International Phone Call

An International Phone Call - Where Does VoIP Bring Benefits
By Paul Wittich

Without a doubt, the cost of an international phone call has been dramatically impacted by Voice Over IP, where the opportunity to reduce costs and gain more flexibility in calling patterns has had a considerable impact on the market.

Indeed, many of the first wave of Voice Over IP operators focused their business model on attracting customers who had been paying huge costs per minute but could now take advantage of a cheap phone call.

However, it is not always the case that an international phone call will be cheaper and more flexible simply due to Voice Over IP. In fact, there is a clear pattern as to where these cost gains and other VoIP benefits can be realised, and where not, and this article will give you the theory to help you build a strategy for using VoIP for the routing of international minutes.

As with all markets, the key determinants of price, and changes in price of an international phone call, are those of demand and supply. Don’t worry if this is new terminology to you – there are examples below that will help explain.

Demand

In the case of an international phone call, demand rests on residential and business customers. As the world continues to develop, there is a much greater need for overseas communication – as a result, the demand for international phone calls is increasing at a fast rate. In some rapidly developing economies, inbound calls from abroad have risen by 40-50% in a single year.

We measure demand in terms of a curve, showing the quantity demanded at every price offered. The advancement of international trade in products and services has meant that the demand curve has shifted higher. However, the curve is also fairly flat, or elastic, meaning that customers are not entirely flexible in what they are willing to pay, and a rise in calls prices to a destination will often mean that many less calls will be made.

So where is this demand centred? Well, for this we simply need to look at the major growth economies of the world – China, India, Brazil are great examples, where the demand for calls into these countries has risen sharply. Other developing countries, such as Bangladesh, Mexico, Thailand and Ukraine are further examples on a slightly smaller scale.

All other things equal, you would therefore expect this shift in demand to cause a rise in the price of an international phone call in those markets. And that would normally be the case. However, with an international phone call this has not been true, and another significant influence has been in force that of – SUPPLY.

Supply