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Anyone can be a carrier

Via Om Malik: $10,000 and you are a phone company.

These days, the international telecoms game seems a virtual cottage industry. According to Chris Edgecomb, CEO of California-based wholesaler Sirius Telecom, it now costs only $10,000 to set yourself up as a global carrier. The reward is your share of minutes that now terminate for as low as 0.01c per minute, he says.

The equipment is dirt cheap now.  Ebay, for instance, at this very moment has a Cisco AS 5350 with dual E1 interfaces for $7500.  That will get you 60 ports of capacity, which can carry roughly 2.5 million minutes of traffic monthly, if run 24 hours per day at full capacity.  So, if you can get a penny a minute, you can gross $25,000 / month.  Figure on $1500 for the E1 capacity on the local loop, $800 for the backhaul, and $500 for colocation, which means that theoretically you could make a very handsome margin.  However, in reality, your system is probably going to run at 80% capacity for 8 hours per day, rather than 24 hours, which means a gross of more like $6600, rather than $25,000.

In addition, you’re going to need to bill people, which means buying a billing software package, such as the one offered by PortaOne, or using a hosted billing solution like the one offered by Telic.net.  Telic’s solution is probably the best for the small time operator, since it scales with the number of minutes you sell, as opposed to PortaOne’s which is a $50K package.

Any way you cut it, it’s still a business with handsome gross margins, and it’s not that expensive to get into. That is the reason the incumbents find VoIP so frightening.

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