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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.

The financial activity in the ITSP sector that I am seeing leads me to believe that the ITSP sector is taking off.

• Cypress buying up Reignmaker assets.
• Telesphere got $15M for expansion.
• XCast collecting a $2.7M investment.
• Forbes publishes an article titled The Value of VoIP.

Although there have been analysts who think that IP Lines will slow down, I have to think that in the economic reality we are facing, the distributed workforce, the tele-worker, and the mobility of employees, more and more lines will move to VoIP. For cost savings as well as productivity reasons. 

If lines do slow down it will be due to the following reasons:

• layoffs - less employees = less lines needed
• mobility means less landlines needed
• email, social networks, IM/chat, texting is replacing phone calls.
• over all trend for less phone calls.

There are so many reasons for small and medium businesses (and self-employed persons) to migrate to VoIP that I don't see it being stagnant for long. 

Who to go with?
The one issue is the share number of VoIP Providers (with little differentiation) makes the decision difficult for the business owner. 

Premise versus Hosted
The premise hardware guys are selling their gear as if it was hosted at your site. Many business owners aren't familiar with having such a significant communication service outsourced (off property). It's a strange concept to wrap your head around. Plus there may be changes like cabling and handsets that go with the move that represents too much change for the business owner in today's hectic marketplace.

Blinking Light Syndrome
For productivity to be affected positively at the office by VoIP, the way workers answer and use the phone might have to change. Call park being the biggest one. (But some providers have this solved). Still change is tough.

VoIP Providers Themselves
Many of the people selling VoIP pitch the cost savings. Wrong! There will be changes, so it needs to start with a conversation about how the business operates and uses the current phone system. It takes longer but it is the best approach. Looking at the bill and shaving points off it hasn't been highly successful for CLEC's, who have spent billions to make millions. 

The other side of the ITSP coin is the unclear marketing message. So many companies in the VOIP space do not have an elevator pitch, a positioning statement, or a dumbed-down way of explaining what they do/provide. It makes it hard to market.

And lastly the confusion over what an ITSP is. Here in Tampa I have listened as one ITSP knocks another. That doesn't help at all, especially when the sales person doing it has clue none anyway. The ocean has to be raised witha discussion about why buying Voice over FiOS is not as advantageous for the business owner as Hosted PBX. 

Case studies like Forbes' article will certainly help sell more lines.

When selling VoIP, the conversation should be about productivity, reliability, and security not cost savings. In a poll, VZB "was the surprise top finisher in Infonetics Research's first North America Business VoIP Services Leadership Matrix in both IP Centrex (hosted IP services) and IP connectivity, Infonetics said today."  Main factor: reliability and financial security of VZ. NGT, 8x8, and Cbeyond were next in the poll. "Comcast is moving up fast on hosted VoIP (IP Centrex) services." ITSP need to get a move on.

What's the perfect VoIP Service?

I have seen so many VoIP Providers, I can't keep track. But that also means that the VoIP providers are not doing a very good job of Messaging, Positioning and Differentiating their offerings.

The only VoIP provider I know that has married Hosted Exchange with Broadsoft is Simple Signal. It makes to me because what is UM (unified messaging) but voicemail to email - everything in one box.

Unison Offers VoIP, E-Mail, IM to SMBs in New York City

Google Voice does it as well. One inbox for Gmail and Google Voice. And GV has some nice features like a transcript of your voicemail; recording calls;

Recently, I read that a company had instituted a who-is-calling-please response into every call before th ephone rings. I love this! No more dumb dialers. No more UNKNOWN or OUT OF AREA on the Caller ID.

Quick rant: I pay Verizon $22.35 for Worksmart which includes Caller ID, but most of the time it is Unknown. WTH? How does it not even known when AT&T calls me? Or almost any other CLEC? Lazy. That's why you are losing customers.

Presence (not to be confused with tele-presence) was supposed to integrate IM/chat, email, mobile and desktop phone. I haven't seen much of that in real world implementation. (I understand why, but I'm just pointing it out).  Skype does a decent job of video, voice or chat - plus recording.

Broadsoft has allowed many ITSP's to hook to SalesForce.com. Why not offer a hosted CRM software that is married to your PBX and email offering? VoIP is just one application.

• HD Voice
• conference-on-demand (web and video)
• call blocking
• Portal as easy as AT&T CallVantage
• call logs that can match up caller ID

Obvously, the usual features are still a must-have, including:

• simultaneous ring
• find-me-follow-me
• 3-way calling
• caller ID
• voicemail
• vm-to-email
• call forwarding
• Do Not Disturb

Chime in. I would love to hear from you:

• what you are doing
• who has the best message
• are you a cutting edge ITSP

UPDATE:
M5 announced that the marriage of the M5 Genband-based Hosted PBX with SalesForce.com and Call Metrics has been a hit.

If you Google VoIP save money, there are a million hits. There is the article, "How to Save Money with VoIP Service" with 5 lame tips. VoIP News has one titled, "15 Ways to Use VoIP to Save Money During the Downturn", that lists ways to use different vendors for differing free services based on VoIP. VoIP News has another one which asks, "Will VoIP Really Save You Money?" The answer of course is yes.

