Ecosmob Technologies

Posted on Jan 30

Class 4 vs Class 5 Softswitch: The Infrastructure Decision That Will Make or Break Your VoIP Business

Three months into launching their VoIP business, the CEO called me with a problem.

"We built what the consultant recommended," he said. "A Class 5 softswitch. State of the art. But our wholesale partners keep asking why we can't handle least-cost routing properly. And our operational costs are three times what we projected."

"What kind of customers are you primarily serving?" I asked.

"Wholesale carriers. We're aggregating traffic and routing it to international destinations."

There was a long pause.

"You built retail infrastructure for a wholesale business," I told him. "You need Class 4, not Class 5."

The silence on the other end told me everything. Someone had sold them the wrong solution, and now they were paying for it—in infrastructure costs, operational complexity, and missed business opportunities.

This conversation happens more often than you'd think. The Class 4 vs Class 5 decision seems technical, but it's actually strategic. Get it wrong, and you're building on a foundation that fights against your business model every single day.

how this happened

What Class 4 and Class 5 Actually Mean (Beyond the Jargon)

The terms "Class 4" and "Class 5" come from the traditional telephone network architecture. In that world:

Class 5 switches connected directly to end users (your home phone)
Class 4 switches connected to other switches, routing calls between networks

In the VoIP world, these terms have evolved, but the fundamental distinction remains critical.

Class 5 Softswitch: The Retail Champion

A Class 5 softswitch is designed to serve end users directly. Think of it as customer-facing infrastructure.

What it handles:

Individual user registrations (SIP accounts)
Feature-rich services (voicemail, call forwarding, conferencing)
User authentication and authorization
Per-user billing and CDR generation
Extension dialing and internal routing
Rich feature sets for business phones

Who needs it:

Hosted PBX providers
Unified communications platforms
Business VoIP services
Residential VoIP providers
Contact center solutions

The mental model: Class 5 is like a retail store. Lots of individual customers, each with unique needs, buying different products, requiring personalized service.

Class 4 Softswitch: The Wholesale Powerhouse

A Class 4 softswitch is designed to route high volumes of traffic between carriers. It's wholesale infrastructure.

What it handles:

Trunk-to-trunk call routing
Least-cost routing (LCR) across hundreds of routes
High-capacity concurrent call processing
Codec transcoding at scale
Interconnection with multiple carriers
Traffic analytics and route quality monitoring
Margin optimization through intelligent routing

Who needs it:

Wholesale VoIP carriers
International call routing providers
VoIP termination services
Traffic aggregators
Carrier interconnect platforms

The mental model: Class 4 is like a distribution warehouse. Massive volume, standardized processes, efficiency over customization, thin margins requiring optimization.

The Critical Differences That Actually Matter

Understanding the conceptual difference is one thing. Understanding how that translates to your business is another.

Architecture Philosophy

Class 5: Depth of Features
Class 5 platforms are built for feature richness. Each user might need different capabilities:

Custom voicemail greetings
Sophisticated call routing rules
Integration with CRM systems
Presence and messaging
Video conferencing
Mobile app support

The architecture supports thousands of different configurations because every customer uses the platform differently.

Class 4: Speed and Scale
Class 4 platforms are built for throughput. Features are standardized because wholesale customers care about different things:

Call completion rates
Answer-seizure ratios (ASR)
Post-dial delay
Route quality metrics
Cost per minute
Concurrent call capacity

The architecture optimizes for processing millions of calls efficiently, not customizing thousands of user experiences.

Routing Logic

This is where the differences become stark.

Class 5 Routing:

User dials a number
System checks: Is this user authenticated? What's their dial plan? Do they have permissions for this destination?
Applies user-specific routing rules
Might route internally (extension-to-extension) or externally
Generates detailed CDR for billing

Class 4 Routing:

Trunk receives call from originating carrier
System immediately evaluates hundreds of possible termination routes
Applies least-cost routing, quality thresholds, and business rules
Selects optimal route in milliseconds
Passes call to terminating carrier
Generates wholesale CDR with margin calculations

A Class 5 system routing a Class 4 workload is like using a sports car to haul freight—it technically works, but it's expensive and inefficient.

