September 20, 2016
What’s the right number of interconnects?
Wouldn’t it be great if there was a clear, unambiguous response to this question? Like, 4,284 interconnects is the right number. That would be awesome if that number existed. But, unfortunately, it doesn’t. See, there is no “right number” for interconnects. It all depends on your business, your objectives, your needs, your capabilities, etc. All the pieces that make up your voice business are what go into determining what is the right number of interconnects a carrier should pursue and maintain. Are you a pure play retailer? Do you focus solely on the U.S.? Are you an OTT player? How much traffic do you have currently? What is your on-net footprint? How are you doing from a termination perspective? What is your ACPM? What is your margin? What are your plans for the next 18 months, 3 years, 5 years…? All of these questions inform your voice strategy and that informs the number of interconnects you need.
Here at GCS we have carrier customers who range from a handful of interconnects, say 8-12, all the way up to more than 4,000. That’s a pretty wide spectrum. Do you need to be connected to every provider in the marketplace? Probably not, but you also probably need to be constantly increasing your suppliers. The voice industry is a highly commoditized, hyper-competitive marketplace. It’s dynamic, seemingly changing day-to-day, if not moment to moment. So, that means for carriers to maintain competitive relevancy, they need to be engaged in the market, and one way to do that is to have a strong, vibrant interconnect base of carriers it does business with on a frequent basis. So, what is the right number? I don’t know, but I know it’s probably a lot more than 8-12, and for some carriers, it’s definitely more than 1,000.
Have a great week, Ani