79% Business IP Voice by 2013, In-Stat Forecasts

VoIP penetration among U.S. businesses will increase rapidly over the next few years, reaching 79 percent by 2013, compared to 42 percent at the end of 2009, In-Stat says. This penetration reflects companies having a VoIP solution deployed in at least one location.

 In-Stat now finds that 41 percenrt of businesses with VoIP capability have no legacy TDM voice services, compared to 34 percent in 2008. About 42 percent of US businesses now have a VoIP solution in at least one location, In-Stat says.

Hosted IP services such as IP Centrex also saw steady growth in 2009, while IP PBX growth was significantly stunted.

While there are indications that the economy and high-tech investments are in slow recovery, IP equipment investments are likely to lag other areas, In-Stat says.

VoIP adopters now have a good understanding of the cost savings associated with VoIP, and have oriented their limited budgets to optimizing efficiency and savings by replacing legacy TDM voice solutions, says David Lemelin, In-Stat analyst.

With businesses opening up fewer new locations than we have seen in recent years, much of this current investment is occurring at headquarters locations where efficiencies and savings can be maximized.

Hosted IP Centrex has now surpassed broadband IP telephony as the leading revenue-generating, carrier-based business VoIP solution. In other words, business IP telephony now generates more revenue than other forms of business VoIP, In-Stat says.

Still, 33 percent of businesses that have already deployed VoIP solutions report that recent economic conditions have caused them to slow additional deployment plans, compared to 30 percent reporting no change in plans.

Broadband IP Telephony revenues continue to grow and will more than double by 2013, compared to 2008, driven by single-user applications among increasingly distributed and mobile workforces.

Consumer Centric Communications

Live blog of Pacific Telecommunications Council panel on "consumer-centric communications"

Consumer Centric Communications: I was looking forward to this panel, and my expectations were met and exceeded. There’s a lot of great work being done in areas of e-health and remote communications that the title doesn’t accurately speak to. However, e-health is a good representative area illustrating ways and players addressing global human needs, and the technology that supports it.

David  Sawcer: Pfizer model and tele-health used to analyze questions like why mobile has such a potential benefit but not so great adoption? My experience show that all aspects of successful remote collaborative care, remote monitoring and senseing, and remote access to data and resources. Collaborative care: in military, servicemen would get posted to remote locations with limited health care, generally necessary to evacuate them. We set up a satellite link to joint services hospital, we were able to provide interactions to store-forward info, or interact with local care providers. Was possible to provide diagnosis or treatment questions but had limitations.

Access to data and services: using remote PDAs, drug formulary and interactions database, and online diagnosis (e.g., Up To Date and paid service through university) – didn’t exist until a few years ago, now widely adopted.

Remote sensing/monitoring: in Africa, rural health care, congesitive cardiac care (can be fatal) is common. Is simple question to monitor at local level with bathroom scales (weigh patients), then text in for medical advice (take certain amount of medicines). Unfortunately the program failed when someone stole the bathroom scales. Colleague Elizabeth: when there isn’t a good substitute, alternatives come about organically. On interface part of equation: on patient side, great willingness to use mobile phones or devices (if easy). David: Services most useful when regularly updated with reliable information and was given away free. Technology has to fit the way we work. Costs haven’t been well calculated re: efficiencies, investment; no studies in this area. We talk to the carriers a lot as they’re looking for new areas, but it’s not on their horizon. Pediatric study at UC Irvine and UC San Francisco: got to refer patients on web, by form interface, to appropriate providers. 400 referrals over 4 years shows disparity in usefulness.