Billing Complexity

Class 5 Billing:

Per-user subscriptions
Per-minute charges for specific destinations
Feature add-ons (extra users, video conferencing, etc.)
Monthly recurring revenue focus
Detailed itemization for end users

Class 4 Billing:

Per-minute wholesale rates
Different rates for different routes and quality tiers
Volume discounts and committed use agreements
Margin tracking between buy and sell rates
Real-time cost analysis for routing decisions

Performance Expectations

Class 5 Performance:

Hundreds to thousands of concurrent calls
Sub-second call setup times
High feature availability (99.9%+)
Responsive user interfaces
Real-time presence updates

Class 4 Performance:

Tens of thousands to millions of concurrent calls
Millisecond routing decisions
Ultra-high availability (99.999%+)
Minimal latency in voice path
Real-time route quality monitoring

The Expensive Mistakes Companies Make

Over the past decade, I've seen every variation of getting this decision wrong. Here are the most common—and most expensive—mistakes:

Mistake #1: Building Class 5 for Wholesale Business

This is what happened to the CEO I mentioned earlier. Someone convinced them that a feature-rich Class 5 platform was "more capable" and therefore better.

What actually happens:

You're maintaining features you'll never sell
Your routing logic is too complex for wholesale needs
Per-user licensing doesn't match your revenue model
Your cost per call is 3-5x higher than competitors
You can't compete on the one thing wholesale customers care about: price

The fix is painful: Either rebuild on Class 4 architecture or accept that you're permanently non-competitive in the wholesale market.

Mistake #2: Building Class 4 for Retail Customers

Less common but equally problematic. Usually happens when wholesale carriers try to move "upmarket" into retail without understanding the implications.

What actually happens:

You can't deliver the features retail customers expect
Voicemail is either missing or implemented as a hack
User provisioning is manual and error-prone
You can't integrate with the CRM and UC tools customers need
Your churn rate is high because the product feels incomplete

The reality: You're trying to sell a dump truck to people who need a sedan. The fact that your dump truck is really good at being a dump truck doesn't help.

Mistake #3: Building "Hybrid" Platforms

The most seductive mistake: "Let's build one platform that does both!"

Why it sounds good:

Serve multiple customer types from one codebase
Reduce infrastructure costs by sharing resources
Position as a full-stack telecommunications provider

Why it fails:

You end up with mediocre Class 4 and mediocre Class 5
Your retail features are limited by wholesale scalability requirements
Your wholesale efficiency is compromised by retail feature overhead
Your development team is perpetually torn between conflicting priorities
You become expert at neither wholesale nor retail

The harsh truth: Companies that successfully serve both segments run separate platforms. They might share backend components (billing, authentication), but the core switching infrastructure is purpose-built for each use case.

Mistake #4: Choosing Based on Technology Instead of Business Model

"Our team knows Asterisk, so we'll build Class 5" or "FreeSWITCH is more modern, so we'll use that for Class 4."

Technology familiarity matters, but business model alignment matters more.

The right question isn't:

"What technology do we know?"
"What can we build quickly?"
"What's the latest platform?"

The right question is:

"Who are our customers?"
"What are they actually buying?"
"How do they measure value?"

Answer those questions honestly, and the Class 4 vs Class 5 decision becomes obvious.

How to Actually Make the Decision

Let's make this concrete. Here's a framework for determining which infrastructure you need.

The Customer Profile Test

Choose Class 5 if:

Your customers are individual users or businesses who register phones/softphones
Your typical contract is $20-200 per user per month
Your customers ask about features like voicemail, call forwarding, and conferencing
You're competing on feature richness and user experience
Your sales process involves demos and feature comparisons
Your customer expects detailed per-user billing

Choose Class 4 if:

Your customers are other carriers or high-volume users
Your typical contract is volume-based (per-minute rates on thousands of calls)
Your customers ask about ASR, ACD, and route quality
You're competing on price per minute and call quality
Your sales process involves rate sheets and capacity discussions
Your customer expects wholesale rate structures with margin visibility

The Volume vs. Value Test

Class 5 signals:

Lower call volume per customer
Higher revenue per call/user
Complex feature requirements
Direct end-user support
Monthly recurring revenue model

Class 4 signals:

High call volume per customer
Lower revenue per call
Standardized service requirements
Carrier-to-carrier support
Usage-based revenue model

The "Who Answers the Phone?" Test

Surprisingly effective:

If end users answer the phones you're connecting, you need Class 5. You're providing a service directly to people who use phones.

