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October 2008 | Volume 11 / Number 10
Cover Story

VoX Communications Harnesses the “Power of the Cloud” to Deliver VoIP Solutions

By: Richard “Zippy” Grigonis

In an era when many upstart Voice-over-IP (VoIP) service providers claim low-cost, feature-laden alternatives to traditional landline phone service, Orlando, Florida-based VoX Communications (News - Alert) ( stands out as a proven wholesale provider of white-labeled hosted VoIP solutions for business and residential VoIP services.

A subsidiary of Pervasip Corp. (OTCBB:PVSP), VoX Communications offers extensive wholesale broadband voice, origination and termination services for cable operators, carriers, CLECs, ISPs, WISPs and resellers, as well as enhanced retail VoIP telephone services for small business and residential users.

The success of VoX can be traced to its nationwide SIP-based network, which leverages industry standards, open systems hardware and software, and high availability server cluster architecture. Instead of a single, gargantuan, centralized system, VoX has instead developed and deployed a distributed architecture that allows for an array of independent servers, logically grouped into server clusters thanks to the company’s ingenious software. This greatly minimizes the up-front equipment expenditures required to support VoIP services.

As VoX Communications’ Founder and Chief Information Officer, Mark Richards, says, “VoX has developed and deployed its own advanced SIP Voice and Transactional application ‘server cluster’ architecture, running Red Hat (News - Alert) Linux. It’s an extremely stable and scalable cluster platform free of any single-point of failure. We can scale this system up to a multitude of SIP Proxy and Media servers in a load-balanced environment that can easily support thousands of calls per second. If you examine our design principals and engineering methodology, you can see that this platform is a takeoff on the ‘Google (News - Alert) Linux server farm’ concept that they use for searches. At VoX, however, we’ve applied a similar architectural mindset for VoIP and transactional data processing. We’re also able to do on-the-fly upgrades and bring new severs online without disturbing customers, which is tremendously important.”

The uniquely low financial risk associated with scaling this technology is evidenced by the fact that, unlike competitors whose technologies scale in multi-million dollar increments, the VoX server architecture can scale in much smaller increments — $100,000 or so. Thus, VoX is never burdened with underutilized, expensive plant and equipment and does not have to pay for underutilized bandwidth or technical personnel. Moreover, the capital costs of a new server cluster can be recouped in a relatively short timeframe.

“We are extremely comfortable that this platform, together with the latest VoIP signaling protocol — SIP — and enhanced compression voice codec — G.729 — can process the smallest packets of information possible both quickly and efficiently,” says Richards. “We’re even able to deploy multiple ‘personalities’ remotely from a central location, considering SIP, RTP, CDR, features and other network architecture elements as single components, or ‘personalities’ as we call them.”

“A North American IP infrastructure or even a global infrastructure could be deployed relatively quickly and at low cost,” beams Richards. “We believe that our network embraces ‘the power of the cloud’ — the Internet — and as such, benefits from stability in the core network from our Tier-1 carrier partners. We have moved the control and intelligence to the edge. By deploying our VoIP SuperPOPs we simply have to control only on- ramp and off-ramp QoS.”

The VoX system also allows for an extraordinarily flexible wholesale architecture, which enables the Company to tailor services to the specific requirements of a wide range of potential wholesale clients.

“It generally takes between two weeks and 30 days to get the technology all set to go for the wholesaler — that includes things such as billing, the website, and so forth,” says Richards. “Then there’s a period during which the wholesaler is fully trained — after all, they must be able to answer certain questions from their customers. We work closely with them so they’re ready for specific questions about adapters, or what it means when some particular light starts blinking. On average, it’s a 90 day cycle from the initial inquiry to market launch for our service provider customers.”

And Back at the Back Office…

Further bolstering this system is the more than 50,000 man-hours of development that has been invested in the highly automated, scalable VoX back office.

“No human ever touches an order other than a few address validation exceptions and actually putting the express shipping label on the box prior to shipment,” says Richards. “This is by design a very capable back office that will easily scale and provision orders for very large wholesale partners without having to hire a large staff to meet demand. The back office and processes are in place and able to handle 1,000, and even 10,000, orders per day. I question how many other companies could realistically put this same stake in the ground.”

Excelling in the Marketplace

“The technical wizardry of VoX Communications is complemented by our program structure, pricing and support services that will enable our Company to become a market leader against competing and sometimes better known VoIP service providers.” states Richards.

“I sincerely believe that our product can easily be private-labeled and our technology is rock-solid,” Richards continues. “Our strategy has been to pursue a wholesale model, and not to compete with Vonage (News - Alert) and others for retail digital voice services. Through a massive marketing effort over the last few years, the retail players have done an excellent job of introducing VoIP services to the mainstream market, and signing up large numbers of residential customers. But it has come at a high price — over $300 per subscriber. With an attrition rate close to 3% per month, this becomes an untenable situation in my opinion. We have tested various alternatives as an entrée in the retail market, and have chosen not to go down that path.”

