New XConnect Funding Boosts VoIP Peering Prospects

Direct connection, or peering, between VoIP providers has lots of benefits. In particular, calls between different providers' subscribers don't have to transit the PSTN (public switched telephone network). That's beneficial because each such transit causes their sound quality to deteriorate, and costs money. In addition, features such as presence detection only work over end-to-end IP connections. Thus given VoIP's cost-saving and other attractions during a recession, peering should be growing increasingly popular. A new investment in peering leader XConnect Global Networks confirms that notion.

The investment, by a consortium including Venrock Associates of the U.S., Accel Partners of the U.K., Grazia Equity of Germany and Crescent Point Group of Singapore, injects $10 million in Series B funding into XConnect. The London-based company will use the money to continue expansion of its so-called "Interconnect 2.0 portfolio," which includes carrier ENUM registry and multimedia hub services. More simply put, it allows VoIP providers to find out each other's subscribers' VoIP phone numbers, and also allows them to pass multimedia services and traffic to one another.

XConnect's overall set of services allows VoIP providers to interconnect in several ways. They can use private federations administered by XConnect. These are closed groups, typically of large carriers and cable companies. The groups have their own rules that determine such things as who pays what for delivering each other's traffic. Alternatively, they can use XConnect's SIP-based Global Alliance, in which providers deliver each other's calls either with or without payment to one another, or "settlement."