Sowing The Seeds Of VoIP

If you have any doubt about the merit of VoIP technology then you haven't talked with Alan Shepard of More Wire, Inc. Shepard is the Johnny Appleseed of VoIP. He spends most of his waking hours telling ISPs operators how they can use the technology to make big money providing flat rate voice service to their customers.

by Jim Thompson [March 15, 2002]

MWI launched the first nationwide flat rate service using voice over Internet protocol (VoIP) technology in 1999. Their ICallSMART program offers subscribers unlimited long distance calling throughout the U.S. and Canada.

"We've taken the pain out of VoIP for ISPs and their customers," said Shepard, executive vice president of More Wire, Inc. "We charge a fixed cost for each port an ISP sells on their gateway which extracts the metered rate gamble out of the equation. It's based on bandwidth usage, not head count."

High quality, low price
All the customer needs is an active dial-up telephone. They call the local ISP, enter an access code and then punch in the phone number of the person they're calling.

"They can call anywhere in the U.S. and Canada and are never charged taxes, surcharges or per minute fees," noted Shepard. "We suggest a price to the ISP of around $40, but they can charge anything they want."

Shepard added that one of the major difficulties of VoIP has been explaining to customers that there is no quality difference between it and the standard voice service they get from AT&T, Sprint or their local Bell system.

"We are not selling VoIP, we are selling digital long distance," he explained. "That's something the average person can understand. They don't need a computer. All they need is the $10 phone they got from Walmart."

MWI can guarantee high quality service because they own the backbone and then interconnect with major carriers like Sprint and Qwest.

The numbers game
Aside from the quality issue, Shepard spends a lot of time running numbers for ISPs and explaining how their VoIP solution can translate into a major revenue stream.

"In some cases, ISPs have spent $100,000 to $150,000 to bring in DSL and wireless services just so they can retain two to three percent of their customers," he said. "Here's a solution that for less than $35,000 they can increase their customer base by as much as 300 percent and produce far greater revenue."

To start offering flat rate long distance service via MWI's ICallsMART program, all an ISP needs is a Cisco 5300 Gateway Server, T-1 connectivity on the front end, and a connection to the WWI network.

"It couldn't be simpler," Shepard said. "We even configure the gateway for the ISP so it's a turnkey, plug-n-play operation. They can use their current radius server for authentication of dial-up customers. Since it's a flat-rate product, just like their Internet service, they also don't have to spend $10,000 on billing software."

According to Shepard, an ISP is able to pay for the fixed costs and is in a 'break even' position, with 300 customers. Billing is based on bandwidth usage with a basic cost at $400 per port.

"With the ICallSmart service, easily 2,000 customers can be handled on the same server on the same gateway, generating revenue in the neighborhood of $80,000 per month with a 50 percent gross profit margin," said Shepard. He added that a Cisco 5300 server can typically produce revenue of $15,000 to $20,000 in a dial-up environment.

Currently, MWI has service providers in 30 states and plans to open service to 15 European countries within the next 60 days. MWI also plans to offer unlimited calls to Europe for an additional $14.95 a month fee and are working on a toll-free access calling card with a charge of 4.9-cents ($.049) per minute.

"We've extracted all of the difficulties, the what-ifs, the maybes, and the 'how do I do its' from the VoIP equation," Shepard said. "We even help ISP develop a marketing strategy to help insure success. Even if you are selling $100 bills for $10, you still have to tell people about it. We are here to help ISPs and increase their bottom line."

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