“We are executing on a wholesale model in which we empower our clients to private label and sell high-quality digital voice services. Many of our wholesale customers already have a large customer base that they can market to at a substantially reduced cost, far below $300. The cable operators are a great example — they are experiencing a high penetration rate within their served markets because they can bundle the voice product with cable and Internet services. As a result, they increase their average revenue per customer (ARPU), they gain additional contribution margins, and they create a tremendous customer stickiness that results from the voice product. They will eventually see penetration rates of over 30% throughout their served market. This is true also of the ISPs, wireless broadband providers, and a large number of resellers and ASPs, all of whom have access to and a trusted relationship with large numbers of retail clients.”

“As our wholesale customers are having success signing their own retail end users, and at a low acquisition cost, we also experience a very low per-subscriber cost. VoX merely delivers the back end, walks them through the process, and provides a customized web presence for them. Our technology is a bit more ‘nimble’ and flexible than others. Since we benchmarked others in this business, we learned from our predecessors’ trials and tribulations. Whereas others had to quickly build a network with multiple vendors, VoX took the time to deploy a predictable, scalable platform that’s capable of serving millions of customers.”

Richards continues, “For the retail service providers, I think the critical challenge today is to keep attrition down — one of the main reasons their growth has stalled. Users are turning to their friendly local cable company, and other providers, many times seeking better quality and additional features at a competitive price. Additionally, customers now can choose from new retail providers such as (News - Alert), Clearband, and a multitude of others that have come on the scene recently. There are literally thousands of companies around the world selling VoIP, but few do so successfully using their own equipment as we do. Since some smaller wholesale providers have fewer subscribers, they perhaps don’t yet have to worry about customer growth affecting their ability to provide good quality phone conversations. But at some point every provider must face the challenges of quality of service. We began with quality in mind and the ability to scale to large numbers.”

The Future

“Various people on Wall Street and elsewhere have difficulty differentiating VoIP providers,” says Richards. “I could tell them that some of our competitors have at least $3 in hidden fees, and we have none. But quite frankly, since there will be $30 billion in revenue coming off the PSTN in the next 5 years, it doesn’t matter. We just have to be there and continue to provide high-quality products and features at a competitive price. People often tell us they’ve tried other wholesale providers and the experience hasn’t always been a good one for many of them. We can deliver a 2-port ATA [Analog Telephone Adapter] or an IP Phone that will plug-and-play wherever you are in the world and you’ll experience toll-quality voice with no dropped calls. As the multi-billion dollar PSTN network goes away, we just have to continue to execute on our simple but effective strategy.”

“We intend to build a profitable company for our shareholders,” says Richards. “It’s a huge market opportunity and less a matter of delivering the lowest price than delivering a quality service, reaching more people, and finding more channels to sell the product. I’m confident that we have the lowest cost-per-port, industrial-strength technology available for IP soft-switching. The value proposition made possible by our technology’s cost-efficiency should be compelling to wholesale and retail customers and invasive to our industry. We pay a lot of attention to our business and its financial metrics as we continue to define and pioneer new services of our own.”

“The future of VoX? Well, we have reduced reliable telephony to a simple application, which technically can run in a browser. Once you have done that you have achieved mobility, and this is where your imagination really kicks in. VoX digital voice service is already running on a cell phone for one of our partners, and as smart phones evolve, we want to be there. I see us running on the Blackberry, the Apple (News - Alert) iPhone, and similar devices where voice is just an application.”

“Some people say that the big phone companies would block us.” says Richards. “But I have been an Information technology guy for 30 years and I could encrypt my packets, stealth my ports via a proxy or run within the context of a VPN — block me? — Good luck with that! [smiles]”

“Where does VoX go from here?” asks Richards. “We are just beginning. When you can switch to channel 33 for personal communications on your TV and use VoX to do an IP Video call to your family two continents away — only then will VoX have evolved to where I want it to be. Companies like LG are doing some very interesting things with the next generation of TV and when your TV has a microphone or you can’t tell your TV from your PC because it’s the same box — then we will be truly moving into the IP communications age. Where can we go from here? — anywhere and everywhere — there is no limit to technology or ‘the power of the cloud [Internet]’. The future is limited only by our own imagination.”

Based on expressions of interest from dozens of U.S. and international carriers, it’s quite likely that Richards is correct in his assumptions. And in 2005, we here at Internet Telephony (News - Alert) named VoX the “Most Innovative VoIP Technology Provider”.

Richard Grigonis is Executive Editor of TMC’s IP Communications Group.

» Internet Telephony Magazine Table of Contents

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