VoIP companies (VoIP providers) use different business models to earn money.
With the exception of toll-free services in VoIP business the one who originates (sends out) a call pays to the one who receives the incoming call for termination.
In the example above there are three VoIP providers in a chain:
- Original calling party (retail customer) pays to VoIP provider A (retailer)
- Provider A (retailer) pays to provider B (reseller – wholesaler)
- Provider B (reseller) pays to provider C (terminator)
- Provider C (terminator) pays to PSTN or GSM network operator
- Final called end-point gets nothing, he even can be charged by PSTN/GSM operator for the received call
There may be more than one reseller in the chain as soon as no resellers at all. Retailer may also terminate call to PSTN/GSM directly and there will be no a separate provider for termination in the case.
Retails receive calls from home users, calling cards and call-shops. They usually do prepaid business. There is higher margin (a difference between calls selling and buying rates) with higher initial and maintenance expenses also. Their strategy is to either find good terminators or resellers with a complete A-Z list of available destinations.
Wholesales (resellers) receive calls from other VoIP providers (both retail and wholesale). They have low margin but expenses are low too. Usually they have a lot of interconnections with another wholesales and terminators.
Terminators have own gateways and send calls to PSTN or GSM network to called parties directly. Their margin is high and expenses are moderate. Their strategy is to find more retails or wholesales having direct retail customers (whose traffic has better quality that just a regular wholesales’ one).