XConnect Reaches for VOIP Peers

In a unique play to divert VOIP traffic from the PSTN (and its associated access charges), London-based VOIP peering service, XConnect Global Networks Ltd., Wednesday extends its reach to North America with the addition of the Canadian-based service provider YAK Communications Inc. (see iBasis, XConnect Launches in North America).

XConnect links together the IP networks of VOIP providers (VOIP islands, as VOIP industry types call them) so that the providers’ customers can make pure IP calls to each other that never touch the PSTN.

“We’re witnessing the biggest shakeup in the world of communications since Alexander Graham Bell first picked up the receiver... it’s the beginning of the end for the PSTN,” said XConnect founder and CEO, Eli Katz, at the service's product launch last month.

Today the "shakeup" hits North America. XConnect's new partner, YAK, currently serves approximately 860,000 customers for its traditional telecom services. It just began actively marketing its WorldCity VOIP service in January.

XConnect says it is currently in talks with a number of other U.S. VOIP providers, and is close to signing a “household name” here.

The efficiencies gained from interoperability are just the first layer of the peer-to-peer service the company offers, XConnect CEO Eli Katz says. Katz seems most excited about the VOIP security tools delivered through XConnect’s central hub. These are needed to defend against such emerging threats as Spam over Internet Telephony (SPIT).

Katz paints the grim picture of a VOIP user waking up and finding 90 new voice messages on his SIP phone, all of it SPIT except for messages number 3 and 78 which are actually from people he knows.

“In the Wild West world of VOIP, things like spam over Internet telephony and caller ID spoofing, if not managed extremely carefully, will have an extreme effect on the industry,” Katz says. XConnect uses centralized packet "cleansing" and protocol verification systems to make sure the system is not being abused.

XConnect also has signed partner agreements equipment provider NexTone Communications Inc. for session management gear and software and real-time IP services. NexTone will be the main vendor for developing IMS-based wireline/wireless convergence services for alliance members to offer their customers.

“They’re interesting in that they are solving some of the scaling issues that VOIP carriers are dealing with today,” NexTone marketing VP Dan Dearing says of XConnect. “They’ve taken care of many of the interoperability and the numbering issues. It’s just a matter of sorting out the business issues.”

NexTone session border controllers supply much of the interoperability and security functionality among XConnect member VOIP providers. In fact, all the XConnect member providers were using NexTone solutions in their networks prior to joining, Dearing says. “Our session management solutions have really seeded the market for this type of model."

The XConnect consortium now consists of only four announced VOIP providers -- Gossiptel (UK), Telio (Scandinavia), VozTelecom (Spain), and now YAK (Canada). But it claims the network already touches “several hundreds of thousands” of customers in Europe, Africa, and North America.

Privately held XConnect also attempts to leverage the increased buying power that a consortium of companies can bring. For long-distance calls that must be completed on wireline networks, XConnect negotiates lower access charges. One example is the company’s relationship with the wholesale long-distance carrier iBasis Inc. (OTC: IBAS), also announced today.

XConnect’s landing in North America comes at an oddly apt time, as the debate over access charges paid by VOIP providers to terminate calls on the PSTN came to a boiling point Monday as Level 3 Communications Inc. (Nasdaq: LVLT) withdrew its access charge forbearance petition from consideration by the Federal Communications Commission (FCC). (See Level 3 Yanks VOIP Petition.)

— Mark Sullivan, Reporter, Light Reading