Wholesale telecommunication providers are those organizations that own and may operate a telecommunications network. These carriers, known as wholesale carriers, then sell capacity on their networks to other telecommunication service providers. These secondary service providers, also known as retail telecommunication service providers, then offer voice, data, internet, networking, and data center solutions through the network. Wholesale telecommunication companies may also provide retail services at the same time as offering network bandwidth to retail telecommunication providers. Often wholesale carriers are entities that deliver networks that only serve other carriers, not retail customers. However, in more cases, those wholesale carriers provide parallel services to the retail carriers.
This service can provide wholesale telecommunication companies with new opportunities to generate revenue on networks they may otherwise not use, including diversifying their offerings to meet the needs of the retail telecommunication providers purchasing bandwidth on their network. While retail telecommunication companies are able to purchase network bandwidth without incurring the cost of developing and deploying their own network and therefore give consumers more choices in the market.
Most markets in telecommunications use such a two-tier structure, in which facility-based firms roll out proprietary networks and their own infrastructure, and service-based firms purchase bandwidth on the facility-based firms' networks to offer services in retail markets. The latter firms can provide those retail services for businesses, such as for SD-WAN or Internet of Things (IoT) services, while other retail service providers can be mobile virtual network operators (MVNOs) that do not have a spectrum license or a mobile network but offer network services by purchasing wholesale mobile services.
Wholesale telecommunication providers offer various services. These include traditional telecommunication products offered to retail telecommunication providers, which can include local and long-distance voice, voice over IP (VoIP), internet, wireless, and payphone services. These providers can also include whitelabel solutions for businesses, such as dial tone, VoIP, fax, and internet; or they can offer broadband networks bandwidth for internet service providers.
Voice services are, arguably, the main and traditional offering of wholesale telecommunication providers. These services begin with providing a large, multinational network capable of a full range of voice services, both local and long-distance. And, as more of the telecommunication industry shifts towards digital offerings, wholesale telecommunication service providers have also begun to offer a complete set of VoIP. Previously, VoIP services were seen as a potential threat to the telecommunication industry, but wholesale telecommunication companies have begun offering whitelabel VoIP solutions for retail telecommunication companies or directly to businesses.
The other bread-and-butter offerings of wholesale carriers are internet and data services, especially as wholesalers are spending money on developing fiber infrastructure, subsea cable routes, and data centers to manage traffic volumes. And these services are purchased by retail providers, such as resellers and system integrators, to bundle these services. However, many have suggested that wholesale carriers have to continue to develop these offerings, including more digital services, such as Ethernet and software-defined wide-area networks (SD-WAN).
For wholesale telecommunication companies that offer internet services, these providers are referred to as Tier 1 service providers, or internet service providers (ISPs). To be considered a Tier 1 ISP, similar to a wholesale telecommunication provider, the ISP must own or control significant portions of its underlying network infrastructure. Often a Tier 1 carrier has to operate across various countries to be considered a Tier 1. A Tier 1 provider can deliver VoIP services with higher quality voice and reliability than, perhaps, retail providers, as they can control priorities in traffic over a network to further compete. But for wholesale telecommunication companies, offering internet access, bandwidth, and increased functionality and becoming a Tier 1 ISP can better serve businesses and consumers in retail markets.
Tier 1 ISPs will host various Tier 2 and Tier 3 ISPs, cloud service providers, and data integrators. This can limit the ability for Tier 1 ISPs to offer customers specific services, limited by the choices available to them. This can require Tier 1 ISPs to increase the reliability of upstream services through mechanisms such as peering, CDN connectivity, or third-party IP transit providers. Further, they can develop networks to meet custom requirements for specific businesses. Tier 1 ISPs also offer protections, such as distributed denial-of-service (DDoS) attack protection or volumetric protections. These and other protections, such as data scrubbing and automated reporting, can increase the desirability to be on a specific Tier 1 network over another.
As part of expanding into internet services and offering Tier 1 internet services, wholesale telecommunication service providers have begun offering cloud computing and data services, as well as data center services. Some of these services focus on automating and increasing service quality on their own networks. While other parts of these services can be provided to Tier 2 and Tier 3 ISPs or retail telecommunication providers to further offer as part of their business services. These services are part of a larger development in wholesale telecommunication services toward increased digitization in their service offerings. Similar services wholesale telecommunication companies have begun offering through internet services and cloud and data center services include the following:
- Alternative access services
- Carrier internet services
- Colocation
- Hosted IP PBX
- IP Faxing
- LAN/WAN
- SIP Trunking
- SoHo and Small Business Voice Lines
- Sonet
- TDM Services
- Toll termination services
Wholesale telecoms go beyond the offering of mobile telecommunication services, which are a part of the wholesale business and include 4G and developing 5G systems, including small cells, which can further support other developments, such as IoT on larger scales, such as for the development of city-wide connectivity systems for the facilitation of smart cities, autonomous driving, and connected public transport systems. Further, for mobile services, wholesale carriers can offer cellular and wireless tower backhaul services to increase wireless distribution, long-haul transport for long-distance data transport, network connection over great distances, and point-to-point services to deliver data service directly to an end user.
