Big VoIP Revenue for Small Potato Providers

Located just a few miles from the San Diego Convention Center the home of the upcoming Internet Telephony Conference & Expo is NetSapiens a company making the lives of smaller service providers much easier.

I spent some time with Anand Buch, Co-Founder & CEO of the company and learned more about what they are up to. I last saw Anand in June of this year at the IMS Party TMC had at Globalcomm in conjunction with Siemens and the IMS Forum. Anand picked up where we left off but before we got into business talk I got to discuss the good old days of VoIP when Nuera was in its heyday. Much of the NetSapiens team came from Nuera and we discussed what the future of the company might be under their new AudioCodes parent.

According to Anand, company simplifies the delivery of voice and multimedia services for smaller providers. Their core business is turnkey solutions for startup or small providers that don’t have the bandwidth or resources to go after VoIP market themselves. In addition, and this is a quote from Anand, "They are an integrator with a core competency in product development."

They see their ideal customer as smaller providers with a captive audience for VoIP services but who don’t have the ability to get their voice services out quickly. Generally this means 10,000 or less subscribers.

Some of his potential customers are outsourced web hosters or an outsourced information technology shop for small businesses. The service providers who purchase from his company can either buy equipment or a hosted service if they like. The company’s platform also functions as a call center with an ACD if needed. In addition the platform can handle prepaid calling card applications.

We spent some time discussing the of the domestic ISP market which is about 4,000 or so in size. Anand has noticed that many of the ISPs who have survived the consolidation of the past few years have found niches and and/or served a local community very well. We discussed how the ITSP market will likely see the same events unfold and successful ITSPs will focus on productivity focused individuals, small business and ecommunity sites like those in the online dating or gaming field. Even a soccer league could be a potential customer.

Anand is proud to discuss the engineering built into their solutions as it was developed by the former Nuera engineers who are some of the best in the business. With that he told me the system has built-in IMS pieces that are required but he is careful not to over-hype his solutions and notes the common practice of calling SIP-enabled interfaces "IMS-ready."

I asked what he is seeing in the market and said what is essential to success for his customers is the ability to provide the best quality voice applications and best variety to meet the productivity needs of the customer and do this in an efficient manner from an operation standpoint

Service providers further have to be able to make rapid changes for their customers in a cost-effective manner.

He went on to say his customers find there are so many different services they can provide for their end users. The challenge is packaging it. What PBX features will sell to which group? "They need to provide the two or three that are very valuable," he said.

"Service providers have to pick off what their targeted customer base really wants," he told me. He continued, "Bombarding them with 20 features dilutes the offering." He asked, "What differentiates you? Is it QoS — What are the 2-3 things that are core to you?"

He cited the discussion about ISPs serving a local community. He explained that one of these companies is a current customer and they are not the cheapest provider– they have an excellent engineering team, a great network and their uptime is great. He shared some revenue numbers with me that were fairly impressive.

There is an opportunity for the smaller service provider now he believes. If not, larger companies will get the business by default and when this happens, the customers lose out due to inferior customer service, quality, etc.

We then had a candid discussion about the Asterisk competition. To my surprise Anand was complimentary of this competitive platform but he pointed out you need a redundant carrier grade carrier platform. This requires as he says, OPEX, CAPEX, testing, and you need an engineering team to develop it. He continued by saying this approach costs you six months and you lose time to market.

No talk about the future of IP communications or any technology for that matter must focus on the killer app. Anand believes these come from the end user. He cites the fact that one company he is aware of uses their platform for major voicemail broadcasting internally — the company doesn’t talk very much and voicemail takes the place of e-mail.

NetSapien’s pricing model is quite interesting as they use concurrent licensing not seats. The reason for this is they think new applications are going to come — they don’t want to inhibit their customers from getting users by charging per-seat prices.

We spent a few minutes talking about the audience type and what he calls them. In his opinion these carriers are best described as competitive communications providers — not ITSPs, tier 3 or VoIP providers. Certainly this term is not unflattering and CCP is another acronym I will gladly commit to memory. The question is do service providers care if we call them tier 3, rural or other names that might be considered unflattering? In my experience they generally aren’t upset with these designations. In the end though perhaps those few service providers I have offended at the onset of this article with the "small potato" designation, will get over it slowly when they put the concepts of this article to use and start earning the big VoIP revenue.

Big revenue is the name of the game and the IP communications event designed to help you get there is Internet Telephony Conference & Expo which takes place in just a few weeks. From a focus on peering to SIP to applications you cannot afford to be in the IP communications business and skip this expo. Also –don’t forget about the collocated conferences on IMS and IPTV.

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