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Gary Kim has an excellent blog view about How Not to Sell Hosted PBX. First, you need to sell that is Reliable, Dependable.  Even before the usual pitch of: Show me your phone bill and I will save you some money. (Blah!)  Give Gary's story a read.

Another point Nicholas Carr made was that IT and telecom are colliding. A new landscape is coming. 

My thoughts immediately went to GV. Who will be replaced by Google Voice?

• Who is the commodity?  
• Who will add Value to the User Experience?

People will pay for easy and reliable. (Not all of them will, but more than enough will. Remember that Cbeyond only has 50k customers and PAETEC just about 100K). 

Stop selling on price. If you aren't talking TCO or ROI, you are selling telecom, not apps. 

PBX and software companies have had to stop thinking in terms of product and start thinking in terms of Managed Services deployed over the Network. If they are thinking about it as SAAS, should all the Hosted PBX folks be looking at Voice as just another app delivered over the network? Voice is just an app!

Garrett Smith blogs about a new patent that was awarded to 8x8, parent company of Packet8 (and holder of 74 patents on VoIP and communications technology). It's about the automatic connection of an IP device to an IP-PBX.

You would think that by this time all the patents covering VoIP would be done. I will say that VoIP Providers need to have an attorney examine the patent for any infringement.

All the talk about Hosted VoIP being on the rise, blah, blah, blah. Meanwhile, Paetec is on LinkedIn "hiring PBX (Telephone Equipment) Sales Reps for our Raleigh, Nashville, Memphis Offices." For the Allworx product line, I would imagine.

KeaneTel, a Master Agency, is advertising Training on ShoreTel IP PBX Sales. "This is the first of four Training Webinars on ShoreTel by KeaneTel."

All the talk about Hosted PBX and yet premise based PBX sales still seem to be doing alright.

Could be all the FUD. Could be the weekly outages. (Yesterday, it was reported on listservs that Level3 and Cogent had an outage. Level3's outage in Atlanta seemed to even affect VoIP.)

Outages seem to get a lot more press today, but if people are in The Cloud for apps, email, VoIP, data, etc. AND the Internet Access is down, well, you have to consider that. Redundant links - for everyone including the user.

I'm in Atlanta speaking at the Microcorp One-on-One event about Trends in 2010. The three trends that I see for agents are the following: Applications, Quality of Service (QOS), and Mobile Broadband (MBB). But they are kind of inter-dependent. Ubiquious broadband leads to innovative uses and applications. Applications like on smartphones lead to a greater need for mobile broadband networks.

Mobile Broadband is growing. Smartphones are replacing cellular handsets. Social networks are moving to mobile devices so people can Facebook and Tweet. RIM's Blackberry brought us mobile email, but it is a standard on many phones now. Netbooks and data cards are presenting the US cellular companies with some fits. They like the additional revenue, but have to keep dropping billions on the network backhaul and capacity upgrades. (And another $45B+ on the upgrade to LTE/4G).

All this means that there are new uses for the mobile broadband, like the Kindle. Sprint's Wispernet allows Amazon to instantly download books, magazines, newspapers and blogs to Kindle devices. Machine-to-machine devices can utilize the cellular data network to provide connectivity for ATM machines, security cameras, and a host of other devices that need to communicate with a NOC or remote server.

All of this is a cycle of applications driving network usage. Ubiquious broadband driving more apps. It's one reason that the FCC needs to maintain open network and Net Neutrality guidelines in place.

Applications - like email, databases, office suites, CRM - are creating a demand for managed services, such as an outsourced IT department. In addition, businesses are looking at the Cloud - moving applications to a data center for redundancy, security, and availability - as a way to save money and stop worrying about the IT department. With applications being delivered in the Cloud or by way of SAAS or even Virtualization, Agents have a chance to offer more than just Internet Access or WAN circuits, like private line. Agents can sell Layer 2 to Layer 7 - pipe to apps. It's a way to get deeper into accounts. It's a way to offer a complete solution. It's a way to deliver on the label of Trusted Advisor.