Ravi Sharma: Modeling digital flows in the eHealth Eco-system: Strategic implications for players. Example of community center, relatively bandwidth intensive. This market is multi-sided, there is a critical role for telecom network operators (what’s in it for them?). Research questions: 1. identify key stakeholders in this space, model the digital info flows among them. 2. Analyze the values created vs values-captured… Is an ecosystem that encompasses all key players, allows interoperability among them by providing a common platform for interfaces and transactions. Business models: e-commerce based, centrism-based (hospital or provider centric), and platform based (Google; proprietary vs open). Shift in focus from provider-centric to patient-centric models. Time is right to look at electronic personal health records (PHRs). Value of this ecosystem is a function of many components. (Diagram of digital info flow). (Here’s the PDF paper.) Game theory/analysis questions: does value captured justify value created for every player? Does a player stand to lose by opting out of this system? Future work: is a player better off in-system? corresponding value in quantitative terms? what characterizes a win-win business model that makes for a fair, efficient, and stable (sustainable) value network?

Audience discussion: Many efforts on grassroots level to standardize and discover information sharing practices. Singapore doctors training includes steps for diagnosis, shared records with patients. Also generational change brings updated attitudes and technology practices.

Eunice Hsiao-Hui Wang: User acceptance of 3.5G mobile broadband services: the early adopters’ scenario. Early adopters focus of studying user behaviors of 3.5G (HSDPA). Study’s objective: availability: affordabilitiy and adoption (continued subscription). More people like to access the Internet by mobile devices. In Taiwan, several mobile networks (GSM, GPRS, 3G, 3.5G), also wireless (WiFi, WiMax). 23M cell phones, 100% penetration rate, 13M Internet broadband subscribers, penetration rate 66% (Jan 2009). Among Internet broadband subscribers, only 7.7% adopting mobile broadband services and growing fast. Small business user market (3.5G subscription bundling with smart phones like Blackberry, PDAs – slow user growth), potential critical mass market (3.5G bundling with free NetPC and affordable flat monthly fee ($27US).

Survey: web-based on 255 Taiwanese 3.5G mobile broadband subscribers, where is critical mass (behavioral pattern)? Technology Acceptance Model: belief – attitudes – behavioral intention, leads to belief: perceived ease of use, perceived usefulness and perceived playfulness. (graphic of reserch framework) Sample demographics: 53% female, 23.5% age 21-25 and 25.5% 26-30 years old, 55% university level, mostly lower income brackets. Conclusions: perceptions not significantly related to behavioral intention. Most significant factor is attitude: positive attitude leads to greater possibility of continued use. Suggestions: easy, simple and user-friendly service is essential, enhanced convenience-driven interface design encourages subscription (gets jobs done efficiently).

Junction Networks Adds Standard Conferencing Features

Junction Networks has added new features to its business voice service packages at no additional cost, providing users features they have asked for, the company says.

“Our goal is to deliver the most cost effective, business-class phone service for 5-100 users. Now, our customers benefit from more features like conference bridging for 15 people and acd queues while still paying under $20 per user, monthly,” stated Michael Oeth, CEO of Junction Networks.

The "Small Business" OnSIP package, which costs $99.95 a month, now includes 15 voicemail boxes; four attendant menus; four groups; a conference bridge and an ACD (automatic call distributor) queue.

The "Medium Business" package, selling for $199.95 a month, now includes 50 voicemail boxes,
six  attendant menus, six groups, five conference bridges and two ACD queues.

The OnSIP Conference Bridge has also been reduced to only $19.95 per month, with a 15 user limit.

The changes are based on customer feedback, especially demand for conferencing features.

The enhancements are examples of two fundamental trends. First, IP telephony providers continually strive to provide more value to their users, often at no incremental cost, sometimes at low cost.

Second, end user demand for conferencing features illustrates the more-important role one-to-many and many-to-many communications now are assuming in the business world. Though much voice and email communications continues in one-to-one mode, lots of other activity has moved to one-to-many channels. Blog posts, microblogging, social network updates and podcasts, for example, are augmenting traditional one-to-one communications.

83% of Enterprises Have Deployed Unified Communications

About 83 percent of 745 North American enterprise and mid-market executives have unified communications capabilities in place, or are planning to, while 17 percent report they still are not interested, says Henry Dewing, Forrester Research analyst.

