Year-End Watch List: 10 VoIP Trends to Keep an Eye on

Posted by Daniel McFarland on Dec 3, 2015 2:43:47 PM
Daniel McFarland

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According to a recent report by Future Market Insights (FMI), a research group that studies trends in the IT industry, the VoIP market is expected to experience continual growth and generate a predicted $86.2 billion by the year 2020. That’s a lot of money to be earned.

In order to stay ahead of your competitors, you must study trending developments and decide when to take necessary action. If you want a slice of that $86 billion dollar pie, you need to prepare yourself and tackle these trends before your competition. Here are ten trends to watch as we conclude these final months of 2015 and enter the New Year. 

1. Peering

Peering is a VoIP trend among wholesale VoIP carriers as a way to reduce costs. Right now, the party making the call pays and connects to the Retail Service Provider (RSP), who in turn pays the Wholesale Carrier, who then pays a terminating access fee to the Local Exchange Carrier (LEC). The LEC then converts the call and sends it along to the VoIP Service Provider, and the recipient gets the call. There's at least three different fees being tossed around in this process.

Ideally, wholesale VoIP carriers will be able to avoid LEC termination fees. By “peering” with other VoIP wholesalers, calls are moved through a shared number database, and terminating through an LEC becomes unnecessary. Peeing also occurs on the upper LEC level, and it’s evident that this method is the best way (as in, least expensive) to go, and the FCC will determine its viability.

The Peering agreement has some room for flexibility, and it may mean that the RSP pays something to the VoIP Service Provider. It depends on the individual agreement.

2. Regulation

The FCC has had trouble regulating the VoIP industry, due to the blurred lines of the information vs. telecommunications service that it provides. Despite the communication confusion that the FCC is always trying to overcome, they have already placed a few regulations on the VoIP industry, including mandates on:

  • E911 service – VoIP providers must allow 911 to be contacted through their services.
  • Number porting – VoIP providers must comply with Local Number Portability Rules (LNP).
  • Calling records – Use of customer propriety records by VoIP providers are limited and must be protected.
  • Universal service – Services must be provided regardless of the level of income in any given area.
  • Accessibility – Accommodations must be made for those with speech and/or hearing disabilities.

The latest in FCC regulations could be targeted towards further facilitation towards reciprocal compensation. Commonly used by CLECs (Competitive Local Exchange Carrier), reciprocal compensation allows their call rates to be as low as $0.00 per minute, infinitely less than intrastate access charge rates that can be higher than $0.30 per minute. In response, the FCC is undergoing further action to regulate reciprocal compensation due to the strain it places on intercarrier compensation. The result mandate would prove to be costly to CLECs who have built themselves on reciprocal compensation.

3. Consolidation

There has been a slight increase in buyouts, acquisitions, and mergers in the VoIP world in the last few months. In October, Onvoy continued to expand with the acquisition of Layered communications. Then in November, TCNI merged with Impact and Broadsoft acquired PBXL. In even bigger news, Verizon is hoping to sell their enterprise assets, valued up to a potential $10 billion to a willing buyer. It goes without saying that the sale of Verizon’s assets will create a massive shift in the telecommunications and VoIP industry.

With big moves in VoIP consolidation happening more and more frequently, it would be wise to have at least some awareness of the shifting market.

4. Taxation

The VoIP industry is relatively unregulated compared to traditional land-line methods of communication. Because the free exchange of internet data is much more difficult to tax than physical channels of communication, such as copper wires and analog technology, the FCC is always trying to find new ways to not miss out on the VoIP cash flow.

tax.jpgCurrently, the only tax imposed on VoIP is a regulatory fee for the cost of VoIP services. The Federal Excise Tax applies a three percent tax to local services. However, due to the rising growth of the VoIP market, don’t be surprised if the government finds new ways to tax VoIP communications as a new revenue stream.

5. Hosted Billing

Wholesale VoIP providers are turning to implementing hosted billing solutions so resellers can invoice their VoIP services with ease. Hosted billing services are designed to consolidate all of the billing needs of a reseller, such as collecting, taxing, and providing sales reports.

