An introduction to VoIP wholesale

The relatively recent widescale adoption of VoIP systems for business and home telephony has not yet caused a massive paradigm shift. Most organisations that have adopted VoIP use a traditional provider and therefore receive service in a similar way to ‘traditional’ telephone service.

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That is changing, however, mostly due to the increase in VoIP wholesalers and VoIP minute resellers. What exactly is VoIP reselling, and what benefits could it possibly bring to customers?

How does wholesale VoIP work?

‘Reseller’ may have a bit of a negative connotation; in this case, it shouldn’t. VoIP resellers purchase minutes from wholesalers in such bulk that they get rates an end customer – even a large business – could never dream of. This allows them to repackage the VoIP minutes into bundles that businesses and individuals can benefit from.

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This works because of the nature of the VoIP industry and network infrastructure. There are fundamentally three tiers of VoIP provider. Tier 1 providers own infrastructure – they are companies such as BT and Virgin that lay and maintain the physical infrastructure and sell carriage on it. Tier 2 providers run the networks that provide the communication routes on infrastructure owned by tier 1 providers.

Tier 3 providers include companies such as – wholesalers and resellers that run amalgamated networks or package services for end clients.

What benefits do VoIP resellers bring to customers?

With this multi-tier approach, you would expect costs for customers to end up higher. There are more entities between the provider and the end customer, each needing to make a profit; however, in this case, it works in reverse.

Fundamentally, data carriage on the physical infrastructure costs next to nothing, especially when bought in the sort of quantity tier 2 providers will be looking for. Similarly, it costs little to maintain a network – the majority of the cost is in set-up and expansion.

While these costs need to be covered, this gives everyone in the chain – especially the resellers – large margins to work with to provide a variety of services at a wide range of prices, giving end customers a tailored service at a competitive price.

While VoIP adoption may have been slow over the past decade, there is now no reason to avoid it. The infrastructure is great, and it offers substantial cost savings.

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