Web conferencing and collaboration services, though, are seen as a priority by 55 percent of SMB respondents, as well as storage and backup services, also seen as a priority by 55 percent of SMB respondents.

Integrated communications that unify voice, email and instant messaging are the most-wanted capabilities, with twice the number of executives saying that is important, compared to other features such as presence, integration with business applications, can conferencing capabilities.

That isn’t to say there is little or no interest in features such as desktop call control or mobile integration, but that demand for those features is about 2.5 times less important than unified handling of voice, email and IM traffic.

And while demand for specific features is relatively unevenly distributed, the business value drivers are fairly broadly distributed. Saving money, providing better customer service, improving communication flows and saving time all are cited as key values.

At a time of very-tight information technology budgets, more than a third of respondents say they are hiking spending on hardware, servers and desktop software. About 15 percent report they are increasing spending for managed UC services.

The situation at small and medium-sized businesses and organizations is a bit different, as you might suspect. Where 83 percent of enterprises have unified communications projects in place or in progress, only about 24 percent of SMBs say that is the case at their organizations.

And about 20 percent of SMB executives surveyed say they really have no interest in UC.

And though it seems logical to many of us that SMBs remain prime candidates for hosted services that avoid major capital investments, most SMB executives say they are more interested in premises-based solutions.

When asked how interested they are in buying a managed UC solution sometime in the next 12 months, 56 percent of SMB executives say they “are not interested.”

About 21 percent say they are “somewhat” interested while four percent say they are “very interested.” About 11 percent of SMB executives surveyed by Forrester Research say they currently are using a hosted UC solution.

So it appears industry advocates have some ways yet to go in convincing SMB executives that hosted UC solutions are a better approach than premises solutions.

Recent surveys of IP telephony adoption by SMBs have suggested a similar attitude towards hosted IP telephony as well. About a quarter of SMB executives say they would consider a hosted IP telephony solution, while about three quarters still say they would be more comfortable with a premises-based solution.

Call it habit, inertia or lack of trust. SMB executives still have not embraced hosted IP telephony at rates many of us expected. Some have suggested that fear about making a mistake with a mission critical tool is compounded by fear of choosing the wrong supplier.

Extreme fragmentation of the supplier base, as also is typical of the information technology support business, means no single name generally stands out—in the service provider space—as a “logical” supplier of IP telephony or unified communications.

On the other hand, buyers seem more familiar with the brand names of the firms supplying them phone systems, which then are likely vehicles for a move to IP telephony or unified communications as well.

So far, the hosted IP telephony industry does not seem to have tipped the scales, though one might argue that 25 percent penetration of the customer base for a relatively new solution is not shabby.

IP Telephony Makes Huge Gains in Business

IP telephony seems to have made huge inroads into global business organizations, especially in China, a new study by Frost & Sullivan suggests. In fact, IP telephony is more the norm than the exception, illustrating the fact that IP telephony is the new normal.

"About 80 percent of respondents who have not yet deployed IP telephony say they will," says Jim Tyrrell, Verizon Business VP. Verizon Business and Cisco Systems sponsored the study.

Chinese organizations are especially active, with 89 percent using some form of IP telephony as their primary phone service.

And though early on many organizations were concerned about adoption, that no longer seems to be a key concern. About 92 percent of IT managers surveyed indicated VoIP quality is at least as good, if not better than traditional wireline phone systems.

The Frost & Sullivan survey included 3,662 information technology or line-of-business decision makers in organizations in 10 countries in Asia-Pacific, Europe and the United States, in enterprise and small or medium-sized organizations, across a range of verticals including financial services, government, health care, high technology, professional services, manufacturing and retail industries.

More than half of respondents say collaboration tools allow for greater balance between work and personal life and help them gain more control over their busy lives.

