholesale VoIP termination providers charge fees
to transport and terminate data or voice successfully.
The cost for VoIP termination
is based on transport, equipment, local PSTN fees, and
any tariff imposed on the traffic plus VoIP termination
services are a commodity in many markets, with rates
typically based on capacity in the region, completion
rate, QoS, and cost. Lowest cost, highest completion
rate, and best QoS are the three elements that most
service providers look for in a wholesale VoIP termination
company. Since competition is stiff now, providers have
Some companies wish to get into
VoIP termination in order to expand their present portfolio
of offerings and do so by accessing several geographical
areas and using them to transfer and terminate calls
from VoIP to PSTN networks. Each geographical gateway
receives VoIP calls in the form of data packets, converts
them to analog signals and terminates calls locally
to the PSTN network.
VoIP termination setup usually includes a billing server,
several gateways, a geographically tied presence with
high-speed Internet access, support for H.323 and SIP
protocols and contracts with several origination partners.
The gateway is responsible for converting data packets
to voice signals and vice versa. There is a certain risk
for those dealing with in the wholesale VoIP termination
market, especially when it can be a fluctuating commodity,
but the rewards can also be quite impressive as well.