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The value of toll bypass in the enterprise

IP telephony expert Jon Arnold explains the value of toll bypass in an IP telephony setup, detailing why enterprises should consider it as an option while tempering cost-savings expectations.

Why would a customer deploy toll bypass? What type of customers can (and should) use it?

Your question is unclear, but I'll do my best. I can't tell if you're new to telephony, or you've been around it...

a long time -- and, if the latter, maybe there's something you know that I don't. I'll take your question at face value and briefly respond.

Toll bypass -- as I understand it -- involves diverting voice traffic away from the public switched telephone network (PSTN) and over to Internet Protocol (IP) networks, where the call becomes VoIP and runs at no charge, much like email. This needs to be qualified by saying that toll bypass only applies to domestic long distance, where incumbents have total control over the end-to-end connection. International call must be routed over other carrier networks once leaving the domestic domain, at which point toll charges will always apply. Think of this as driving on a toll highway in the U.S., and then crossing to Canada to go on a Canadian toll highway. At that point, you have to pay the toll -- there's no getting around that.

Given that the majority of landline long distance calls are domestic, toll bypass is pretty attractive to businesses. However, no VoIP provider offers their service on this basis. The prime cost benefit of VoIP is lower monthly subscriber fees. In today's market, toll bypass is another form of cost saving, but it's pretty minor. Years back, when the long distance market was just starting to become deregulated, domestic LD was still a major cost factor, and this was a key driver to use VoIP. Due to all the competition created by VoIP, incumbents have had to drop their prices to remain competitive, and the arbitrage opportunity around domestic LD, has largely gone away. These costs are now quite low for time-division multiplexing (TDM)-based service, and the savings to be had from VoIP are really not that much.

As such, I wouldn't be looking to deploy VoIP primarily for the toll bypass. It's definitely a benefit for multi-site businesses with offices spread all over the country, but toll bypass would not be the main benefit. For companies that do a lot of international calling, the savings from VoIP would likely be more attractive. However, there's no toll bypass happening here -- these are still toll calls, just routed over cheaper networks.

This was last published in August 2010

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