Where does VoIP save you the most? Inter-office dialing, In-State calls which cost more than inter-state calls, and international dialing. But the key for Hosted PBX isn't about cost savings. It's about business productivity and efficiency.  It's about Business Continuity.

In a new article by FreedomVOICE, "9 Ways to Slash Phone Costs and Increase Productivity", the push is to a distributed workforce via tele-commuting, tele-work, or virtual office space. And that doesn't mean permanently. What if the receptionist has a sick kid? If you had a Hosted PBX set-up, in many cases, she could still work from home and the office does not experience a disruption. That's a productivity gain. Isn't that better than saving money?

If a business is moving to UC, how does the decision get made on the platform?

In many cases, the IT Administrator has some responsibility for the phone system (even if that means he calls the PBX vendor). When the IT Admin is tasked with replacing the phone system, what goes into that decision?

Certainly, if the admin is Cisco certified, he will be leaning towards a move to Cisco Call Manager. You don't get fired for buying Cisco. You also go with what you know.  If the admin is an MCSE, he may lean towards an OCS solution.

My guess would be that it would be difficult for a PBX vendor like Shore-Tel or Avaya to pitch their box. It's too foreign. A PBX is an unknown black box. In a business IT department, you go with what you know.  It comes down to IT being familiar with IT vendors. PBX vendors just never bridged that gap. Likely that is why VAR's and MSP's (managed service providers) are having success selling Hosted PBX solutions. IT guy to IT guy. Trust is there because they speak the same language.  Hosted solutions are a concept that an IT guy (or gal) can fathom. After all, what is a server or Exchange or Novell or the mainframe?

Keep this menatlity in mind when heading out to pitch PBX. (Don't call it that!)

Talking to a channel exec this morning about UC. There isn't really a clear definition of UC. When you speak to UC companies like Altitude, the UC is about the contact center, first call resolution, and unified desktop. To me, first call resolution is a business process management (BPM) issue. And so is the concept of unified desktop.

"Routine customer-service interactions may require agents to interact with five, 10 or even 15 or more systems. Much of the time, these systems are ignorant of one another, requiring agents to log on each time they access a new system.... Unifying the agent experience into a single, consistent desktop takes the complexities out of the training process and job performance......  Management is also more clearly able to see the impact of call resolution because call closure procedures are uniform, no matter what back-end functionality comes into play during the course of the call..... The universal desktop view also makes it considerably easier for constituencies such as sales, marketing, and finance to understand the customer-service business processes at play and tailor their own activities accordingly." [from a Cincom guest column]

In my experience, this isn't an IT project, this is a COO or CEO project. I would also venture to guess that most back-end systems cannot be hooked together to provide the necessary data for Unified Desktop. Another guess would be that this type of venture would likely fall under the 70% of failed IT projects. Why? Unless the CIO is financially compensated for a project of this magnitude to be delivered, it will lose priority and die. A project this massive (actually any BPM project) requires inter-departmental cooperation, many meetings, a lot of man-hours, a strong project manager, the backing of the C-suite, and a 2-year timeline, where it stays in the spotlight.  UC becomes UD.

At medium sized businesses, UC can be defined as VoIP plus email plus collaboration and conferencing. For Cisco, this is the sweet spot: Call Manager with Webex. Unfortunately, Cisco doesn't have that email piece. That email piece is missing from most PBX and VoIP providers.  For Microsoft, this is exactly what they hope UC comes to stand for because that is what OCS is designed for. The downside to MS OCS is reliability, TCO, and E-911.

At the small business, I don't think they know what UC is at all. Why would they? UC is a term the industry can't define, so what would a small business owner know about it? The SB Owner is looking to cut costs, but even at 15% savings, is he going to move to a hosted PBX platform? Probably not because of the big changes that come with that migration. What changes? Blinking light syndrome for one. That being the changes the workers will deal with daily from the previous set-up. The blinking light is call park, which most PBX systems do not include. So immediately the workers have to make a big change in how they handle calls.

There is a capital expenditure (CAPEX) to move to VoIP in the LAN. Cabling, POE switches, battery back-ups, IP Phones, and a QOS Router. And now there is a very different looking phone on the employee's desk, so we have training and re-training.

To move a small business over to UC, there has to be a sound business reason, which can only be uncovered if you spend the time to understand the prospect's business. (This is why working in a niche is most profitable).  You have to understand the call process at work in the business environment. That may have to start with "I'll-save-you-10%" but then needs to quickly move to a discussion about the business, its workforce, and its relationship to the phone system.

Overall, people do search for "unified messaging" and "unified communications" but I'm not clear on what the universal meaning of those terms are. We have a show (IT EXPO WEST 2009 in Sept.), but I think that the definition of the acronymn varies. Maybe we can discuss that in Sept.

John Todd is an Asterisk evangelist and works for Digium. VoIP Users Conference reposted John's 7 steps to better SIP Security on Asterik (here). The reason for the 7 steps now?

