U.S. Small and Medium Businesses to Spend $32 Billion on Voice and Data in 2010

U.S. small and mid-sized businesses will be spending about $32 billion in 2010 on voice and data services, according to Analysys Mason.

Speakeasy Free Phone Offer Extended

Speakeasy has extended its "free phone" offer, which the company launched in March to apparent great success.

The company has been offering free Polycom SoundPoint IP 321 VoIP-enabled phones to new business customers who purchase unlimited or global Hosted Voice calling plans and have a minimum of five lines.

The promotion was so successful that Speakeasy has extended the promotion through the end of June.

Any way you look at it, merchandising tends to work.

Will the "Bell System" Survive?

"Will the Bell system survive?" asks Allan Ramsay. He argues that a "massive transfer of wealth from Bell to VoIP is underway." We can disagree about how large the wealth transfer is, what VoIP is, or whether voice is on its way to becoming a feature, and not a revenue driver at all. 


It is not a question the Federal Communications Commission appears to think relevant, though. 

Will the Bell System Survive? A Massive Transfer of Wealth from Bell to VoIP is Underway - MumbaiHunGama Info Articles:

Ringio Launches "Rich Calling" Service for SMBs

Ringio will launch a new cloud-based "rich calling" service for small and mid-sized businesses that might be mistaken for a hosted PBX sort of service but actually is more a hosted customer relationship management solution.

Ringio’s service allows users to map existing phone numbers to the CRM functions, which are available either on a desktop client or on Android-based smart phones.

The service is designed to be easy to set up and use, and requires no changes to existing hardware or software.

“We define ‘rich calling’ as bringing a telephone call and relevant information about the caller together at the same time to enrich communication and information sharing, says Ringio co-founder and Chairman Michael Zirngibl.

One example is that if an existing customer calls, notes about prior interactions with that customer are displayed, allowing any call agent to "pick up where the last agent left off" in a more-seamless way.

Ringio also features "presence" features so if a call has to be transferred, the call agent can be sure the other party is available to speak.

Ringio is launching the service’s own integrated call-control and screen-pop client for the PC, Mac desktop or Linux. Ringio also automatically retrieves and synchronizes records built using Google’s Contacts database, and plans are under way to integrate Ringio with Salesforce.com by later this summer.

The service will be provided directly to business customers through www.ringio.com. Pricing starts at $99 per month for four users, with additional users at $25 per month. Ringio is considering distribution partnerships and invites inquiry via partners@ringio.com.

Ringio’s intelligent call-routing functionality is being provided by Voxeo, a longtime platform host with an extensive history in IVR and convergent communications.

Zirngibl says it takes as little as10 minutes to set up for the first time.

Free Polycom Phones With Speakeasy Offer Through May 31, 2010

Speakeasy, owned by Best Buy, is offering free IP phones to new business customers.until May 31, 2010. Speakeasy is including, free of charge, Polycom SoundPoint IP 321 VoIP-enabled phones to new business customers who purchase unlimited or global Hosted Voice calling plans and have a minimum of five lines.

To the extent that the need to buy new IP phones has been a barrier to adoption, the promotion eliminates that concern.

In addition to offering a free Polycom SoundPoint IP 321 to new customers (MSRP $139), Speakeasy is also announcing their new hardware lineup including two new Polycom phones and three new Cisco phones. Speakeasy's phone lineup now includes the Polycom SoundPoint IP 335, 650, 670, and SoundStation IP 6000; as well as the Cisco SPA 504G, SPA 509G and SPA 525G. Special prices are available for a limited time only for customers wishing to upgrade from the free phone offer to one of these new models.

http://www.speakeasy.net/press/pr/Speakeasy_offers_free_phones.php

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.

Comcast To Buy New Global Telecom

Comcast Corp. apparently has agreed to purchase New Global Telecom Inc., according to XChange. The deal should reemphasize the growing role cable operators expect to play in the business IP communications space, beginning with the small business segment.

