Is Telstra Getting Out of Fixed Line Consumer Voice?

In what might strike you as an odd statement, Telstra executives say that VoIP is not sufficiently reliable to sell to consumers.

While launching a new IP telephony services aimed at small business customers, Telstra CEO David Thodey said the company was only continuing to review consumer VoIP services.

“As we think the product is mature enough, and has enough technical backup, we’ll bring that product to market,”Thodey said. However, Thodey didn’t appear to believe a Telstra VoIP offering would appear soon, according to Australian content provider Delimiter.

“We don’t think the quality and reliability is there," Thodey said. "We could bring it to the market tomorrow, but we don’t want to."

That explanation might strike some as quite odd, given the success carriers are having with consumer VoIP.

In fact, some of us might speculate that something else is afoot, namely an unwillingness to invest in consumer VoIP because Telstra might not want to sell consumer VoIP when it starts to buy wholesale access services from the National Broadband Network.

When that happens, Telstra, like other retail service providers, will have a choice of customers to serve. Given Telstra's belief in 4G Long Term Evolution, Telstra might be planning to rely on wireless for consumer voice, staying out of the consumer fixed-line voice service.

That might strike you as odd, but keep in mind that Telstra also operates separate cable TV facilities, running on separate networks. While you might think Telstra is giving up a "triple play" opportunity, it isn't. Telstra can deliver broadband access using the NBN, video entertainment on its existing cable TV networks and voice and mobile broadband on its planned 4G network.

In principle, Telstar could deliver voice using its cable networks as well, but Telstra might simply have concluded that mobile is the best way to sell voice to consumers.

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Forrester Finds Most Enterprises Still Buy Phone Systems, Not Hosted IP Telephony

A recent Forrester Research survey of 567 enterprise and smaller business users that already have adopted IP telephony shows that most buyers so far have chosen premises-based solutions.

Just four percent of respondents say they have adopted a 'hosted' IP telephony service. Another four percent reported they had adopted a 'telephony as a service solution. About five percent said their IP telephony solution was outsourced. Taking all three as a group, just 13 percent of IP telephony solutions were hosted, cloud-based or outsourced.

That might make a great deal of sense. The economics of IP telephony tend to suggest that small users can benefit from hosted or cloud-based solutions, while enterprises often can justify owning their own solutions.

The study lends credence to the cable operator strategy of targeting businesses with 20 or fewer employees, as those are the venues where the economics of buying a service are best, compared to buying a premises-based solution.

About 71 percent said their IP telephony solutions were self maintained, while 16 percent said they owned their solution, but that it also was managed by a third party.

Forrester Finds Most Enterprises Still Buy Phone Systems, Not Hosted IP Telephony - Thoughts on Carrier Evolution - Carrier Evolution

Voice as a "Spice"

Consultant Thomas Howe describes the way voice can work in a new context by calling it the equivalent of "spice." In other words, it might often be the case that, within the context of an enterprise application, voice is a feature used to enhance a process, rather than a stand-alone function or application.

In that sense, click-to-call is an example. Most people would agree that is the case. What remains unclear, at least for service providers who will continue to make signficant revenue selling voice as a stand-alone service, is whether "spice" is a business for them, or not. In some cases, it will be; but in other cases it will not.

To the extent that spice can be an interesting revenue stream for service providers is whether they can figure out ways to combine traditional calling functions with enteprise application features that integrate "calling" with information relevant to the call, that is valuable to the enterprise and is worth paying for, from the corporation’s point of view.

Monetizing such "hard to replicate" data by combining it with voice is where telcos have a great opportunity to grow, says Howe. There are many areas where only telcos can deliver voice and have the information that will add value to the call, such as authentication, location, even availability.

The issue is that many other providers in the business ecosystem also have the ability to integrate such functions in new ways. Google and Apple, for example, may well be able to leverage "location" information without needing the assistance or permission of the service provider.

Still, it should be possible to create services that confirm a person is home to receive a delivery, or to assist in scheduling at-home or at-office appointments.

Identity authentication, more than simply location or "phone number" identity, might be useful for transactions as well.

SME VoIP Still a Challenge

Plenty of challenges continue to face successful providers of hosted or premises-based VoIP services. In its most recent survey of IP communications demand in the small and medium business market, Savatar Research found some “good and bad news and some that is disturbing,” says John Macario, Savatar president.

“We were expecting a bump in the market, based on the last three years of work, or at least a growth rate consistent with the past,” he says. “The bad news is that adoption is flat.” There’s not a lot of growth, he says. SME adoption is stalled at about 17 percent.

“There’s increasing frustration among SMEs,” who apparently haven’t yet gotten the message about benefits, which are clear enough based on feedback from executives who have purchased and use IP communications products and services.

It isn’t that SMEs are buying legacy phone systems. They just are not moving. They’re “just sitting on what they’ve got.” And that’s true both for premises phone systems and hosted offerings, Macario says.

All of which suggests many service providers who don’t know how to serve the market, he notes.