Beginning in the 1830s, with the invention of the telegraph, the telecommunications industry has continued to develop, helping shorten the time it took people to communicate with each other, from days to hours to seconds with the development of the telephone and increasing the amount of data that can be sent at any given time with modern mobile technology. These developments and changes have enabled modern business in many ways. Telecommunication companies have had to develop with them, with many companies growing beyond voice services and expanding into video, text, and data. This has further increased the need for high-speed internet access and the quality and reliability of the delivery of data. This has led to developments and innovations in wholesale telecommunications and their service offerings.
These developments and innovations tend to be centered around developing services with the precepts of availability, scalability, and budgeting in mind, based partly on the cloud business model. It has been suggested that, for a wholesale telecom to achieve this, it would have to remove traditional boundaries and limitations on its networks, and instead offer fluid, responsive, and elastic networking with the help of software and infrastructure, such as artificial intelligence, to be built into their application layer.
By around 2010, the wholesale telecommunications market began to be threatened by providers of VoIP services, who often rented the networks and bandwidth the wholesale telecommunication companies offered. This was led by services such as Skype and included video conferencing services that could be used over the internet rather than over telecommunication networks. However, through investments into networks for high-definition voice and video technology, wholesale telecommunication carriers and providers by 2016 had evolved to offer VoIP services, which were deployed over global, end-to-end core IP networks to be delivered efficiently for its customers. This year was also a year in which VoIP surpassed traditional voice traffic for the first time, but wholesale telecoms were, for the most part, prepared. This has further evolved into the concept of communication platforms as a service (CPaaS), which can be provided by wholesale carriers, allowing them to enable new platforms and services for their retail customers.
Through a combination of network function virtualization and cloud-based applications, retail telecoms reduced their need for CAPEX investment and instead were enabled to negotiate with wholesale carriers for a range of capabilities, including network access, data storage, and server capacity, along with other services and applications that can be provided by the wholesale carriers on demand through a CPaaS type service model. Further, to help increase retail interest, wholesalers can become more transparent and efficient in their service offerings and communication with customers through increased process operation. The more significant development and investment in the wholesale infrastructure, along with partnering and cooperation between wholesale providers, network operators, media, and content companies, can lead to a model in which all parties can benefit, enabling end-to-end delivery of services with streamlined quoting, order management, provisioning, and delivery.
Telecoms offering managed services have helped improve communication, team cooperation, and flexibility. They have been noted to help businesses focus on their primary business segment by using telecom solutions for operational activities. This can increase an organization's operational efficiency as telecoms offer end-to-end managed services and solutions and also help increase the revenue for the telecoms. The managed services have grown in their popularity from 2014 to 2019, while global customers have purchased managed services that offer uniform experiences globally. This could include building unified communication systems or offering more efficiency by managing the client's technical complexity. One of the driving services provided by telecoms has been the inclusion and integration of technologies such as artificial intelligence, IoT, and edge computing with other telecom services.
For wholesale telecoms offering mobile networks, inbound and outbound roaming has become an integral part of the retail and wholesale mix. Roaming, particularly roaming data, has provided a pressure point as telecoms (on wholesale and retail levels) work to offer seamless and reliable roaming for voice and data, while customers can affect the revenue over concerns around the costs of roaming. For example, a subscriber roaming can opt to switch off their voice and data over fears around the costs and instead use alternative data access methods, such as Wi-Fi, to access and download data over mobile networks, and use over-the-top services for voice and video calls. However, suggestions remain that telecoms that offer transparent and open roaming charges can provide the subscribers with the confidence of using roaming—as they can know the cost it can incur—and make roaming profitable for telecoms.
IP access and transport (IPX) allows wholesale telecoms to solve some data roaming challenges associated with packet-based data transfers. IPX should be considered a convergent interconnect platform, capable of providing a way to deliver various IP-based services. Further, IPX can enable a multi-service environment, allowing providers to offer a multi-service approach and capture new business while reducing the cost and complexity associated with managing specialized, bilateral, and isolated interconnects. A multi-service approach means delivering consolidated access to roaming, transport, and services such as global VPN and IP transit. It can also integrate Voice over LTE (VoLTE), HD Voice, Voice over IPX (VoIPX), signaling, and roaming services, as well as video, IoT traffic, mobile messaging, and rich-media applications, within a single communications framework.
