XO Communications announced Wednesday that it will start charging for converged IP services based upon bandwidth use rather than the total number of voice lines.
XO, a competitive local exchange carrier says that it will start treating its VoIP services the same way it treats its other IP services and will stop charging customers for individual lines. Rather, customers will be able to select a plan that meets their particular bandwidth needs and can choose from various plan options, such as unlimited local calling, unlimited site-to-site calling and a total number of monthly long-distance minutes.
"In an IP world, it's really total bandwidth that matters," says Nic Jackson, the director of voice and converged services at XO, explaining why XO felt the need to shift its traditional pricing model.
XO hopes that its new pricing scheme for converged IP services will give it an edge in an ever-expanding VoIP market. Lisa Pierce, a principal analyst at Forrester Research, says that while XO's bandwidth-based pricing for voice services is an interesting model, it's too early to tell whether it will be adopted widely by other VoIP providers. In the short-term, though, she thinks that the model will give XO a selling point for businesses that might be intrigued by potentially simpler pricing plans for VoIP expenses.
"Because this is a different pricing scheme, it gives them an opportunity for them to explain it and what they perceive it has advantages over traditional pricing schemes," she says.
In addition to its new pricing plan, XO also announced upgrades to its VoIP services portfolio. XO's new IP Flex service, which is a new version of its XOptions Flex service, has upgraded its VoIP offerings to higher bandwidth speeds of 4.5M and 10Mbps. Meanwhile, the XO Session Initiation Protocol service offers customers many of the same options as the IP Flex service, including unlimited local and site-to-site calling. Additionally, it also offers dedicated Internet access at speeds of up to 45Mbps, as well as an optional voice compression that gives users the ability to conduct more calls over IP than on the IP Flex service.
XO has been continuously expanding the reach of its VoIP offerings for several years, and last year the company said it had experienced an 80% growth rate in its VoIP traffic in 2006, reaching a total of 15 billion minutes for the year.