Based in Golden, Colo., New Global Telecom provides wholesale services to carriers and competitive service providers in the U.S. The company has recently announced a series of private-label deals, under which NGT supplies branded VoIP services to operators like American Broadband Inc.

Best Buy Sells Phone Power Nationwide

Best Buy now is distributing the "Phone Power" VoIP service nationwide. That's a pretty big boost for any retailer, and especially so for an independent VoIP provider aware that the market is consolidating and that scale is sorely needed.

Phone Power costs $19.95 per month with no contract, $16.95 with a one-year contract and $14.95 for a two-year contract. The service offers unlimited calling within the United States and Canada and 60 international minutes in 88 countries.

The Best Buy offering includes a two-line home adapter as well as a USB travel adapter. It sells for $79.95, and comes with a $79.95 instant service credit to be applied when the customer activates service on an eligible one or two year service plan.

It isn't clear yet whether Best Buy also will be actively selling Phone Power business packages, which come in both multi-line and single-line versions, offering unlimited inbound calling and 5,000 minutes of outbound calling with auto-attendant feature, and other popular business features, included on multi-line packages.

Why Isn't All Voice Free?

"When I wrote a story about various VoIP initiatives a decade ago, nearly every expert I spoke to spouted the same prediction: within 10 years, all phone calls will be free," says John Dvorak, PC magazine columnist. "The rationale behind the pronouncement was that the wires and systems used for phone calls will eventually be used to transfer data, just like everything else."

"You don't get charged for visiting a Web page, so why get charged for making a phone call, if both are essentially data?" he muses.

It's an old argument, but is akin to asking why a diamond, made of carbon, is worth more than a thimble's worth of oil, also made of carbon, or a tiny cube of apple.

The answer to the question of different incremental pricing or costs to use network features has little to do with the representation of symbols and everything to do with larger permissible business models mandated by government entities.

In a legal and regulatory sense, bits are never "just bits." Cable TV bits are regulated differently from voice bits that touch the "public phone network," while Internet bits are regulated differently from each of those other types of bits and from private network data.

Still, it is one thing to argue that use of communications or other bits may not impose an incremental cost to a user. That is not to say there are not specific costs associated with use of the bits. Google Voice might not charge an end user for completing a specific call. But there are actual costs, imposed by the regulatory regime. Google pays them, not the end user.

But that does not mean the call has no cost, only that the cost is indirectly paid.

As for why others, besides Skype, other instantt messaging-based call providers, have not moved more aggressively to offer various forms of "no incremental cost to offer" calling, financial interests are involved as they always are.

One might as well ask why no-incremental cost education, music, video, books or plane tickets are not available.

In 1977, for example, long distance calling represented about half of all U.S. telephone company revenue. By 2007, that was no longer true. Instead, wireless services had taken the place long distance once played in underpinning the whole business. That isn't to say long distance has dropped to insignificance. It remains important. It is to say that there must be some revenue model underpinning the business, and if it is not long distance or voice, it will be something else.

No, there is no mystery about why VoIP has not lead, over the last 10 years, to "universally-free" (no incremental cost to end user)  voice calls. Voice, though declining, remains a key underpinning of the carrier business model. Nor do government regulators permit "free to end user" calling between networks.

Google Voice might not charge a U.S. user for a U.S.-terminated call. But Google Voice is compensating the terminating networks for use of their networks. Google Voice envisions a different business model for domestic calling than "per minute" use of the network. Lack of end user charges does not mean "terminating minutes" do not carry costs.

That, in fact, is behind Google Voice's blocking of some numbers, in some high-cost exchanges. And those charges are radically higher. Some firms report that the high-cost termination charges are as much as 25 times higher than typical.

How Do You Measure the Value of Something That Has No Price?

Global end user spending on communications services (voice and data, not entertainment video) runs about $1.8 trillion a year or so, one can extrapolate from the most-recent International Telecommunicatons Union statistics.

Fixed line voice probably sits at about the $740 billion range in 2009.