Applications are driving sales. Voice and email are just the primary apps. Business critical data is also driving mobile broadband. Ubiquious broadband is allowing for innovative ways of accessing data. The problem becomes reliable access to the data. That's where Quality of Service comes in. QOS on the WAN is what is needed to access data reliably and quickly. The MPLS trigger is the Class of Service reliability and prioritization of data over the network. This is paramount for businesses running a truly converged network with video, database, VoIP, email and Internet riding the same pipes. WAN Optimization is selling due to the cost containment and the performance enhancement. Big bang for the buck.

So the agents can sell mobile broadband, applications via Virtualization or SAAS, and add QOS to the WAN to provide reliable access to these business critical data.

Lots of parties last week at Channel Partners Expo. It seems like it is almost 2003 again. So back to the Delano we went with FusionTel. FusionTel wanted to make a splash by having a party at the Delano. It worked about 60 people showed up at 4:30 to have a few drinks and chat.

I got to start a conversation with their President, but we didn't get to finish it. I did get to chat with Stacy Conrad, Senior Director of Partner Sales, about agents selling their Hosted VoIP service. The latest story is about an agent who sold their service.

The vertical was Healthcare. Fusion was sold because the customer, who is based in Massachusetts, was opening a new site in California and needed the combo pack - phones and Internet service. The agent presented the customer with the concept of trying Hosted VoIP instead of buying the traditional phone service and on-premise PBX. 

The value proposition that FusionTel presents is lower up front cost (CAPEX) as well as enhanced features. But the sales trigger was likely the ability for the receptionist in Mass. to also answer calls for Cali. and transfer calls for free via extension dialing. This freed the company from needing a receptionist in CA. 

"We differentiated ourselves by our expertise, our professional on site installation, and our competitive pricing," Stacy Conrad remarked.

Alex Doyle at Broadsoft pointed out a blog post from his company: Why is UC like a Gym Membership.  The analogy is really about PBX systems - hosted versus on-premise. A gym is the hosted scenario and a Bowflex would be the on-premise version. It's the best analogy I have seen used to date. I hope you are going to ITEXPO and Broadsoft Connections, because smart folks will be at both places simplifying things for you.

FierceVoIP has a headline: Carrier IP Telephony Market off 14% in 2009.

Analyst firm Dell'Oro Group sees the carrier IP Telephony market breaking out of its current slump in 2010, according to a recent report. While the group said the carrier IP telephony market in 2009 will be down around 14 percent from 2008, Dell'Oro expects the market to rebound to $4 billion by 2013.

Tech Data's Senior Product Sales Champion for UC was at the event last night. I spent a few minutes chatting with him about his position, but couldn't really get a definition of UC out of him. Polycom and tele-presence are what he pushes - to me that's not really UC. HD Voice? No we leave that up to Polycom and the vendors. Seems even a tech company has a problem wrapping the head around Unified Communications. (UC doesn't mean the latest gadgets).

XO has some components to build a UC bundle - overlay IVR, Broadsoft SIP Trunking, some straight forward Hosted PBX (with a limited feature set), and Hosted Exchange for the email integration piece.

If the UC Champion thinks UC is tele-presence and video conferencing, what does that say about well defined the term is in the Industry?

This will be a strange post but Alex Balashov and I had a Twitter exchange today about the telecom industry and its relentless pursuit of arbitrage plays. From long distance to calling card to SIP trunking, it's all about changing the bucket of minutes for something cheaper so someone can make some short change coin. Kind of ridiculous.

I asked where the Purple Cows are. Where's the HD Voice in my Hosted PBX? Where's the mobile component that is stupid easy? 

Alex doesn't like Hosted PBX. "As for Broadsoft, it's an overpriced waste of time. Not because it sucks- it is a very feature complete multitenant engine...its cost simply doesn't scale to what people are willing to pay for hosted PBX and dial tone. Shot up by commoditization." 