About 58 percent say there are times they don’t want to be reached while 52 percent of respondents say the new communications devices allow workers to gain more control in their lives. Also almost half (47 percent) said they could not do without the ability to conference remotely.

Confidence in virtual meeting technologies is growing. Some 61 percent see collaboration technologies as reducing the need to travel for business. More than half think using conferencing tools – such as an audio conferencing, web conferencing or video conferencing – is a good alternative to visiting business contacts face-to-face.

Regionally, European respondents like to work in the office (as opposed to working from home) and prefer in-person meetings and business travel over using conference calls. However, respondents in Asia Pac and in the United States see conferencing as a good alternative to face-to-face meetings.

Telecommuting is gaining traction. Almost half (47 percent) of respondents report having a formal telecommuting policy in place. However, less than a third (27 percent) telecommute at least once a week, and 22 percent telecommute on a daily basis. At the same time, 61 percent of respondents say they like to work from anywhere.

The results show India is the most telecommuting friendly country, with 59 percent of its organizations having a formal telecommuting policy, and 48 percent of its workers telecommuting daily followed by Hong Kong, with 54 percent of its businesses having a formal policy, and 26 percent of its workers using it on a daily basis.

The United States and China are tied for third with 47 percent of U.S. organizations and 64 percent of Chinese firms having formal telecommuting policy and 25 percent of U.S. workers and 21 percent of Chinese workers using it daily.

Why VoIP Won't Escape Voice Regulation

Telephone subscribers in Oklahoma City and 223 other communities throughout the state will be required to pay a two percent "line inspection fee” on the basic residential rate beginning in February. The fee has been assessed by cities for decades, but up to this point at&t has simply "eaten the cost." It now will pass the fee through to users.

Apparently at&t pays a fee to maintain the rights of way for its telephone lines in 224 of about 490 communities it serves in Oklahoma.

And that's one of the reasons VoIP-as-a-replacement-for-wired-voice will not forever escape regulation of the sort legacy voice services are subject to. There are many vested interests at the local and state level, as well as at the national level, that generate revenue from voice services. As IP-based communications begin to displace huge chunks of the services base, those interests inevitably will move to protect the revenue by pulling VoIP into the older framework.

Now, the way this gets done might change. Where a "subscriber line charge" now is assessed for each "voice line," it might someday be assessed on a "broadband access connection." The revenue won't be allowed to evaporate.

What Disruption Looks Like: Newspapers

So what would disruption of the global telecom industry by IP communications look like? It's a hypothetical question, for a couple of reasons. The newspaper industry, for examnple, has been in a lingering decline in readership and ad revenue for decades. Nothing spectacular, year over year: just a steady, decades-long decline.

The telecom industry has seen something like that only in the twin areas of rates per minute charged for long distance and number of wired access lines in service. The long distance data is different from what one sees in the newspaper business in that volumes have skyrocketed even as prices have dropped. There is no such elasticity in the newspaper market.

The parallel between newspaper and telco fortunes is most similar in the area of access lines, where there might even be something like negative elasticity developing: "drop the price and people buy less." But the analogy doesn't fit very well precisely because, unlike the newspaper industry, the global telecom business has developed a huge replacement business for wirelines, namedly wireless services.

In fact, global telco revenue has been climbing steadily almost without a break for more than a century.

At the same time, telcos have discovered data services in addition to voice, broadband Internet access, entertainment video, ringtones, music and game downloads and other smallish businesses. The point isn't "smallishness." The seeds of tomorrow's business already are planted.

Newspapers have done nothing of the kind.

Last year, McClatchy, a U.S. newspaper chain, acquired Knight Ridder. To help pay down debt, McClatchy sold the Star-Tribune of Minneapolis in March for $530 million. Even with an added tax benefit of $160 million, the sale price amounted to only about half of what the company paid for the paper in 1998.

And then in November, the company took a $1.37 billion after-tax non-cash impairment charge, partly to reflect a further decline in the value of its newspapers.