If you have problems with your hosted billing solution, make sure that you have the ability to solve disputes through their customer support. Monetary issues can be very frustrating, and a good customer support team can ease the pain of dealing with the potential loss of profit. For more information on solving billing disputes, check out this infographic.

6. Domestic Fraud

Nobody wants their VoIP services to be hacked and nobody definitely want to receive a bill with hundreds of thousands of dollars invoiced towards unsolicited calls. The threat of VoIP Fraud is real and the expenses can be astronomical.

While we typically see that fraudulent calls are made to international numbers, domestic fraud is becoming a rising concern. According to Randy Stegner, Operations Manager at VoIP Innovations, “Domestic calling patterns are easier to determine and therefore may be one reason why domestic fraud is on the rise. International calling typically must be enabled on the provider side while domestic calling typically requires nothing but connectivity to a VoIP provider and may contribute to the uptick in domestic fraud.”

Fraudsters use automated dialers to make hundreds, and in some cases thousands, of calls in attempt to make profit off of the traffic.

You can learn more about the rising concern of domestic VoIP fraud in an interview with Randy Stegner, conducted by TMCnet, here.

Also, be sure to check out our post on Top 10 Ways to Prevent VoIP Fraud Attacks for tips on avoiding fraudulent activity.

7. BackOffice Management

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The ability to regulate all of your DIDs, scan through business reports, organize your clients and services, and everything else you need to operate a telecom business in one place is a dream come true with the use of a BackOffice platform.

A BackOffice allows resellers to log onto an online application and manage their VoIP services. Main features of using a BackOffice include:

  • DID Management
  • Number Porting Management
  • Organizing DIDs and Clients
  • Data Reports and Alerts

A BackOffice can make the daily operations of a telecom business more streamlined due to their convenience and ability to make real-time adjustments. For more information about BackOffice features, check out our Top 10 Post from October.

8. Cloud Technology

With the telecommunications industry steadily moving towards data rather than minutes and switching from analog to internet, the use of cloud technology is on the rise. Cloud-based phone systems eliminate the need to keep a dedicated phone server running in your office, which means you will save a lot of money when it comes to installation and maintenance costs.

Cloud servers are located in a remote area and receives connection through the internet. If you’re familiar with other cloud services, such as Google Drive or DropBox, this concept won’t be new to you.

9. VoIP on Mobile 

As addicted as people are to their mobile devices as it is, it shouldn’t come as a surprise that the VoIP Industry is going to take advantage of the mobile market. The greatest advantage of mobile VoIP is the amount of money you save by using an app that allows you to make VoIP calls. App users can avoid purchasing a calling plan completely as long as they can connect to an internet connection. Mobile apps can be used to make free calls through a Wi-Fi connection as well as access cloud-based technology. 

phone-916392_960_720.jpgAlso, with BYOD (Bring Your Own Devices) becoming increasingly popular in the workplace, VoIP services must be implemented into such mobile devices to keep up with demand. Expect to a lot more news surrounding the involvement of VoIP in cloud and mobile technology in the near future.

10. SMS

It’s no surprise that SMS (Short Message Service), more commonly known as text messaging, has become the primary way for all of us to communicate.  We are busier than ever and most communications these days are about passing key information like when and where should we meet or I will pick you up at 8PM not just chit chatting on the phone. SMS is short sweet and to the point.  Say what you want to say when you want to say it and respond when the time is right. 

So why is it important in the VoIP world?  The answer: the increasing trend of VoIP on mobile. Mobile devices are no longer just for making calls. Now, mobile devices have become handheld computers. With data plans, we are seeing more and more users using a VoIP number with SMS capabilities.  This means if you’re a VoIP provider it’s a must that you choose a carrier that offer SMS capabilities with their DIDs.


These trends are important to watch for anybody in the VoIP industry. Subscribe to this blog for more information on these trends as they develop.

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