Monday, April 04, 2005

VOIP Fraud

Having talked to numerous VOIP providers, it is readily apparent that (1) most don't have a viable business plan, and (2) this sector is still fluid, changing on almost a daily basis. VOIP Termination seems to be the one of the viable service offerings for the VOIP Providers, but even this is in a chase to bankruptcy. The race to bottom in VOIP rates is fast becoming a problem. I have seen carriers at 1.2 cpm in continental US, but Primus just boosted their rate to 2.5 cpm unless you commit to $500 in billing (that's 33K minutes). Deposits and pre-pay are a necessary requirement for cashflow, because there are still too many surprises in billing and in consumer fraud. Carriers are having a problem handling the debt load. It requires a base of at least 1000 users to handle the over-unders in billing. Many ISPs have not considered the billing system required to handle CDRs and LD billing. Or pricing schemes as they try to offer all-you-can-eat plans without knowing what the costs are for that plan. (The average consumer uses about 300 minutes of LD per month). .... in an ISP-Planet article ( Patnode is optimistic about the VoIP future. "I've never seen rates go up before in all my telecom years," she says. "In the last month, I've started to see rates go up. It's because of consolidation—many companies cannot handle their debt load. So far, we've been able to stick to our price sheet even in this crazy turmoil." The strategy is simply about price. "VoIP is a web service and should be consumed like a web service. The consumer should be able to see what's available and make a purchase, and if you don't like it, go to a different provider. If my rates are not as good or if there is a network problem it's all just an IP address and you should be able to switch."

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