Sprint Nextel (NYSE:S, news, filings) yesterday announced an interesting initiative for wholesale exchange of VoIP traffic, called the Partner Interexchange Network (PIN). The switchless routing framework will be based on the SIP protocol, and will allow VoIP providers to exchange voice traffic directly. This kind of offering of course works best with lots of members, so the key will be to entice those providers to come. I'm not sure how the economics work out, presumably Sprint charges for the service but on the other hand without scale there's not so much to charge for yet. With the large amount of VoIP traffic they need to terminate they probably want the project to pick up steam ASAP.
The idea is not new of course, Stealth Communications has had a voice peering fabric running for years and many others have dabbled in it. However, even though VoIP has made such substantial inroads in the market that Verizon's CEO is now dreaming of a POTS-less future, most VoIP traffic still has to touch the PSTN somewhere. Even calls from one VoIP user to another. This is the first public offering of this type by a major wholesaler of VoIP services, which implies that perhaps we have finally reached the tipping point.
Sprint, being one of the largest (if not the largest) wholesale suppliers for cable VoIP providers, is now seeing enough traffic out there that it sees opportunity in building a bypass for avoiding all the extra fees that go along with touching the PSTN when the calls aren't on the PSTN. If this kind of effort is successful VoIP providers should save money, and therefore there will be further revenue drain on the incumbents than just wireline subscriber losses. It should help quality too - fewer IP/PSTN translations needed and all that.
As more and more traffic stops hitting the PSTN the mismatch between cost structures is going to become more and more obvious, as will the insanity of the intercarrier compensation regime. Assuming the FCC doesn't fix that first... yeah that'll be the day.
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