Today, as you may have heard already, Bandwidth.com signed a landmark commercial agreement with Verizon in which we agree to exchange VoIP traffic at an industry-first deal at a rate of $.0007 per minute – an incredible industry benchmark.

Because Bandwidth.com is emerging as the leading provider of network services to Voice 2.0 application providers with the major “household name” strategic partners, and Verizon is the largest telecommunications company in the US, this deal sets a new precedent and standard.

The goal of this post is to outline why it matters in the big-picture for the use of current and cutting edge VoIP services and applications, and for innovators cranking out the next generation of those services and applications.

The Deal Itself

This particular agreement is one of the largest VoIP traffic agreements in history, and the “triple-zero seven” agreed-to commercial rate is going to drive down the costs of these services for millions of consumers.

Basically, this agreement recognizes that VoIP traffic is an information service, and not a legacy telecom service, which is a key piece for an innovative commercial deal like this.

Even more, this deal recognizes that all VoIP traffic – regardless if it begins in IP or is ultimately received by the called party in IP – is covered by the deal. This is an industry first and a huge victory for innovators, and hence, in a very real way helps fuel next-gen communications and applications.

And it should be noted that absent this deal, that currently within the industry, the average rates for VoIP traffic are still significantly more expensive than $.0007 – so that’s a radically low price.

So, Why the Heck Should I Care?

If you’re not familiar with the adoption of VoIP within the communications industry, this probably sounds like a bunch of inside baseball. But you should care, and you should care a lot.

Think of it this way – the lower the rates that Bandwidth — a major VoIP service provider, is able to exchange VoIP traffic with other providers, the lower the cost it is for you to make calls from anywhere. It’s just that simple, there really is a direct connection here – no pun intended.

More importantly than just VoIP pricing, this really should open the door for further innovation by both major players and startups alike. For Bandwidth.com, it means we can roll out new, innovative products on the modern network and win customers on the merits of the innovation and value we can deliver on a level playing field. And that’s precisely why we think this deal is a big leap forward for the industry.

We started Bandwidth.com with a vision of being a new kind of communications company – one that would disrupt the status quo with a purpose built network and new business models, enable innovation, and go well beyond the “dumb pipes” reputation that the industry has earned over the years. This vision means the value is not in the network itself, but innovating on top of it and allowing others in the industry to do so as well by offering our network on a wholesale basis, with easy to plug-in APIs and aggressive rates…all to encourage more competition and innovation in this market.

For this reason, we launched our own business VoIP services with a product called Phonebooth, which has the goal of providing SMBs with a more powerful, radically simpler, and more affordable phone service. We then we launched our nationwide all-VoIP network soon thereafter.

Last year that network served up billions of minutes of VoIP calling – not only through our own products, but also for major partners. And that’s what’s important to note here – all of the cool new communication services we know and love depend on the cost of doing business in VoIP, and for them, this deal is huge.

We hope this deal paves the way for rabid innovation in the VoIP world, and in the process to make our point that today’s innovators in voice and emerging applications do a lot more than just carry your voice – they are multi-functional apps with multi-dimensional functionality, allowing you to do a more than you can imagine than just old fashioned voice calls.

They will offer transcription and multi-modal “follow me” functionality, and so much more. In an age when my phone is just one app on miniature, handheld computers like the iPhone, cross-pollinating functionality blurs the lines – which empowers and enriches the lives and productivity of the customer.

That’s what this agreement boils down to. We’re breaking down the barriers to innovation in the VoIP world by offering landmark pricing on the wholesale side of our network.

Why The Major and Emerging Innovators Will Love This Deal

Put simply – this deal gives certainty to the major communication innovators in this space as they want the lowest possible wholesale pricing for their VoIP traffic. In previous years, innovators wouldn’t know exactly how much it might cost them to provide their services. There was simply no visibility on reliable and cost-effective rates for exchanging VoIP traffic among service providers. This deal changes that.

This agreement provides them with that certainty – but also gives them highly competitive pricing that sets the standard to make VoIP even more affordable for the innovators.

The end result is that they can focus on building stellar products that benefit consumers now, rather than holding back and waiting for affordable rates some day way off in the future.

Just think about how often you use innovative VoIP products online – with some at absolutely no cost to you. Just imagine what they could build if they could be certain that the cost of those calls weren’t going to go through the roof all of a sudden, because of pricing uncertainty.

The point is – the products and services that millions of consumers love and use every day are precisely the reason why this deal is so important.

With more competitive pricing, the innovators and entrepreneurs are unleashed through this commercial deal, and we hope that you’re going to see huge investments in ambitious new products and services that will change how you communicate with loved one’s, or do your job, or simply have fun.

Just The Tip of the Iceberg

The big takeaway from this agreement is that it helps usher in a new era in the communications industry. It creates new possibilities, particularly for new ventures as it provides much greater access and scale for entrepreneurs.

Competitive pricing on VoIP traffic means that you can expect to see voice capabilities plugged into a much greater array of new products and services, many of which I expect will come from entirely new startups and entrepreneurs that can finally get into a game that was previously cost-prohibitive and dizzyingly ambiguous.

Bandwidth is a perfect example of this new paradigm as we pursue innovation of our own Phonebooth application while supporting other innovators by opening up our network on a wholesale basis.

And that’s really the best part – this agreement is ultimately going to spur growth in the economy as existing and new ventures now have the ability to explore new products at a scale that was previously impossible.