Filling in the gaps: ISPhone maps strategy to compete against big carriers

In an environment where big carriers will control much of the telecom money, several smaller operations are seeing an opportunity to fill in the blanks or exploit new areas that big players have yet to recognize.

ISPhone, a Traverse City, Mich.-based Internet telephony service provider, made its first steps toward such a play last week, signing a deal with Clarent to use its products to build out its clearinghouse operation. Under terms of the deal, ISPhone will use Clarent's back office equipment to maintain its member ISPs' voice subscribers. Additionally, the company will use Clarent's gateways and associated software to provide wholesale enhanced IP telephony services to ISPs.

ISPhone, which launched its wholesale unit in June, is targeting smaller ISPs that may not have the funds or expertise to add voice services but face competition in the dial-up market from big carriers.

"The target market has always been ISPs with a regional focus," said Kenneth Moody, vice president of ISP operations for ISPhone. "The [competitive local exchange carriers] also are really strong candidates."

Key to ISPhone's plan is its clearinghouse operation, which should draw in regional and smaller national players that want a global reach but lack the technical expertise to deal with international settlements.

"It's a process that requires a lot of scrutiny and detail," said Heidi Bersin, senior vice president of corporate marketing and communications for Clarent.

ISPhone is facing competition from many big carriers, including AT&T's global clearinghouse, which provides service to several international carriers.

However, the company is marketing itself as a lower-cost alternative. Additionally, it's counting on smaller players' general mistrust of AT&T.

"AT&T has always been a thorn in the side of ISPs," Moody said. "There's a lot of mistrust in those groups."

Currently, ISPhone is using only Clarent gateways, but as interoperability progresses, the company should be able to offer service to ISPs using other vendors' equipment. In fact, Clarent is looking to its membership in the iNow forum to open the door to interoperability. "You still have to do some custom stuff, but there are a handful of providers and vendors that are working well together," Bersin said.