Infonetics Research says VoIP services bring in $21 billion for service providers in the first half, so assume an annual total of $42 billion. Assume 16 percent of those revenues are for trunking services of one sort or another and voice revenues might hit $35 billion or so for the full year.

That suggests VoIP services represent about 4.7 percent of total global voice revenues in 2009.

The point is that VoIP remains a relatively small portion of global voice revenues. But the situation is more complicated than simply how VoIP stacks up as a revenue driver. The larger problem with voice revenues, as everyone agrees, is that it is trending towards becoming an "application," not a service. That means it will sometimes be provided "at no incremental cost," or at "very low incremental cost."

The value VoIP represents cannot be strictly measured using "revenue" metrics, anymore than the value of email or instant messaging or presence can be measured by revenue metrics. Probably all that anyone can say with some assurance is that the value VoIP represents is greater than five percent of the total value of voice communications, as many sessions occur on a "non-charged" basis.

Many years ago, consumers got access to email in one of two ways. They got email access from their employers, or they bought dial-up Internet access and got their email from their ISPs. In neither case has it, or is, possible to calculate the economic value of email, as the measurable "product" for a consumer was the value of the dial-up Internet connection.

Business value is even harder to calculate, as organizations can buy software and hardware to host their own email, and then buy access connections that support any number of applications, without any specific fee required to host email services.

The larger point is that, in future years, the service revenue attributable directly to voice services will be a number that might remain flat, might grow or might shrink. If voice revenues ultimately shrink, as they might in many markets, or if VoIP replaces TDM versions of voice, that will not necessarily mean that people are talking less, or that the value ascribed to voice is less.

It simply will mean that the value is only indirectly measurable. Only one thing can be said for sure. Markets whose products cannot be directly measured will not be measured. The first sign of this is the increasing use of metrics such as "revenue generating units" or "services per customer" or "average revenue per user."

At some point, though it might still be a measurable quantity, the value of voice services will be only partially represented by "service" revenue. It's tough to measure the value of something that has no specific "incremental cost."

So what will market researchers and agencies do? What they have done before: they will measure the value of some associated product that does have a market price. They will measure the value of purchased access connections, rather than particular applications, much as one could measure ISP access subscriptions, but not the value of email.

Enterprise Telecom Spend Now $1500 to $2000 Per Employee, Says Gartner

North American enterprises spent between $1,500 and $2,000 per employee on telecoms services in 2008, say analysts at Gartner. Total telecom spending represents about 20 percent of IT budgets. Wireless spending represents about 15 percent to 30 percent of total telecom spending but remains both the strongest growth category.

Fixed services continue dominate spending primarily due to enterprise spending on data networks.

But enterprises are shifting the way they buy services. Wireline services generally are sourced from multiple providers, as you might expect, given the regional nature of fixed access networks.

Wireless services ncreasingly are sourced on a national basis, when possible. That also makes sense since the tier one mobile providers offer nationwide service.

Contracts that combine buying of fixed and wireless service are more popular when possible, as they generally lead to volume discounts.

MPLS rates fell by double digits in 2008 as enterprises squeeze their VPN transport accounts, Gartner says.

The average North American fixed services contract is a three-year deal with an incumbent provider, although cost concerns have proven a boon for alternative providers and technologies such as audioconferencing.

Enterprises increasingly are bundling wireless with wired services to gain volume discounts, Gartner says. As a result, enterprises have reduced total communicatons spending.

Net Neutrality Not Good for Real-Time Services?

One of the unknowns at the moment is how any proposed Federal Communications Commission network neutrality rules might affect a service provider's ability to offer quality-assured services.

That's possibly important for any users or providers of real-time services (voice and video), since bandwidth alone is not a guarantee of quality experience.

Real-time services are highly sensitive to latency and delay. The issue then is whether consumers will have the option of buying services optimized for real-time services.

Think of this as an end-user opportunity to buy bandwidth services that are akin to the Akamai content delivery service currently available to businesses.

