INFINIROUTE REBORN WITH TAUSS; PEERING BECOMES BIG BUSINESS

Demand for voice-over-IP peering has finally caught up to the business models of entrepreneurial peering providers. It may be too late for the likes of ITXC, acquired in June 2004 by Teleglobe International Holdings, but InfiniRoute Networks, hoping the timing is now right, relaunched this week under new CEO Gary Tauss.

InfiniRoute has tweaked its business model to focus on delivering traffic from emerging markets to Tier 1 operators and has re-introduced its VoIP Direct managed VoIP peering service. Tauss, who joined the company in May, also moved its headquarters from San Francisco to Princeton, N.J.

“That's where the core technical team was anyway,” Tauss said.

The company also took on technical and business executives from the former ITXC. Among them are Jay Meranchik, senior vice president of operations and engineering, who held the same position at ITXC; Neal Axelrad, vice president of sales and business development, who led ITXC's sales efforts; and Michael Loiacono, vice president of finance, who was ITXC's controller and director of finance.

The company's VoIP Direct service provides Tier 1 carriers with aggregated connectivity to carriers in emerging global markets, such as Latin America, Asia-Pacific and Europe. The single, aggregated connection reduces the number of call handoffs by establishing a VoIP peering community and utilizing the latest releases of InfiniRoute's Routing and VoIP Optimization Engines.

Tauss decided to focus on these emerging VoIP markets after the company's courtship earlier this year with wireless operators remained platonic. The company launched its service for wireless operators in January, again, a little ahead of market demand.

“InfiniRoute was talking to wireless operators as originators of traffic, but the big mobile guys are all owned by their fixed-line [parents], and all their traffic went through their own facilities,” Tauss said. “But as a destination, we were absolutely right, traffic from emerging markets is causing a huge disruption in the traffic matrix.”

One wireless operator that recently turned to InfiniRoute to solve just such a problem is Telefonica, which InfiniRoute announced this week.

“They terminate traffic from legitimate carriers, but they own a lot of mobile properties and have a constant stream of small carriers needing to terminate traffic with them. We aggregate all those small guys and pass the traffic through one big pipe,” Tauss said.

As a managed service, InfiniRoute is doing more than aggregating traffic. Part of the re-launch was a souped-up back office that does a better job of managing service level agreements and providing call detail records, billing, reconciliation and, its main competitive advantage, routing based on quality of service (QOS).

“They have done a lot of work to make the back office easier because, after all, that's the reason to buy. Otherwise, carriers have to set up all these [peering] arrangements in the back office, and it's a nightmare,” said Deb Mielke, managing director at analyst firm Treillage Network Strategies.

As for InfiniRoute's timing, Mielke said that two years ago, there was not a whole lot of VoIP traffic to route or aggregate. “But now that there is more VoIP out there, I think there will be a greater need for what they do. They solve a huge problem for service providers,” she said.

In addition to aggregation and back-office functions, InfiniRoute helps facilitate interoperability between the big session initiation protocol (SIP)-based VoIP providers and the smaller providers, many of which use the H.323 protocol rather than SIP.

Interoperability and QOS help drive revenue growth by increasing call duration, Tauss said. Without these attributes, the answer seizure ratio of a typical VoIP wholesaler is less than 40%, and the answer bid ratio is less than 30%. Tauss said that with InfiniRoute's QOS, those ratios are comparable to those of traditional voice service.

“It's like found money for the service providers,” Tauss said.