If other systems answer the phones you're connecting, you need Class 4. You're providing infrastructure that routes calls between systems.

The Competitive Landscape Test

Look at your top 3 competitors:

What infrastructure are they running?
How are they positioning themselves?
What's their pricing model?

If they're all running Class 4 and you're building Class 5 (or vice versa), you better have a really good reason. You're not smarter than the entire competitive market—you're probably solving the wrong problem.

Real-World Scenarios: What Each Use Case Actually Needs

Let's get specific with real business models:

Scenario 1: Multi-Tenant IP PBX Provider

Business Model: Provide phone system to small businesses (5-50 users each)

Customer Expectations:

Auto-attendant and IVR
Voicemail to email
Mobile apps
Call recording
Integration with their CRM

Infrastructure Required: Class 5

Why: You're serving end users with feature expectations. Each business needs customization. Your value proposition is feature richness and ease of use.

Platform Examples: Asterisk-based, FreeSWITCH, BroadSoft, proprietary Class 5 platforms

Scenario 2: International Call Routing Service

Business Model: Aggregate traffic from multiple originators, route to destination carriers

Customer Expectations:

Competitive per-minute rates
High ASR and ACD
Real-time route quality data
Multiple redundant routes
Transparent margin structure

Infrastructure Required: Class 4

Why: You're moving high volumes efficiently. Features don't matter—price, quality, and capacity do. Your value proposition is optimal routing and competitive pricing.

Platform Examples: FreeSWITCH (Class 4 configuration), OpenSIPS + RTPEngine, proprietary Class 4 platforms

Scenario 3: Contact Center Platform

Business Model: Provide calling infrastructure for sales and support teams

Customer Expectations:

Agent queueing and distribution
Call recording and quality monitoring
CRM integration
Real-time dashboards
Softphone or WebRTC clients

Infrastructure Required: Class 5 (with specialized contact center features)

Why: You're serving end users (agents) with sophisticated feature needs. Call routing is complex but based on business logic, not cost optimization.

Platform Examples: Class 5 platforms with ACD capabilities, purpose-built contact center platforms

Scenario 4: VoIP Termination Service

Business Model: Accept SIP traffic, terminate to PSTN or mobile networks globally

Customer Expectations:

Broad geographic coverage
CLI (caller ID) handling
Volume-based pricing
Route redundancy
Technical interconnection support

Infrastructure Required: Class 4

Why: Pure wholesale play. High volume, standardized service, price-competitive market. Features are irrelevant—capacity and cost matter.

Platform Examples: Class 4 softswitches optimized for termination

Scenario 5: UCaaS Provider

Business Model: Unified communications—voice, video, messaging, collaboration

Customer Expectations:

Voice calling (obviously)
Video conferencing
Team messaging
Presence
File sharing
Integration ecosystem

Infrastructure Required: Class 5 (as foundation) + additional UCaaS components

Why: You're building on Class 5 voice infrastructure but adding significant additional capabilities. The voice component needs Class 5 because you're serving end users with feature expectations.

Platform Examples: Class 5 voice + custom UCaaS layers, or integrated UCaaS platforms

The Technology Stack: What Powers Each Architecture

Understanding the technology helps clarify the differences.

Class 5 Technology Stack

Core Switching:

Asterisk (most common for SMB)
FreeSWITCH (Class 5 configuration)
BroadSoft/Cisco BroadWorks
Metaswitch
Proprietary platforms

Key Components:

SIP registrar (handles user registrations)
Rich media server (voicemail, conferencing, IVR)
Feature server (implements call forwarding, find-me-follow-me, etc.)
Web portal (user self-service)
Provisioning system (auto-configuration of phones)
Application server (for advanced features)

Typical Architecture:
Multi-tenant design where each customer/business is logically isolated but shares infrastructure. Heavy emphasis on feature completeness and user experience.