Cable Growth Shifts to SMB Segment

It is a measure of how much has changed in the U.S. cable and telephone industries that

commercial services, especially those delivered to small- and medium-sized enterprises, are an increasingly critical imperative for U.S. cable operators.

In fact, the revenue and margins delivered by these services will be the main growth engine for the U.S. cable industry over the next few years, say researchers at Pike & Fischer.

That itself is change from patterns of the last several years, when broadband access and consumer voice services have driven revenue growth.

On the other hand, though mobility revenues have underpinned revenue growth for tier one telcos, video service revenue is the fastest-growing wired service.

Separately, the most-recent J.D. Power and Associate study of consumer telephone service marks the third consecutive year that traditional cable television providers have achieved the highest rankings among phone service providers in all regions included in the study.

26% of IT Execs Say They Will Invest in VoIP This Year

Information security tops a list of projects information technology executives expect their firms to invest in this year. Some 43 percent of surveyed IT executives say they will do so, says Robert Half Technology.

Voice over Internet Protocol investments will be undertaken by 26 percent of respondents.

Some 28 percent say virtualization initiatives will be funded while data center efficiency was cited by 27 percent of respondents.

You might be surprised that so many enterprise executives are planning VoIP initiatives of one sort or another, this year. That's almost as many as those saying they will undertake data center virtualization efforts.

http://www.roberthalftechnology.com/PressRoom?id=2458

Random VoiceCon Observations

Here's a set of fairly random observations from VoiceCon, ranging from "slow" return on IP telephony to "no return," as well as the usual cautions about buyer resistance. Joe Abate, Mounrt Kisco Medical Group director of IS says " I don’t think we’ve seen any productivity gains at all after deploying IP telephony. Ouch!

Conrad Cross, City of Orlando CIO, says he "expects the return on investment on the city's TDM-to-IP migration to take four to five years. Three years or less is what most buyers probably would want to see. Small businesses won't even be willing to wait that long, I'd guess.

But Gary Grissum, BNSF Railway VP Telecom, estimates that 40 percent of his company's workforce will retire in next few years, and unified communications might be a way to attract a new generation of workers. That's a big deal. Some of us have argued we need to see a change of buyer influences (younger, in other words) before we can really assess how far technology buyers are willing to shift their preferences.

Overheard a VAR mention that the problem with selling unified communications to smaller businesses is that they don't see the benefits, forget about the price. I'd say that has emerged over the last year or so as a key impediment. Buyers in the small business segment discount all "soft" gains such as productivity, less wasted time and unified message boxes. Really, you have to show them how they save money--hard dollars--right away.

Kevin Gavin at ShoreTel points out that the tough economy is focusing IP PBX buyers on return on investement, even more than typically is the case. Duh! Customers demand very-clear ROI before buying.

Global VoIP Growth Slows

Global growth in local VoIP minutes seems to have slowed down a little, say researchers at iLocus. There was a sequential growth of seven percent in local VoIP traffic from the third quarter of 2008 to the fourth quarter of 2008, apparently caused by a decline in the rate of VoIP subscriber growth.

International long distanceVoIP minutes, on the other hand, experienced negative growth quarter over quarter. "This is perhaps due to the overall decline in international long distance traffic in the fourth quarter of 2008, iLocus says. The negative growth also could be due to slight bit of consolidation in the service provider segment, as well. National long distance minutes saw a healthy growth rate owing to the growing use of IP networks by wireless carriers to transport NLD traffic, iLocus says.

In the fourth quarter users consumed 107. 2 billion local minutes, 298.1 billion national long distance minutes and 22.5 billion international long distance minutes.

http://www.ilocus.com/2009/03/voip_minutes_in_4q08_touch_428.html

Indian Company Slashes Voice Rates

India's State-run communications company MTNL has slashed international call rates to one Rupee per minute (about three cents) for its Voice Over Internet Protocol customers to about 100 countries such as Saudi Arabia, Pakistan, Japan, Malaysia and Kuwait.

