FCC VoIP Direct Access Trial May Lead to Reduced Costs, Greater Efficiency for Business VoIP Providers

Big changes are brewing in the VoIP space, particularly in terms of how telephone numbers are given to VoIP providers. The FCC has implemented a 90-day direct numbering access trial for certain VoIP providers — Vonage, SmartEdgeNet, WilTel Communications, IntelePeer and Millicorp — that grants them limited direct access to telephone numbers. If the trial goes well, it could lead to a permanent change to the industry.

Currently, VoIP providers must go through the local number portability (LNP) process, while VoIP peering providers or interconnected VoIP providers must obtain telephone numbers by paying for services from a competitive local exchange carrier (CLEC), which basically acts as a middleman. VoIP peering allows VoIP calls to be forwarded from one Internet telephony service provider to another by way of a direct IP-to-IP connection.

In other words, the FCC trial would eliminate the need for CLECs in this role or, at the very least, greatly reduce their role in the interconnection process. A recent report from TransNexus, a VoIP network management software developer, confirms this, while suggesting that the change will have a huge impact on business VoIP providers’ bottom lines through cost savings while, of course offering greater efficiency.

As Vonage CFO Dave Pearson stated in a July 31 conference call with analysts: "If the proposed rules are adopted, that will facilitate the shift to direct IP to IP interconnection and enable long term structural cost savings in the double digit millions of dollars in the subsequent two to three years."

Other potential benefits of direct numbering access include reduced need for third-party providers and the likelihood of more advanced VoIP services and features hitting the scene. Still, the trial is far from over. If it turns out that numbers may end up being exhausted in certain area codes, for example, the situation may carrier on as it has for years.

Edited by Alisen Downey