VoIP traffic is increasing because it is a more affordable alternative to time-division multiplexing (TDM) calling and satisfies the need for wholesale termination arrangements to ensure that calls reach their intended destination regardless of whether the originating carrier has facilities in that geography. A carrier’s success depends highly on which carrier it chooses for VoIP termination services due to its impact on expenses, revenues, profit margins, and, ultimately, customer satisfaction.

While previously, large carriers worked directly with one another to create termination agreements, the number of wholesale providers has since increased and smaller carriers with tighter local presence have emerged, creating a competitive marketplace with additional options for carriers. The larger operators now need to position themselves such that the smaller carriers can interact and exchange information with them easily.

The decision on which carrier to select and negotiate with to derive a deal is becoming increasingly complex. Considerations include pricing model: namely, fixed rate, usage-based or arbitrage. Carriers with fluctuating traffic may be better served with an arbitrage model that is more responsive to irregular call volumes. With access to a large community of termination service providers, carriers may choose to request pricing based upon specific needs, creating a more customized situation. Rates quoted are based on a per minute fee for the duration of each call. Only calls that are completed are charged.