The company's share price recently was $12.75, down more than 80% from the 2005 peak. The decline leaves McClatchy, the nation's third-largest newspaper publisher by daily circulation, with a market capitalization of barely $1 billion.

There is one sliver of hope: McClatchy has a position in the online classified advertising market, though newspapers collectively have lost their hoped-for lead to the likes of Craig's List.

McClatchy acquired a 14.4 percent share of CareerBuilder.com, as well as a 25.6 percent stake in Classified Ventures, the parent of Cars.com and Apartments.com.

The issue is how much success McClatchy and other major newspaper chains are going to have in the local online advertising business. Compared to the telecom industry, the newspaper industry is well behind the curve in cultivating new businesses, even if small.

One is tempted to say it is a shift of consumption to the Web that is responsible for the newspaper decline, but that's not entirely correct. Newspaper consumption began its decline long before the Web existed, so one has to blame television-based news. A shift of information consumption to the Web simply is accelerating a trend already in place.

XO Communications, Tech Data in Distribution Deal

XO Communications has signed a distribution deal with Tech Data Corporation, giving Tech Data partners IP communications services for small and medium-sized businesses.

Tech Data will offer its resellers and systems integrators XO's converged IP voice and data services, including XO SIP, which delivers converged voice and data services to businesses with IP-PBX systems over a single, high-speed connection.

XO SIP delivers converged voice and data services to businesses with IP-PBX systems over a single, high-speed connection. XO SIP features include unlimited local calling; unlimited site to site calling; long distance; dedicated Internet access; optional voice compression and online management.

How Much More Can Vonage Take?

And what is the exposure for other independent providers of VoIP services? Not to mention software and hardware providers, though the dominant carriers are unlikely to sue their suppliers.

AT&T filed a lawsuit against VoIP provider Vonage Oct. 19 seeking damages for alleged patent infringement.

The lawsuit comes on the heels of a Vonage settlement with Sprint Nextel over patent infringement as well, and against an as-yet-unresolved patent infraction case filed by Verizon. Vonage also appears to have settled another legal dispute with Klausner Technologies, a small company with patents on voice mail technology, for an undisclosed sum.

In a filing with the U.S. District Court for the Western District of Wisconsin, at&t says Vonage willfully infringed an at&t patent related to telephone systems that allow people to make VoIP calls using standard telephone devices.

So far, Vonage's patent-related payments are north of $80 million, as Vonage announced on Oct. 8 that it settled its suit with Sprint Nextel for $80 million. As part of that agreement, Vonage agreed to license VoIP patents from Sprint, including more than 100 patents covering technology for connecting calls from a traditional phone network to an IP network. And then there is the Klausner settlement.

Vonage is also in the process of resolving a patent infringement dispute with Verizon. Unfortunately, of course, the Sprint Nextel settlement and the ultimate Verizon settlement will set a precedent likely requiring Vonage to settle with at&t as well. That will likely bump Vonage's patent payments well above $100 million in total.

And if Vonage is infringing patents held by all three giants, what are the odds other VoIP providers are immune? As for the giants, they'll simply cross-license. For everybody else, the warning is pretty clear: get too much success and you will be sued. So one wonders when the assault against cable companies will come. After all, if one wishes to slow down competitors, messing around with Vonage is okay if it creates the foundation for the bigger assault against cable. But Vonage isn't a telco incumbent's big problem in any case.

It is a sobering thought: all the other independent VoIP providers other than cable are much smaller than Vonage. What chance do they have if any conceivable profit goes to pay lawyers and settlement fees?

Telcos and Web Communications: Who Wins?

Attention might not be the basis for every revenue model, but it clearly underpins most media businesses. It might underpin other businesses as well, including communications.

So note changes in how and where people in France are spending their "communications" time. Since 2000, attention and time spent have been shifting towards Web-based applications and pursuits, and away from telephone-based communications. To be more precise, 53 percent of "communications" or more might be said to originate in some Web related activity, not a classic "pick up the phone" activity.

