By Alok Saboo on July 23rd, 2010
If you are looking to start your own business, then the VoIP space is a great option to consider. The VoIP market is booming and expected to grow rapidly in the foreseeable future. More and more companies/individuals are taking advantage of booming VoIP market and starting VoIP business. This is your chance to profit from VoIP. In this series of posts, we will provide you with all the details you need to start your own VoIP and Calling Card business. So let’s get started…
The first thing you need to do is decide what part of VoIP marketplace you want to serve; some possibilities are:
- Wholesales VoIP Provider (Termination or Origination Provider) act as VoIP traffic aggregators for their customers. Wholesale VoIP providers cater to retail VoIP providers. This requires high volume and technical expertise and is out of scope for this article.
- Residential VoIP Provider: These are providers like Vonage, CalltoPBX who cater to residential customers through products such as Vonage World Plan. A typical offering allows unlimited calls to a few countries, unlimited incoming calls, free DID, and other features such as conferencing, voicemail, call forward, etc.
- Prepaid Calling Cards (Pin-less Calling Cards) Provider: These are VoIP providers that typically sell VoIP services by minutes. They usually contract with Wholesale VoIP Providers for termination services and markup their rates accordingly and offer their services through SIP or a local access number. .
- Reseller of some VoIP Provider: They are distribution partners reselling VoIP services of other companies making money in the process. We have already covered why and how to become a Betamax reseller (e.g., Rynga, Jumblo, SmartVoIP) and will not focus on this in the current article.
How to go about starting your VoIP Business?
There are essentially two parts to starting your VoIP business.
The hardware (e.g., servers) and the software (e.g., billing system). Depending on your preferences, you can decide to outsource some or all part of the business and concentrate your energies on customer acquisition. Here are the options that you have:
- Buy your own infrastructure. If you choose this option, you must have (or hire technical people who has) good knowledge of networking, VoIP, Linux and Asterisk. You will have to buy your own server and deploy it in co-location, setup softwitch and billing software and take care of daily technical stuff.
- Host infrastructure (it is called SaaS or Software as a Service). In this case professional company takes care of VoIP infrastructure: hardware with pre-installed softswitch and billing software, including maintenance and support. This service is designed so that you are free to promote your business and don’t have to worry about technical details.
- Use your own hardware and rent Billing software including technical support. Here you get the package that includes the billing software and technical support.
Which option should you choose?
Before we can take made a decision, let us familiarize ourselves with each of the option in a little more detail.
1. Buying your own equipment
If you are sure that your business will succeed and are ready to invest to infrastructure, you can buy equipment that will consist of:
- Server (that should be deployed in co-location)
- Billing software
- Softwitch (sometimes billing and softwitch are in a single platform)
The minimal investment for this might be 2500 USD, but usually total price is about 5000 USD – 10000 USD depending on how powerful infrastructure you want to buy.
So the main benefit is that you pay just one time, but usually for start-ups it is better to begin with hosted solution.
2. Hosted Infrastructure – SaaS
Instead of buying and maintaining a VoIP infrastructure, you can take an alternative – you can run your VoIP business without making a large investment. There are several reasons to move from "traditional in-house applications" to SaaS, such as more frequent updates, higher level of service, and lower cost. The SaaS model has flourished recently because of the many benefits it offers to VoIP businesses of all sizes and types. The BlasterPhone hosted calling card platform falls under this bucket. Some of the benefits that are driving customers to take advantage of SaaS:
- Reduced primary investment in server hardware. Your don’t need to make major investments in hardware. You can manage your VoIP business from anywhere in the world through the web browser.
- Quick implementation and shorter deployment time. It is possible to have the system up and running in less than 24 hours!
- Time savings. Your managers will have more time to focus on their tasks because they won’t have to manage infrastructure and take care of technical stuff.
- Redistributed VoIP/IT Budget. By outsourcing software functionality, you’ll benefit from cost savings in infrastructure requirements and IT personnel knowledge requirements. This allows you to focus on core competencies and means that the money you save from using SaaS can be saved or reallocated to boost productivity of other services.
- Uptime. Server will be hosted in a data enter so that power and Internet outages are isolated from incidents that affect local offices.
- Maintenance. Software deployment and maintenance is handled elsewhere, allowing you to focus on your core competencies to run your business.
3. Renting billing software with technical support
This option is in between the two extremes discussed above. Sometimes clients prefer to have billing system installed on their own servers so they would have physical access to hardware, but want to get an external help with billing software and technical support. So in this case you can simply Rent Billing software (the price is usually the same as when you buy technical support). So basically it is the same as hiring VoIP technician to maintain your hardware, just that you get all software that you need to manage your VoIP business.
All these types are described in a picture below. The box refers to MOR that is advanced softswitch with billing & routing functionality, developed by Kolmisoft, but you can use any software that matches your requirements.
Clearly, the decision to choose one option over the other will depend on variety of factors, including:
- Your technical expertise
- Willingness to make upfront investment
- Willingness to commit time
- How fast you want to get started
- How much volume do you expect
- Your time horizon, i.e., how long do you think you will be in this business, etc.
Answers to the above questions will determine which option is optimal for you. The hosted (SaaS) option is the least restrictive option. If you are not sure and want to test the waters, you should consider the hosted business model. However, if you are reasonably confident of your decision and are capable to manage the hardware, you can consider buying your own hardware.
Hope you find this post useful. If you have recently started a VoIP business or are considering starting one, please share your opinion/concerns/suggestions…