Flat rate challenges telco charging model

FX Networks offers VoIP to its data customers at a flat rate of three cents a minute to anywhere in the world

Flat-rate network charging is set to challenge the traditional telco business model and change the way business manages functions such as disaster recovery.

This is the view of Roger DeSalis, operations director of network challenger FX Networks. He says this new model will allow two datacentres to operate “in lockstep”, staying permanently synchronised and up-to-date, and ensuring business continuity from the ICT point of view.

“It’s a new business model” — one that cannot be operated using the major telcos’ volume-based charging, he told Computerworld, following a talk he gave on his company to the Computer Society in Wellington last week.

With a WAN that is faster than the LANs in the customer’s office there is superfluous capacity. A customer could be running 2Gbit/s worth of bandwidth but only operating at 400 Mbit/s, because of the limits of their LANs. That won’t last, he says. “Customers are [presently] just taking time to update their infrastructure.”

DeSalis describes FX’s charging method as the “water-pipe” model.

“You pay to have the pipe, not for how much water you consume,” he says. Conventional telcos or ISPs bill for “overage” beyond a fixed data allowance often do not represent the truth as meters are apt to malfunction, leading to a consumption figure that can only be an estimate.

With abundant bandwidth — 10 Gbit/s in the core and 1 Gbit/s for access — FX Networks doesn’t have to bother with “quality of service” undertakings, says DeSalis. “We just make sure we never drop a packet.”

FX offers voice-over-IP to its data customers at a flat rate of three cents a minute to anywhere in the world. It also bundles in a VoIP offering to ISPs to which it also provides services. This makes their business more viable, he says.

“Telecom has almost destroyed the ISP business” with volume charges that have to be passed on, DeSalis says. FX Networks has no wholesale agreement with Telecom — users should be able to throw away the whole concept of toll rates, he says. Instead, callers are connected between FX VoIP and the wire-line public switched telephone network by way of an unnamed third party. With high-quality VoIP working its way into business phone networks, and a flat charge, DeSalis predicts an end to the direct-dial line to individuals.

If it’s not worth attributing the cost of toll calls to a particular person, then a company may as well economise on lines, passing all calls to a “hunt group”, which will direct the call through the first line available. But having a “DDI” line is a status symbol, he acknowledges, and it will take some time for the practice to be abandoned altogether.

FX Networks was founded in 2003 and its clients include the Government Shared Network. DeSalis considers the company will have really arrived once it gets a bank on board as a customer. He indicates that such a deal is not far away.

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Tags FX NetworksvoipNetworking & Telecomms IDTelco

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