How can Tier-1 carriers fill the gap with emerging VoIP providers?

In their 2010 yearbook, Capacity Magazine quoted Eytan Cohen, Chief Executive Officer of French VoIP
wholesale Longphone : “We find that when we knock on the door of the large carriers we have to jump
through more than a couple of hoops. […] maybe they’re not very serious about doing business with us.” In
this statement, Cohen highlighted the difficulties faced by small-to-medium sized carriers to interconnect with
Tier-1 carriers.

BICS, an international wholesale carrier delivering best in class solutions to the biggest telecommunications
providers around the world, has acknowledged this market imperfection since years. However, it took some
time to figure out what to do. Its innovative approach allowed the company to gradually develop a new
solution targeted to small to medium sized emerging VoIP providers. The guiding thread was to keep the
core of the voice solutions used by worldwide operators, providing the same quality to those new customers
while removing superficial features.

To understand the origin of the issue, we should reflect on the past 15 years.
In the early 90’s, the telecommunication world was ruled by TDM (Time-division multiplexing). Since then,
the market has been segmented in three main categories.
The first segment is the Tier-1 community, consisting of historical incumbents or public companies, typically
owning a global network with more than 500 direct routes globally.
The second segment is composed of Tier-2 players, which are national companies that appeared with the
privatisation of the telecom industry. They typically are national service providers that have a local fixed or
mobile network and are connected directly to Tier-1s.
Finally, the last category is the Tier-3s, individual small players such as MVNO’s or “call shops” that are
interconnected to the Tier-2 layer.

The TDM technology made the telecom world highly hierarchical, as it excludes direct interconnections
between Tier-3 and Tier-1 companies. There were three principal reasons for this.
First, there is a technical issue: the interconnection protocol between Tier-1 and Tier-2 (SS7) is different from
the one between Tier-2 and Tier -3 (PRA). In addition, because Tier-1 generally has a global Point of
Presence, it was physically extremely hard for a Tier-3 to connect to this Point of Presence. Indeed, it has to
pass through the local network of a Tier-2.
As a consequence of the first reason outlined above; the second reason was that Tier-1 company use to
deal with the Tier-2 layer, and the associated commercial model is organised around bilateral account
management. This is a cumbersome and expensive way of working yet justified by the revenues generated.
Consider that if a Tier-1 has to deal with a Tier-3, the volume wouldn’t cover the operational costs.
Finally, there is also a financial obstruction: a Tier-1 would never support and manage the credit risk of each
individual Tier-3 operator.

However in the late 90’s, a new protocol emerged; the Internet Protocol (IP), which enabled the entry of
VoIP. This new way of encoding voice traffic revolutionised the communication world. IP communications
made the world “flat” and, technologically speaking, have removed the need for Tier-2. The previously
mentioned technical issue was therefore solved, but the commercial model and the credit risk remained
important to allow a Tier-3 to directly connect to a Tier-1 network. It was then up to the large carriers to knock
the remaining obstacles down; a challenge that BICS didn’t hesitate to accept.

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BICS fully acknowledged the huge potential of the Tier-3 community, as it owns around one-third of the
global retail customer base for international communications. The future of VoIP business will therefore
belong to these smaller players. Consequently, it was crucial for BICS to develop a solution to address this
market in a profitable way, while assuring the high quality it provides day after day to any big player in the
Tier-1 segment. By designing EasyConnect VoIP, BICS has kept the core of its two well-established voice
products, First Class VoIP Transit and Business Class Transit, but has changed the packaging to fit the
purpose.

It was essential to develop a virtually fully-automated solution, with practically no human interaction. Indeed,
everything is managed through the EasyConnect VoIP website, which becomes a real online sales tool and
virtualizes the sales process. It enables us to tackle the account management issue and guarantee
operational efficiency.

In order to address any credit risks, we decided to transition to a prepaid solution, requiring a minimum
amount for the first payment, which actually covers the fixed cost of the interconnection. Afterwards, there is
no more minimum amount required; the customer can pay as he goes, in Euros as well as in US Dollars.

Customer relationship management, which is also part of an account manager’s tasks, can now be assumed
by the customers themselves, leading to more accurate analysis. Indeed, EasyConnect VoIP comes with a
rich set of online tools allowing the customers to easily generate volume analysis and Quality of Service
reports, as well as manage the destination prices. Again, the operational model has been adapted to smaller
operators. Because a smaller operator counts generally for smaller amounts, they are sometimes left aside
in favor of the bigger customers. With EasyConnect VoIP, any small to medium sized operator can now
manage its balance and generate powerful reports allowing him to reach its business goals.

A prepaid VoIP wholesale termination solution for small to medium sized VoIP service providers, that is what
EasyConnect VoIP is all about! By recognizing and addressing the gap between Tier-1 and Tier-3 operators,
and the necessity for smaller players to have direct access to the network of the larger telecommunication
companies, BICS continues to be in line with its mission: “Connecting the world – Enabling value”.