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Keep an eye on VoEX

VoEX is an interesting company making some pretty neat moves in the VoIP market.  For instance, at the VON show a couple of weeks ago they announced that their SuperRegistry product (a carrier grade enum database) now reaches 250 million North American users.  They've eliminated the need for tandem routing between VoEX customers.  A day later they announced three new interconnection hubs, located in three of the major "meetme hotels" that will allow them to interconnect their network with some of the largest global PTT players.  And not wanting to leave wireless carriers out, a week after that they announced their Wireless Peering Grid at CTIA in Florida.

Friday of last week I managed to catch VoEX execs Cyril Matthews and Charles Studt on the telephone for a few minutes as they were leaving CTIA.  I learned that VoEX is actually three business — an IP trunking business, their SuperRegistry, and an applications business.  Historically, has evolved from trunking to applications as the market has evolved.   What this means is that they can:

  • carry VoIP traffic, just about anywhere.  Last year they did a respectable two billion minutes of traffic, and according to Cyril, this years numbers are going to be even more impressive.
  • peer networks and endpoints, and route around intermediate networks by connecting those endpoints directly.  That's what the SuperRegistry enables.  Moreover, they will peer directly with businesses, and not just carrier to carrier.
  • deliver applications which take advantage of this network.  They have a suite of the types of applications you might expect today available, and as Cyril explained, they expect to grow that suite.

As the company has evolved, they have been taking explicit steps to build new revenue sources around applications and peering, rather than voice minutes.  Voice minutes are growing, but margins are falling for them, just as they are for everyone else.  So, they will become an applications-centric carrier, leveraging the network they've built to provide access to those applications.

It's a model that we've been predicting, at iotum, since 2003.  Several companies have attempted this and failed.  However, VoEX has two things in its favor at this point in time — the market is more mature, and they have a solid foundation in those traditional businesses from which to build.  Timing and a solid financial base might just make the difference.

Ironically, the incumbents fear cannibilization of their voice minutes business which prevents them from building an applications business. VoEX, on the other hand, is the cannibal eating into the incumbents business, and they’re using that business to fund the creation of the very applications business the incumbents need so badly.

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