Founded in 1996, Arbinet is one of the oldest telecom exchanges that trades, routes and settles voice traffic and Internet capacity on behalf of its 385 service voice members and 230 Internet access members.
"We provide an environment in which carriers and service providers can buy and sell voice termination," Heap said.
Its primary revenue model is collecting a membership fee plus a per-minute charge for handling a trade.
"We settle with each party independently," Heap said. "We gather buyers and pay sellers. That was the basic model for five years."
"We gather buyers and pay sellers. That was the basic model for five years."
Most of the trading is anonymous, though Arbinet recently launched DirectAxcess, which extends the company's boundaries whereby buyers can access named international carriers, such as Telekom SA. Presumably, Telekom SA is the telco in the best position to terminate a call in South Africa.
"What we realized is that many buyers want to know that they are buying better quality," Heap said. "The quality is as good as you can get if it goes straight from the buyer to the carrier that is almost always best able to terminate the call."
Arbinet also broke new ground with the introduction of VoIPAxcess, a commercial VoIP peering service. Don't adjust your screen - Arbinet offers commercial VoIP peering.
Don't adjust your screen - Arbinet offers commercial VoIP peering.
Specifically, VoIPAxcess gives VoIP companies a method to collect local call termination charges for telephone calls to their subscribers, thus adding a revenue stream that normally is reserved for CLECs or local telcos.
Invariably, the issue of call quality rears its head. One of the methods Arbinet uses to measure voice quality is by the average duration of the calls.
"If calls last eight minutes, then you have a good idea that the quality is okay," Heap said. "What you find in general is that the public Internet is very acceptable for handling VoIP calls. Almost half of [Arbinet's] outgoing calls are using VoIP."
Another macro way to measure voice quality is that a billion minutes per month are traded on the exchange.
"It's an exciting time in telephony."
"That gives you a good idea that the quality of the calls is fine," Heap said. "It's an exciting time in telephony."
Heap says that Skype is largely responsible for pushing the peering model forward, with its focus on PC to PC or dedicated phone to phone over the Internet. Nevertheless, he was puzzled by the financial realities associated with the blockbuster deal that was recently finalized between eBay and Skype.
"I'm surprised with a lot of people at how much [they valued] Skype at $2.6 billion," Heap said. "I understand the logic make voice community easy between sellers and bidders for products. But why buy someone like Skype? I don't know what is gained by buying the name."
"Skype makes a nice product and it has worked very well," Heap added. "How it translates into money, I'm not sure."
What advantages and business implications do carrier-level peering points offer over dedicated fiber? How secure are peering connections? For the answers to those questions and more, mark your calendar to attend the VoIP Peering Summit at this fall’s INTERNET TELEPHONY Conference & Expo, which runs October 24-27, at the Los Angeles Convention Center.
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