We’ll be speaking more about Veraz (VRAZ) in upcoming articles but I thought this piece was particularly good. Jefferies & Co. writes about the VoIP Industry from the ground up. This will help in understanding why VRAZ may be the best pureplay out there on the VoIP industry.

VoIP and Softswitching Networks: A Technology Primer

Media Gateway – Media gateways are the basic building blocks of a VoIP network. Media gateways process voicestreams and convert traffic between traditional TDM and VoIP networks…switching traffic from one network protocol to another. Media gateways interface with the legacy network and also connect end user devices to the VoIP network.

Softswitch – A softswitch (sometimes called a media gateway controller) handles call control (setup andtermination) and signaling. Softswitches are software based, residing on network servers. Softswitches perform routing for a call within the network based on signaling and customer database information.

Signaling Gateway – A signaling gateway is used to transport/convert signaling traffic from a SS7 network to an IPnetwork and vice-versa. Within a VoIP network, signaling gateways provide call control functionality and service processing, working in conjunction with the media gateway and softswitch.

Media Server – A media server is a specialized device (hardware/software) supporting applications such as Interactive Voice Recognition (IVR), speech recognition, conferencing, and video processing. Softswitches and/or application servers control media servers.

Feature/Application Server – A feature or application server is used to support advanced services (such asconferencing, unified messaging and call forwarding) within a VoIP network. Third-party vendors can build customized applications using feature servers.

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In a recent initiation note (March 18th) on Cellcom (CEL), Goldman Sachs provided a brief primer on the Israeli cellular market.

Mobile as % of Overall Communications Industry

According to Israel’s Ministry of Communications, the Israeli cellular market is a US$3.9 billion market and accounts for slightly greater than 50% of Israel’s overall telecommunications industry.

Oligopoly

The market operates as a mature oligopoly—three main competitors with comparable market share, high penetration, and high cellular voice usage.

Churn Rate
Churn rates in Israel remain low as well, with the 2005 rate of 12.6% substantially lower than that of most developed regions.

Market Share

Market shares have remained relatively stable over the last 3-4 years. The companies have seemingly found their respective niches, and little price competition remains.

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