How to start a voice over ip service and benefit from the calling card business

September 25, 2007

Calling Cards – saturated market?

One of the most important question to ask yourself is which category of people you would like to serve and how you gonna keep up with the supply (read capacity). The calling cards market seems saturated, and there is obviously a huge number of service providers, providing the same product; some of them even offer free minutes on some destinations.

How do they that? Their call volume is so big that they can afford it but administration charges + connection fees cover the cost of the call said “free” ! And by using “grey” routes, virtually the service provider doesn’t pay anything or almost anything – a “grey” route is a call being transmitted over the public Internet through the terminating gateway in the target country: pretty easy to setup with Asterisk 😉

What’s the potential?

I think you’re starting to get the potential of a grey route in terms of profit, but are you willing to serve a large base of customers and forget about quality? In general the customer is expecting a quality as good as his home phone, can tolerate a quality close to his mobile phone, particularly if the call rate is lower than calling through PSTN.

Call Quality

The main problem is the call quality – the best compromise is to combine a grey route with a “white” route – a white route is a call being transmitted via the national operator network (PTSN/SS7). Unless you can produce a subsequent traffic to get very good prices, it’s going to be difficult to be competitive with white routes – we know that customers hardly change their habits unless you offer something really new – the winning formula is definitely: competitive prices, acceptable quality in key destinations: South America, Africa, North Africa, Asia., International mobile networks.

Your target

Next, define your target or potential users – try to ask few questions to your nearest calling cards dealer, or at the call shop and simply ask which destination he would like to get good prices, you will know which destinations his customers are calling the most. You remember I was talking about about “quality close to mobile phone”? Now imagine providing a service with mobile phone quality to mobiles – effectively, this is about using grey routes for calling mobile networks in your target destinations.

The product

Calling to mobiles in Europe or elsewhere is still very expensive. In Africa for example, a good majority of people are using their mobile phone to receive international calls – it’s probably the only way to reach people in Africa, as they rarely have a landline.

The technology

Now you must wonder : how to originate and terminate calls for your market ? it’s time to talk about equipments and expertise.

In this type of deployment, you need a reliable DID provider or setup your own E1s or T1s to originate calls – a customer in Singapore, was telling us that he ordered a T1 in his office connected to a Quintum gateway, which in turn was sending traffic over the public internet via a DSL line ! we were stunned and this is far from professional .

Because, once the incoming call is sent to your platform, you need to handle the call : authenticate the caller with a prompt asking to enter the PIN number, verify remaining credit, bill and teardown the call. You will find open source solutions to manage your calling cards, that could be a good option if you have limited funds.

Open Source vs Commercial

Setting up a voice-over-ip network seems easy with solutions such as Asterisk – I did it myself – but the time you will spend configuring Asterisk, SER, and make sure the billing is working fine, the interconnect with providers can take from 1 to 3 months and no guaranty of support if something goes wrong. And finding talented people can be costly, because you will need some expertise on the long run.

It’s important to assess commercial solutions – you will rarely find a serious telecom player using all open source for their core network. Based on my sole experience, a commercial solution can guaranty stability and answer several questions you may have.

Action

If you just want to try the market with few cards, it’s fine to go open source. In case you would like to establish a strong brand – customers always remember deceiving products – go for a commercial solution such as N-Soft, Digitalk or Talking SIP. They are proven solutions and widely used. You may look at renting Talking SIP, print your cards with nitecrest.co.uk (UK) or topgraphic.fr (FR), study the competition by buying some calling cards – IDT Telecom is probably one of the biggest calling cards supplier worldwide – give attention to their fees structure, billing increments and variable charges.

You may also need a SBC such as Nextone for smooth interconnect and advanced routing – renting is a good option as this platform is quite expensive.

Make sure to find a good termination carrier. It’s difficult to find top class A to Z carriers but as you read in my previous post Minutetraders will help you out finding the right carrier, so register now @ www.minutetraders.com


Summary

Minimize your exposition while increasing or decreasing your capacity as you wish: get started with low expenditure and rent advanced platforms so you can get out at any time.

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