Over-the-top (OTT) services, such as VoIP services, Skype, Facebook Messenger, and WhatsApp, have posed challenges to wholesale carriers as they have provided users a way to connect with others without using the telecommunication infrastructure. In reaction to these changes, wholesale carriers evolved to carry VoIP services. However, customer behaviors remain in flux, with customer loyalty and satisfaction at risk, both for the OTT providers and for the telecom providers. Customers have shown a willingness to switch to the company or service offering more convenience, ease, and a better experience.
This is partially why telecoms have begun to shift to offering rich communication services (RCS) in place of traditional SMS and MMS. An RCS service takes the place of an SMS or MMS and provides a more feature-rich messaging service, in which users do not need to download multiple apps but get access to a range of services within the messaging app itself. For example, a user in RCS messaging could use a virtual assistant to find directions to a given area, book flights, buy clothes, or make restaurant reservations, all through the RCS messaging app. Further, RCS can interact with traditional SMS and MMS messaging and can also interconnect with some OTT providers, although this is based on commercial agreements. RCS is based on IP-Multimedia Subssytem (IMS), as specified by 3GPP, and allows telecom operators to provide a new service for retail telecoms and their customers. This can also be beneficial for businesses, allowing operators to offer businesses a chance to use RCS messaging with artificial intelligence, chatbots, and in-chat search.
Application-to-person (A2P) messaging is a type of SMS messaging technique in which a text is sent from a software application to a consumer's device. For wholesalers, A2P messaging, although a relatively low proportion of overall messaging traffic, presents network operators with a continuing opportunity for revenue growth, even in the case when peer-to-peer (P2P) messaging is in decline. However, this can be difficult as more network operators face challenges around detecting message types and ensuring networks are not subject to high volumes of messaging spam or potentially fraudulent messaging use. In monitoring network traffic, wholesalers have an opportunity to work with A2P messaging applications and businesses to ensure they are legitimate and to increase both corporate customer and consumer satisfaction with a network while removing spoofing, spam, SIM boxing, and SMS bypass fraud from the network.
Although very different technologies, artificial intelligence (AI), and blockchain have been used together to improve automation and offerings and increase revenues for wholesale telecos. AI can help a wholesale teleco leverage big data in their operations while offering network automation, marketing, sales, and customer experience. Whereas blockchain has been used in research to solve problems of financial settlement and in fraud mitigation, digital identity fraud, BCE roaming, and to solve other problems and offset pressures from the network. Combining AI and blockchain could offer wholesale telecos new business opportunities.
For example, using AI and blockchain could allow a wholesale carrier to build wholesale products daily or weekly based on market trends and scenarios rather than developing unilateral or bilateral deals for specified time periods that may not reflect the market in a few months. Using blockchain and AI, there can be multiple inputs, such as rate sheets shared by wholesale partners, daily traffic, wholesale partners' performance, history, and more, while blockchain can be used to build a database of secured and trusted data.
Another example of the use of AI and blockchain can be in dispute settlements. Many operators typically take fifteen to forty-five days, on average, to resolve a dispute, and this process can be accelerated. Many disputes occur because of data issues at a mediation level, arbitrations, or recommendations. In these cases, blockchain can, as noted above, work as a trusted and secure data repository that can be updated and shared, as necessary, daily, rather than monthly. And AI models can further ensure that changes are captured in the blockchain, with minimal engineering, and roll changes out to production as necessary.
Many of the above-mentioned developments and expected developments in wholesale telecommunications come with digital transformations, or digitization. Digitization allows wholesale telecoms to offer better quality across their network infrastructure while offering other services on top of their core offerings. For example, digitization can allow wholesale telecoms to create self-optimizing networks, secured zero-touch networks, virtualization, 5G technologies, SDNs, cognitive radio networks, and a conception that physical hardware layers can guarantee a shift on the basis of future service differentiation.
With the advent of fifth-generation mobile networks (5G), wholesale telecoms have another infrastructure to offer retail customers and commercial customers, and 5G networks provide a breadth of profitable commercial services that wholesale carriers can offer. Some of these are obvious, such as IoT deployments, which 5G could be beneficial based on network speed for near-real-time applications. Fiber networks offering 5G mobile networks offer new services for wholesalers to provide, including the following:
- Wholesale exchange of 5G traffic
- 5G roaming use case
- New national fiber networks
- 5G network slicing
- Non-public 5G networks
5G is expected to continue the trend of the growing need for cloud-based services, edge computing, CDNs, and platforms on the part of wholesalers and is expected to increase the expectation for wholesale telecommunications providers to have strong integration between connectivity and IT services to ensure end-to-end performance in industrial facilities. The challenge for wholesale providers will be the connectivity aggregators, IT providers, and OTTs that will invest in 5G services, while wholesalers are expected to continue to create most of their value through the provision of infrastructure and connectivity.