Time isn't exactly money, so attention and usage do not translate immediately into revenue. But attention sooner or later will create the possibility of revenue. And if this sort of shift in how people communicate continues, revenue opportunities and potential inevitably will shift.

That doesn't mean revenue-generating endpoints such as mobile phones, other communicating devices or "access" services will stop proliferating. It simply is to point out that when so much communications activity originates in Web-based things, whether enterprise or consumer driven, something new will happen, revenue-wise. It has to.

Cisco Predicts Exabyte Networks

Cisco's recent forecast of global IP bandwidth consumption suggests a 37 percent cumulative average growth rate between 2006 and 2011, or about five times the 2006 level. That's aggressive, but you might expect that. You might even have expected the prediction that consumer usage will outstrip business usage, though business dominates at the moment. You wouldn't be surprised at all to learn that video will drive overall global usage.

You wouldn't necessarily be surprised to learn that Cisco forecasts at least 60 percent of all traffic will be commercial video delivered in the form of walled garden services. And a significant percentage of the remaining 40 percent of IP bandwidth will be consumed by IP-based video applications.

The next network, in other words, will be a video network that also carries voice and non-real-time data.

That would be a stunning change from the originally envisioned view of the Internet. But I think we have to recognize at this point that virtually none of the key developments in communications technology have developed as industry insiders, public policy proponents, technologists or entrepreneurs had supposed.

To be sure, all of the diligent work on Session Initiation Protocol will have a significant payoff. But that didn't stop Skype by rocketing past SIP using a proprietary approach.

The Telecommunications Act of 1996 was supposed to lead to an explosion of innovation by dismantling restrictions on "who" could be a provider of Class 5 switch services. Instead, innovation came from the Web. Perhaps despite the Telecom Act, all sorts of innovation has happened.

VoIP was supposed to transform the nature of communications. Instead, mobility, instant messaging and social networks are doing so. One might arguably look to all manner of text communications as the disruptive communications development of the past several decades, not voice.

And then there's electronic numbering and voice peering. Perhaps these approaches still will have some dramatic impact on global voice communications prices and ability to circumvent the "public network." But it's starting to look as though ENUM might be a next generation to provide the signaling system 7 function. That's not to say it is unimportant: only to say it was not what many had intended or expected.

So far, it would seem that the most disruptive impact of the whole basket of new technologies has been to disrupt our ability to predict the future. We've been wrong more than right, as we always are. IP networks are not now, and never will be, as closed as the old public network was. Neither are IP networks going to be "open," any-to-any networks in the old manner, with no intelligence or policies operating in the core of the network.

Lots of things can, and should, be done "at the edge." But increasingly, lots of things cannot. The transition of the global IP network to video also means a shift to real time services (and we aren't even talking about the same process at work for voice and visual collaboration). That spells the end of the completely "dumb network."

BroadSoft Aastra: Man Bites Dog

Aastra Intecom, a provider of PBX-BASED enterprise communications and contact center solutions for large enterprises, now has a strategic alliance with BroadSoft. Aastra, which supports hundreds of thousands of enterprise voice systems, will use BroadSoft’s carrier-grade BroadWorks VoIP platform as the foundation for new next-generation IP-PBX solutions it will deliver directly to large enterprises.

So here's the "man bites dog" angle: in the past, enterprise suppliers have offered a richer menu of features than a large enterprise could buy from a communications service provider. To my knowledge, this is the first time a major PBX supplier has turned to a carrier platform to enrich its enterprise offering.

Jangl to Voice Enable Facebook

Jangl is getting ready to announce Phonebook for Facebook, which puts calling and voicemail right in a user profile and inbox on Facebook. The new feature will allow Facebook members who both have the application to call each other, visually manage voice mail messages in the Facebook inbox and show a current online presence. Voice is becoming an application available within a user's current context.