Telecom Cost Management Featured Article
April 07, 2011
Telecom Cost Management Can Be Complicated on VoIP Platforms
By Susan J. Campbell, TMCnet Contributing Editor
Telecom cost management can be a complicated process as appointed individuals within the organization are charged with determining what elements are driving the costs associated with telecom, how they can be reduced or eliminated and the best methods for efficient management of the overall platform as it pertains to the budget and the bottom line.
According to this recent report, news swirled around Level 3 when the company withdrew its “Petition for Forbearance” in march of 2005. This petition was initially filed to seek a ruling by the Federal Communications Commission (FCC (News - Alert)) that standard interstate or intrastate access charges were not to be applied by Local Exchange Carriers (LECs) to IP-originated calls that are terminated on the Public Switched Telephone Network (PSTN).
With this withdrawal, there are some who suggested that it demonstrates the continued uncertainty and potential exposure to traditional access charges for Voice over IP (VoIP) providers, as well as for those carriers providing VoIP termination services. Such uncertainty easily makes telecom cost management more complicated.
Today, VoIP business models rely on customers’ existing broadband connections for access at no cost. Such a critical assumption is that all domestic terminations for VoIP are actually local and therefore, also free. The same business models assumed that the cost of delivering VoIP traffic from the VoIP provider to a CLEC (Competitive Local Exchange Carrier) and an ILEC (Incumbent LEC) will be determined according to Reciprocal Compensation, at a cost of 0.07 cents per minute or lower.
Much of the telecom cost management challenge weighs heavily on the controversy between access charges and reciprocal compensation. ILECs have challenged the VoIP business model as they have maintained that Standard Access Charges should be applied to terminate all calls, including VoIP traffic that originates outside the ILEC’s local calling area. Such rates can be as high as 3.0 cents per minute or higher in some states, challenging standard telecom cost management practices.
The Level 3 petition urged the argument by the VoIP and CLEC industries that IP-originated traffic should be exempt from standard access charges and instead subject to termination rates as established according to Reciprocal Compensation rules. If such exemptions are granted, those driving telecom cost management initiatives within customer companies would be able to streamline their budgets and more effectively manage costs.
Most VoIP providers do offer customers some form of unlimited domestic usage plan, which helps to streamline telecom cost management. Many of these plans are offered at $25 per month for residential VoIP customers and $35 per month for business VoIP customers. When telecom cost management is a primary focus for the business or even the ordinary consumer, standard plans work much better for the budget.
Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.
Edited by Juliana Kenny
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