I think that there are two camps: one that thinks Voice should be free - and I hear that more from folks IN telecom than from buyers. And these folks simply do not grasp the stranglehold that the ILEC's have on the PSTN, which for years to come will still be the network of the final mile to end user. Yes, cellular is large and cable voice is growing, but most of that traffic still resides on the ILEC operated PSTN. ENUM and Voice Peering domestically in the US has not  reached a level that will cripple the PSTN yet, luckily. (What will we do when that happens?)

The other camp will gladly pay to reliably and clearly communicate with family, friends and customers. 

Maybe I am in the minority but I can't hear folks well on Skype, Magic Jack or cell phones. I for one would like less computer features on my "smartphone" and better clarity, volume controls, and speaker. But that's just me.

Alex does make a good point that all ITSP's need to pay attention to: "No process, no standardisation, no infrastructure = no chance of making money, on something that is a red sea to begin with."  What's a Red Sea? A bloody marketplace built on price, not value. "Develop business processes that can be replicated at decreasing marginal cost, standardize." That at least helps when you live in a Red Ocean.

The Starbucks of Telecom. Who is it? Alex suggests that it is "Ifbyphone, Callfire, and various niche call center and dialer vendors (far from all)." And certainly these companies offer a value add on in a niche way. However, who is providing the dial-tone while delivering a communications experience? (I don't know). I have a laundry list of stuff I want from my Hosted PBX vendor:

• HD Voice
• Easy access on smartphone
• Easy transfer to/from mobile/desktop
• Presence
• Video capability
• IM/Chat
• Email-Voicemail Integrated mailbox
• Voicemail text 
• UM (unified messaging)
• User portal
• Click to call

Alex thinks that the Duopoly is getting better at delivering smaller transactions. I think that they still suck at it and it is costing them a fortune in acquisition cost. Then a fortune more in brand deterioration when people get frustrated with the experience. (Part of is it the B.S. marketing that they have been doing for years that raises the level of expectations to beyond the network to deliver. Can you say More Bars or No Dropped Calls or Best Network?)

Very few Purple Cows in our Industry. And if you think you are one, I suggest you talk to your customers. Why? Because while you may think you deliver a great service, your competitors are taking your customers.

Alex and I did agree that the way SIP Trunking is sold is yet another arbitrage play. "So, I think we agree - trunking in itself is a very mathematically exacting but mostly pointless waste of time.  As far as who captures the value in the non-enterprise VoIP space, you're absolutely right - the very few value-add vendors." 

It's food for thought from twitter.

Alex talks further about TDM - that it is still the winner in reliability, inter-operability, and call quality. 

"From a cost perspective that is a hard OPEX formula to meet. TDM is still the only reliable means of PSTN access. Stuff just doesn't work well. Eventually the smart ones widen up and get cheap TDM circuits, and ISDN gateway boxes. ... 90% of their technical overhead drops off, churn slows, but the margins take a dive unless they got a really good deal. "good deal" usually means meeting an IXC in a hotel and not paying loop on the circuit, just blended usage."

This leads me to wonder what ever happened to Voice Peering and ENUM? Well, one thing is that everyone wanted to start one. There wasn't just one. The rules and connection costs get in the way. Why didn't COMPTEL force its membership into a Voice Peering arrangement in 2005? Add in the Cable Industry, VoIP players, and Sprint's network of cellular minutes and you take a lot of the minutes out of the ILEC's PSTN. Costs drop. Or would they? Seems that the CLEC's would still want Inter-Carrier Compensation since some have this built into their financial model (as it were). Because Bell-heads (traditional telecom execs) don't think the same way that Net-Heads (IP execs) think. The settlement model would have to be forced on them. Even the FCC has balked at that for 10 years. 

Alex doesn't get my Peering point so let me spell it out further. Take Sprint as the manager of the Voice Peering Points in Dallas, NYC, LAX, CHI and maybe VA. CLEC's, cablecos, ITSP's could drop traffic either as TDM or IP on the switch and not pay for termination. A flat rate if you will. But Alex is correct that the settlement issues just won't float. Too many Bell-heads left in charge. 

To mean VoIP was able to take off for 3 reasons: broadband deployment, expensive TDM, and cellular acceptance of crappy call quality. We haven't come much further than that.