Class 4 Technology Stack

Core Switching:

FreeSWITCH (Class 4 configuration)
OpenSIPS or Kamailio (SIP proxy/router)
Commercial Class 4 platforms
Custom-built routing engines

Key Components:

SIP proxy/B2BUA (handles carrier interconnection)
LCR engine (least-cost routing logic)
RTP engine (media processing/transcoding)
Rate management system
Route quality monitoring
Capacity management

Typical Architecture:
High-throughput design optimized for trunk-to-trunk routing. Minimal feature layer. Heavy emphasis on routing intelligence and operational efficiency.

Why the Same Technology Can Do Both (But Shouldn't)

FreeSWITCH, for example, can be configured for either Class 4 or Class 5 use cases. But here's the critical point:

The configuration is fundamentally different.

A FreeSWITCH Class 5 deployment:

Handles user registrations
Implements dialplan logic for features
Integrates with voicemail and other services
Focuses on per-user customization

A FreeSWITCH Class 4 deployment:

Processes trunk-based traffic
Implements LCR algorithms
Optimizes for high concurrent call capacity
Focuses on routing efficiency

Using the same technology platform doesn't mean you can serve both use cases equally well. How you configure and architect the platform determines whether you've built Class 4 or Class 5 infrastructure.

The Hybrid Trap: Why "Both" Rarely Works

Every few months, someone pitches me on their "innovative hybrid platform" that does both Class 4 and Class 5 brilliantly.

It never works.

Here's why hybrid platforms fail:

Conflicting Optimization Goals

Class 5 optimizes for:

Feature richness
User experience
Customization
Integration capabilities

Class 4 optimizes for:

Throughput
Routing intelligence
Operational efficiency
Cost per call

You can't optimize for both. Every design decision favors one at the expense of the other.

Operational Complexity

Running a hybrid platform means:

Your operations team needs expertise in both retail and wholesale models
Your feature development prioritizes conflicting requirements
Your routing logic tries to handle both per-user rules and wholesale LCR
Your billing system manages both subscription and per-minute models

The complexity compounds over time until the platform becomes unmaintainable.

Market Positioning Confusion

How do you market a hybrid platform?

To wholesale customers: "We're a carrier-grade Class 4 platform with advanced routing!"
To retail customers: "We're a feature-rich UCaaS solution!"

But each statement undermines the other. Wholesale customers don't want feature richness—it signals higher costs. Retail customers don't care about routing algorithms—they want ease of use.

You end up with diluted messaging that appeals to neither segment effectively.

The Successful "Hybrid" Model

Companies that successfully serve both wholesale and retail markets do so with separate platforms that share backend components:

Shared Components:

Billing and rating engine
Customer authentication
Interconnection agreements
PSTN termination

Separate Components:

Class 4 for wholesale routing
Class 5 for retail features
Different customer portals
Different operational processes

This isn't really a hybrid platform—it's two platforms with a shared backend. The distinction matters.

Making the Migration: Switching Infrastructure Mid-Flight

What if you've already built the wrong platform? Can you switch?

The honest answer: It's painful, but possible.

From Class 5 to Class 4

This happens when retail providers pivot to wholesale or when feature-rich platforms realize they're competing in a cost-sensitive market.

Migration Approach:

Build Class 4 in Parallel
- Deploy new Class 4 infrastructure
- Don't try to convert existing Class 5
- Run both simultaneously
Route New Customers to Class 4
- All new wholesale customers go on new platform
- Existing retail customers stay on Class 5
Migrate Wholesale Customers
- Move wholesale customers to Class 4 gradually
- Validate routing and quality
- Monitor cost improvements
Consider Dual-Platform Strategy
- Maybe you keep both
- Class 5 for retail, Class 4 for wholesale
- Shared backend where it makes sense

Timeline: 6-12 months typically

Cost: Significant—effectively building new infrastructure

Risk: Moderate if done incrementally

From Class 4 to Class 5

Less common, but happens when wholesale carriers try to move upmarket into retail services.

Migration Approach:

Assess Feature Gap
- Document what retail customers actually need
- Be brutally honest about what your Class 4 platform can't do
- Understand you're essentially building a new product
Build or Buy
- Building Class 5 capabilities on Class 4 foundation is nearly impossible
- Consider partnering with existing Class 5 provider
- Or deploy purpose-built Class 5 platform
White-Label Considerations
- Many wholesale carriers partner with retail platforms
- Provide backend capacity while partner handles retail features
- Lower risk than building yourself

Timeline: 12-24 months for build; 3-6 months for partnership

Cost: Very high for build; moderate for partnership

Risk: High—you're entering a new market with different dynamics

The Hard Truth About Migration

If you've built the wrong infrastructure, the best time to fix it was before you launched. The second best time is now.

