What's It Take to be a VoIP Winner?

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

What's It Take to be a VoIP Winner?

What does it take to run a successful VoIP services company? According to Report Linker, "the biggest VoIP providers are ostensibly run-of-the-mill telecom companies. This means smaller providers must innovate and take the role of pioneers whose marketing strategy doesn't rely only on offering the lowest price, since that's a game they can't win."

Lowest price is about scale. And as we have seen, just getting to 10K customers has taken most providers a long time (like 6-10 years). So lowest price - and the accompanying we-are-going-to-save-you-money speech - just won't cut it today. It isn't about revenue. It's about margin and profit.

A&P Grocery chain filed for BK today. It has been around 150 years. It ran on 2% return since 1998. It had bonds out there paying 8%. That won't work.

You would expect a 150 year old to know that. Apparently not. But they aren't alone. Many telecom/ITSP companies just want to book revenue and subscribers. That's like counting Facebook fans. What does it get you?

Some of your newer ITSP companies are doing unique things.

Alteva is betting on Microsoft with its Hosted OCS/Linc/Sharepoint/Exchange offering. It is so betting on that Hosted UC type offering that Alteva is wholoesaling that option to other ITSP's. Alteva thinks video will be disruptive, especially what comes out of the MS LINC integration. At the same time, Alteva is also betting on Broadsoft Hosted PBX and software integration. "Apps are stickier" is what Alteva CIO William Bumbernick told me during an interview. He also told me about some big college wins of 22K and 65k seats - without naming the colleges. The bonus was that these were agent sales, which ties in with Bumbernick stating that the ideal agent had bigger customers/connections. Hosted UC isn't for the small business, which is why they target more than 100 seats.

Hosted UC, especially video, needs more bandwidth. (See latest FCC report about broadband speeds.) Companies now looking for Hosted UC are medium sized according to AMI-Partners. Likely that means they have a CIO-type person who can roadmap the integration required for Unified Communications.

In other sectors of VoIP, we have Google Voice testing Call Recording. Sure, it has limitations, but then Google Voice has it's own impediments for many business. But Call Recording that is integrated into the Hosted VoIP offering, like PBX-Change offers through its CTI equipment, is what businesses are looking for. Plus it is that feature that becomes advantageous - and sticky.

Leasing is another advantage. Cisco has its program where it is helping ITSP's that use all Cisco products. (And Cisco Capital is telling VAR's that this is the new normal.) PAETEC and Tele-Pacific are CLEC's touting their own leasing programs.

Other areas of VoIP that can lead to a market advantage are zero-touch provisioning that Cbeyond and IBM are working on; translation service that Telcentris is rolling out; and SMS Integration (that's text integration), so your inbox looks more like your smartphone inbox, is something Telcentris is also working on.

What else are buyers looking for?

Basically, integration and simplicity. By that I mean, Google Apps integrated with Salesforce and other apps that the user needs.

Security. McDonald's customer data was hacked this month. Customers expect that data will be secure - until it isn't. That could be the cloud over cloud -- How reliable and secure is that Cloud Provider?

The one thing that will be a liability for ITSP's and VoIP Providers: not owning the network. We are knee deep in the Net Neutrality debate and it doesn't look good. Plus the Duopoly has stated that if the CLEC's don't like the pricing deal: Hey, go build your own network then!

It's more than just the pricing. Without owning the network, providers have to pay extra for quality of service. That raises the rate or takes away from margin. We'll see how this plays out, because unless the ITSP is integrated into the business processes of its customers to the point that the ITSP is a technology partner, pricing will be a factor - and network operators will win more deals, albeit with thinner offerings.

To win against cablecos who are fast becoming very large providers of digital VoIP, customer service and integration with marketplace advantageous features will be required.

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