Wholesale Origination Services (also referenced as Carrier Services) have been a big business for facilities-based telecommunications carriers for over 25 years. Telecommunications carriers fall into two categories: 1) Retail carrier or 2) Wholesale carrier. It is possible, however, for a carrier to be both. While wholesale carriers offer 100% of their network or services for resale or lease, retail carriers may offer none (or only a portion) of their own network for wholesale business. Gross margins on wholesale services are typically much lower than those of retail services, but revenues generated on wholesale services can be much higher.
The increased reliability and popularity of VoIP technology has resulted in a significant reduction of rates and gross margins of all voice traffic over the last ten years. On the flipside, it has also driven traffic volumes exponentially (especially with international long distance calling) because it is now much more affordable for businesses and consumers. VoIP technology has created much competition in the industry, and the additional features and functionality with VoIP has stimulated the demand for DID (Direct Inward Dial) numbers. Not only do VoIP customers need more DIDs, but they also want to port and keep their existing numbers. Wholesale origination service providers can provide services not only within the United States but can also help customers access thousands of numbers in over 60 countries around the world. VoIP technology makes this process much easier and provides significant cost savings for carriers.
VoIP has also eliminated geographic boundaries and made it much easier and faster for carriers to connect to one another. Installation intervals for international services have been reduced from 2-3 months to only 2-3 days because of VoIP technology. In addition, it is much less expensive to connect to other carriers. Back in the 90's, it would have literally cost thousands of dollars to connect to an overseas carrier for wholesale purposes. But today, the only cost might be an incremental cost in the bandwidth at your switch site. By using VoIP technology for origination services, carriers can now provide services to customers around the world, reaching places that were virtually impossible to connect to ten years ago.