Every month you operate on the wrong infrastructure:

Your costs are higher than they should be
Your competitive position weakens
Your technical debt increases
Your migration becomes more complex

Don't let sunk cost fallacy trap you in the wrong architecture.

How Ecosmob Can Help You Make the Right Choice

At Ecosmob, we've helped hundreds of VoIP businesses build the right infrastructure foundation—whether that's Class 4, Class 5, or a deliberate multi-platform strategy.

Our Approach

Discovery First
We don't start by recommending technology. We start by understanding your business model, target customers, and competitive positioning. Only then can we determine which infrastructure makes sense.

Architecture Design
Based on your business model, we design purpose-built infrastructure:

Class 4 Softswitch Solutions for wholesale carriers
Class 5 Softswitch Solutions for retail providers
Multi-platform strategies for companies serving both segments

Implementation and Migration
We don't just design—we build:

Custom development on Asterisk, FreeSWITCH, Kamailio, OpenSIPS
Migration from legacy systems
Integration with existing billing and CRM
Testing and quality assurance

Ongoing Support
Infrastructure isn't set-it-and-forget-it:

Performance optimization
Capacity planning
Feature development
24/7 technical support

Why Companies Choose Ecosmob

Deep VoIP Expertise
We've been building VoIP platforms since 2007. We've seen every variation of Class 4 and Class 5 deployment, every migration scenario, every architectural mistake.

Business-Focused Consulting
We're not just engineers—we understand telecommunications business models. Our recommendations are based on your business success, not technical preferences.

Proven Track Record
Hundreds of successful deployments across retail, wholesale, UCaaS, contact center, and hybrid models. We know what works.

End-to-End Capability
From initial architecture through deployment, migration, and ongoing support. One partner for your entire infrastructure journey.

The Decision Checklist: Class 4 or Class 5?

Here's a final checklist to help you make the decision:

Choose Class 5 if you check these boxes:

[ ] My customers are end users or businesses who register individual phones
[ ] I compete on features and user experience
[ ] My revenue model is per-user or per-extension
[ ] My customers need voicemail, conferencing, and similar features
[ ] My average revenue per customer is $20-200/month
[ ] I provide customer support directly to end users
[ ] I need integration with business tools (CRM, etc.)

Choose Class 4 if you check these boxes:

[ ] My customers are other carriers or high-volume users
[ ] I compete on price per minute and routing efficiency
[ ] My revenue model is volume-based (per-minute wholesale)
[ ] My customers care about ASR, ACD, and route quality
[ ] I process thousands of concurrent calls
[ ] I provide technical support to carrier customers
[ ] I need sophisticated LCR and routing optimization

If you checked boxes in both lists:

You either:

Need two separate platforms (Class 4 AND Class 5)
Need to clarify your business model—you might be trying to serve conflicting customer segments

Final Thoughts: Infrastructure Determines Destiny

Your softswitch architecture isn't just a technical decision—it's a strategic one that shapes everything about your business:

Your target market
Your competitive positioning
Your operational costs
Your feature roadmap
Your scalability ceiling

Get it right, and you have infrastructure that supports your business model naturally. Operations are efficient. Costs are predictable. Scaling is straightforward.

Get it wrong, and you're fighting your own infrastructure every day. Features are hacks. Costs are higher than competitors. Every customer request requires workarounds.

The Class 4 vs Class 5 decision matters. Make it based on your business model, not technology fashion or vendor marketing.

And if you're not sure? Talk to experts who've built both, understand the tradeoffs, and can help you make the right choice for your specific situation.

Ready to Build the Right VoIP Infrastructure?

Whether you need Class 4 wholesale routing, Class 5 retail features, or a strategic combination of both, Ecosmob can help you build infrastructure that supports your business model perfectly.

Schedule a free consultation to discuss your specific requirements. We'll review your business model, assess your infrastructure needs, and outline the optimal architecture for your situation.

Or explore our VoIP solutions:

Your infrastructure should enable your business model, not constrain it.

Let's build it right from the start.