We spend a lot of time having discussions with prospects and partners. We are fascinated by the universality that carriers prioritize or emphasize interconnect voice. That is to say, they tend to give it a low priority. Why is that? I mean, yes, we understand that the industry has declining revenues, greater complexity, and thinning margins. And, yes, it is harder to make a buck in interconnect voice, but should that be the reason behind deprioritizing it? Maybe. But, maybe not.
Interconnect voice is a necessity for carriers. It’s like bandwidth, you just have to have it. So, since you have to have it, why not make sure it is optimized? Even with all the challenges the market has regarding interconnect voice, it is still relevant and important.
So again, we ask…
“Why is interconnect voice deprioritized?”
Here’s a potential reason we have deduced from our conversations:
“Interconnect voice is getting harder and harder, and the contribution margins it provides are declining in lock step with the revenue declines. No one wants to ask for the budget to invest in their interconnect voice operations. In fact, they just want to reduce their cost of operating it.”
The problem with this reasoning, at least as we see it, is that it ignores the value of the top line revenue contribution and it is illogical from an investment stand point. In order to lower the cost of interconnect voice operations, you have to make some initial investments that will yield the reduced costs.
Let’s discuss the top-line revenue contribution. We agree and recognize that contribution margin from interconnect voice is not inspiring. But, what is inspiring is the top line revenue that interconnect voice can contribute and, for the smart carriers, that is a strategic asset. Think about it, with a simple price reduction pushed out to the market, carriers can generate accelerated top line revenues in the wholesale voice market. Want to increase revenue numbers at the end of a quarter? Lower your rates and watch the minutes fly and the revenue associated with it!
That’s why it is important. That’s why we say it is strategic. The smarter carriers recognize it, and have made the necessary investment.
So, where is interconnect voice in your priorities?