Vonage, Verizon set stage for further VoIP interconnection

Verizon (NYSE: VZ) recently established a VoIP interconnection agreement with Vonage (NYSE: VG), the latest pact that it hopes will set the foundation for its growing IP VoIP interconnection partnership program.

Following the agreement it made with Comcast (Nasdaq: CMCSA) in early 2012, Maggie McCready, Vice President for Federal Regulatory Affairs at Verizon, wrote in a letter to the FCC that Vonage is the "second voluntarily negotiated commercial IP interconnection agreement for VoIP" and that it expects "other agreements will follow."

Over the past two years, the telco had put the technical and operational elements together to conduct IP VoIP interconnection.

Perhaps not surprisingly, what's driving Verizon to pursue more interconnection agreements is the growth of its FiOS Digital VoIP service.

"When we exchange FiOS Digital Voice traffic with another VoIP provider, it is more efficient for both parties to exchange that traffic in IP format, which allows Verizon to exchange FiOS Digital Voice traffic at a small number of mutually agreed upon points of interconnection for the entire country," wrote McCready. "Our FiOS Digital Voice VoIP customer base continues to grow as customers upgrade from TDM-based service, and as they do, we expect more and more of our traffic will be exchanged with other providers over interconnections in IP."

Leveraging the lessons it learned from its implementation of the agreement with Comcast, the telco put together what it calls an "IP interconnection technical Workbook" that it uses as a guide to begin commercial and technical negotiations with other VoIP providers.

After sending a number of letters to other VoIP providers inviting them to negotiate new interconnection agreements, a number of players approached them about working together. Today, it is in various stages of negotiating commercial negotiations with nearly 20 service providers.

However, not everyone is on board. CBeyond, according to the company, has yet to strike an agreement with the telco.

McCready said that the competitive provider has "refused to negotiate with us on a commercial basis unless we agree in advance that the negotiations and any resulting agreements would be subject to Sections 251 and 252 of the Communications Act, demonstrating that even the possibility of regulation is adversely affecting commercial negotiations."

It added that a number of other unnamed providers accused them of not agreeing to negotiate terms, claims that Verizon has refuted.

"The work we have done in this area and the agreements that we have negotiated and continue to negotiate demonstrate that Verizon is serious about negotiating VoIP interconnection arrangements with other providers who are similarly serious," McCready wrote.

For more:
- see the FCC filing (.pdf)

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