The call rates to the United States, the United Kingdom, Canada, Australia, Singapore and Hong Kong are already stand at one Rupee (3 cents) a minute. For countries to which the calling rates were at Rs 6 (18 cents), 8 (24 cents) and 12 (36 cents) have now been reduced to Rs 4 (12 cents), 6 (18 cents) and Rs 8 (24 cents) per minute respectively.

For countries where call rates were Rs 2 (6 cents) and Rs 3 (9 cents) per minute, the rates have been reduced to one Re (3 cents) per minute.

The issue now is how market forces will work to lower mobile-initiated or terminated calls, as that's where the future lies in India, China and other markets.

Communications-Enabled CRM

C3IP Communications, a privately-held VoIP provider based in Scottsdale, Ariz., has integrated its communications functions with the Act! customer relations management software. As a result, C3IP clients using Act! have access to customer histories, account information and other resources whenever customers call in.

These days we might call the availability of communication features inside an application a "mashup." Decades ago we would have called this an example of computer-telephony integration. By either name, the idea is roughly the same: embed communications inside a business process.

Dell, Fonality Target SME Market

Some things never seem to change. For several decades, competitive providers of communications services, not to mention value added resellers, interconnect companies that install business phone systems, Internet access providers and broadband services providers have found that the small and medium-sized business segment has been the sweet spot for competing successfully with large incumbents. Cable companies now are preparing their own assault on the lower end of the market as well.

The news that Dell now will be selling the Fonality VoIP Phone System through its global SME sales organization, as well as its channel is simply more confirmation of the trend.

At the same time, there is abundant evidence that not all providers are equally advantaged in the SME space as the technological complexity of services intensifies. Some providers used to selling connectivity services with a clear network demarcation are going to find the going much tougher as the demarc moves to the desktop and the handset.

VoIP, in particular, requires more active assessment, management, monitoring and installation activity and support. And that's just at the network layer. As voice and communications become more embedded in actual end user applications, the level of complexity will take another leap. So, going forward, every provider inevitably will wind up more involved than perhaps desired in all sorts of implementation, optimization and management activities.

More skill and more cost are the inevitable result.

Four More VoIP Patent Infringement Suits

As many of us had feared, if Vonage is infringing patents, why aren't other independent VoIP providers doing so as well? Well, we now have a possible answer. Sprint Nextel Corp. is suing four competitive VoIP providers for the same patent infringements Vonage has been found to infringe. Sprint has sued NuVox Communications, Broadvox Holdings Paetec and Big River Telephone Co.

On the heels of Verizon's new lawsuit against Cox Enterprises for VoIP patent infringement, we might be seeing the materialization of the threat. Executives in the competitive VoIP community have privately worried about just such a turn of events for some time. It now looks as though those fears are justified.

Justin McLain, Endeavor Telecom CEO, partly in jest (but only partly) recently said at a panel at the Internet Telephony Expo that any independent, "over the top" VoIP provider had better have all the funding they need for 24 months, because if not, the companies will fold within that period. "You might want to look for another job," McLain said, again partly in jest, but only partly.

Competing against well-established providers who own their own access facilities and have huge customer bases, plus the ability to bundle entertainment video and broadband access or mobile services simply is going to be too tough, at least in the consumer market segment.

"No bring your own broadband provider really is successful," McLain said. In fact, a good part of any independent provider's success in the consumer market is driven to a large extent by customers who recently have immigrated to the United States and have high needs for international calling back to their home countries, McLain says.

Some other part of the market is composed of price-conscious callers, but the problem is that the average revenue per user a provider can generate from that segment is not enough to support a business, says Sanford McMurtree, RNK Communications VP.

Among the other possible changes in strategy are a shift to multi-level marketing on the Amway pattern, says Gary Coben, deltathree director. "For all the money spent marketing VoIP services, there aren't that many customers," Coben says. "That means people aren't comfortable buying."

It looks to be a tough year for independent VoIP providers who cannot reposition from a consumer focus to serve smaller business customers.