"In the last few months, a number of new tools have made it easy for knuckle-draggers to attack and defraud SIP endpoints, Asterisk-based systems included. There are easily-available tools that scan networks looking for SIP hosts, and then scan hosts looking for valid extensions, and then scan valid extensions looking for passwords. You can take steps, NOW, to eliminate many of these problems."

It's not just Asterisk either. There are holes in every PBX and softswitch. There is long distance fraud, especially in International calling. You should be checking your CDR's at least daily - or run a script to pick up anomalies.

Security in entirety will become extremely important this year. New tools; a tanking world economy; criminals will be looking for every lever to make money or get something free.  So will disgruntled employees, so network admins need to be on top of any changes in human resources.

This morning on Twitter, it was announced that Hosted VoIP company, Acredo, had laid off all its staff. Acredo is the second Hosted PBX player in Orlando to axe its staff in the past few weeks. VOX also laid off most of its staff, while waiting for a big deal to close, which is supposed to be its savior.

We are entering the time when there will be a parring down of the 1000+ companies offering VoIP. The majority of users have migrated to cable digital voice service due mainly to the bundle, the price, the Quality of Service, the name brand, and the large advertising campaigns.

Acredo was Avaya based and not inexpensive. I have no further details about the company.

VOX had over 100 partners reselling their service including NCTA, WISPA and FISPA members. Most notably Junction Broadband was a reseller. The deal with UTGI was supposed to be the saving grace for VOX. The funding partners decided that they couldn't pour more money in while they waited to land the UTGI deal.

Certainly, we will be seeing more of this as VC and hedge funds have been hit by the financial crisis too and cannot continue to fund companies that have not hit a revenue and cash flow stance.

An UPDATE on this story: see Rich Tehrani's update. Acredo is in re-organization - not closed.

A correction: the VOX reseller is Junction Broadband, not Junction Networks as I wrote yesterday. (Please note that the linked press release clearly stated Junction Broadband.) I apologize for the typo.

SUTUS, the maker's of the Business Central 200 office-in-a-box, have announced inter-operability with Excel SIP Trunking.  The real news for the marketplace is that Excel and SUTUS (along with Polycom) are bundling a system for small business.

The Business Central 200 is developed specifically for businesses of up to 25 employees, Sutus Business Central™ comprises a wide array of advanced telephony, data and networking functions. It includes a business-class phone system, file server, email server, router, firewall, wireless access point, VPN remote access server, and automated backups. It has the ability to simultaneously support both standard phone line and VoIP connections and comes with an array of business productivity features. Now VARs can get the office-in-a-box at almost no cost with a SIP bundle from Excel.

The interoperability allows resellers to provide their small business customers with a guaranteed low cost, reliable and full-featured IT and telephony bundle that is unmatched in the market.  It also allows the channel to better service small businesses due to the Business Central's advanced built-in remote support features. Tech support that would previously have required a truck roll can now be handled remotely by basic support staff.

Steve Weltner, Director Product Development at Excel, is excited about Excel's new SIPpbx Equipment Upgrade Program. He comments, "affordability is a non-factor as the device ends up being virtually free."

"With economic tough times facing everyone there has never been a time where pricing and simplicity have been more important," said Shawn Chute Executive Vice President of Sutus, "Excel and Sutus have come together to deliver on both these fronts, providing the small business customer and the channel that services them with an affordable, comprehensive and straight forward communications and IT bundle. One price, one solution, one contact point, we have made it as simple as it can be to subscribe to a fully integrated solution."

For resellers interested in this Sutus Excel program please contact Sutus at www.sutus.com or 778-371-5286. You may also contact Steve Weltner Director of Marketing at Excel at 972-910-1763.

If you are a channel agent or a VAR or a service provider looking for a VoIP Provider to be your VoIP provider, there are 6 questions to think about:

1. Do you want to White Label, wholesale or a retail package?
2. Will you be serving consumers or businesses?
3. Will it be POTS replacement or Hosted PBX?
4. Will you be selling PBX, phones and other hardware?
5. Do you want to do Tier 1 support?
6. How will you sell it? (Or do you have a sales team?)

While many ITSP's (Internet Telephony Service Providers) can do all of it - white label, wholesale, retail, hosted PBX, analog replacement - it is difficult for each to excel at all of that. And you don't want to get half way down the road to have your vendor shift gears and the wheels fall off.

Support is key because "the blinking light" syndrome means that you will be getting calls about "how do I do that?" or "why can't I dial long distance?" So it's good to define responsibilities (and what is Tier 1 support).

Why know your market? Because most ITSP's have not designed an offering to compete against Vonage, Magic Jack or the cable companies. (And besides B2B is way more profitable).

The last question is real: How will you sell it? If you have 100 clients, only 10-20% are going to convert without some type of sales effort. And that doesn't amount to many lines for all of the effort that both you and your vendor will be expending to get this partnership moving forward.

I have seen far too many ITSP's bring on numerous agents/resellers/VAR's/partners, only to see lots of start up activity that never converts to enough sales activity to account for the effort.