Macario says there is some evidence that buying might even have slowed over the last year. For those who have purchased IP communications products or services, “more than 70 percent purchased more than one year ago,” Macario says. “Only 12 percent have purchased between six months to a year ago.”

“About 15 percent have bought last six months,” he says.

The good news is that “the buyers are insanely happy,” Macario notes. About three quarters of respondents say they have gotten economic benefit while 75 percent say the systems are much easier to manage.

About 84 percent say the quality of their IP systems is as good or better than their old systems. The same percentage say the IP systems are as good or more reliable than the old systems.

As you would expect, 82 percent say the IP feature set is far better. Astoundingly, 95 percent say they would recommend or highly recommend the service or system they now use.

They “really are enthusiastic,” Macario says. Among the most-used IP features is the auto attendant capability. For many SMEs, this is the first system that allows them to do so. Half of respondents say they use it. About a third use group-oriented features or informal call center capabilities as well.

About a third use find me/follow me or simultaneous ring, he adds. About a quarter use click-to-dial and the ability to integrate with Microsoft Office applications. “People are starting to explore the feature set and figure out what else they can do,” says Macario.

But it is wireless services of various types that seem to be top of mind and growing in importance. Wireless related services also seem to have huge potential for inducing churn.

Of those who have deployed some sort of IP communications capability, about 71 percent are very or somewhat interested in FMC as a desktop replacement service, if the pricing is acceptable. About 83 percent would be interested in using it as an add-on or replacement for at least some desk devices.

Asked what else they would consider buying from the same vendor who sold the IP communications service or system, about 40 percent indicated wireless was on the list. About one third would buy Web collaboration tools like WebEx or Live Meeting services.

Demand seems to be just as high even for respondents who have not bought any IP communications service or capability. About 75 percent of those who haven’t yet bought are somewhat or very interested in fixed-mobile solutions.

Some 70 percent said somewhat or very likely to switch from their wireline service to an FMC offering and 70 percent said they would switch from their current mobile provider to get the capabilities.

About 71 percent of respondents who haven’t yet bought an IP solution would be interested in mobile desktop replacement as well.

Respondents say they would be willing to consider replacing at least some desktop phones if doing do saves about 20 percent from their total communications bill.

About 35 percent of respondents say they now pay for employee use of mobiles, picking up between 76 and 100 percent of the cost of the service.

Traditional telcos also are getting more traction and mindshare in the business VoIP space, it appears. For two years, traditional phone companies have got a really low share where it comes to SME executive perception about “who” provides business VoIP servicers, says Macario.

This year, telcos moved seven points higher. About 24 percent of respondents now view telcos as providers of business VoIP. Interestingly, 29 percent said cable companies come to mind as providers of business VoIP.

Non-traditional providers fare best at smaller firms. As firm size goes up, telcos do better. In the 50 to 99 employee segment, only 20 percent say non-traditional telcos are logical providers. And note: the cable gets 22 percent of the votes in that segment category.

That might be surprising for CLEC and other executives who think cable will not get traction in the SME space. “When a CLEC or a pureplay provider knocks at the door, they want to know who they are,” says Macario. “Cable has a brand. That helps.”

Cable already has surprising share at the lower end of the broadband access market. In the one-to-four-employees segment, “about half use cable modems,” says Macario.

“Once you get up to five to 19 employees, then 11 percent have T1s,” he notes. “DSL share is 47 percent, 25 percent T1 at slightly larger firms.”

Overall, says Macario, service providers, in a broad sense, aren’t doing a good job of communicating the benefit of making a switch to IP communications.

Global VoIP Keeps Chugging...

Worldwide VoIP service revenue jumped 66 percent to $15.8 billion in 2006 after more than doubling in 2005, and is expected to more than triple by 2010, says Infonetics Research. Worldwide revenue from residential hosted VoIP services jumped 68 percent between 2005 and 2006 while managed IP PBX service revenue grew 45 percent.

Hosted VoIP services continue to outpace managed IP PBX services by far, with residential services fueling the market, but the business segment is also growing, and will continue to, Infonetics says.

“Asia Pacific has been leading the VoIP services scene for a couple of years, with Japan’s SoftBank pioneering the service and taking a strong lead, but the EMEA and North America regions have gained some ground at the expense of Asia in the last two years. The Latin American-Caribbean region is also posting impressive growth and gaining share,” said Stéphane Téral, principal analyst at Infonetics Research and lead author of the report.

The number of worldwide residential/SOHO VoIP subscribers nearly doubled between 2005 and 2006, to 46.5 million, 46 percent of which are in the Asia Pacific region.

About 71 percent of worldwide VoIP service revenue came from residential/SOHO customers in 2006, 29 percent from business customers.

SoftBank is the world's largest VoIP service provider with 18 percent subscriber market share, followed in order by NTT, Vonage, France Télécom, and Time Warner Cable, Infonetics says.

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.

Enterprise IM Shift: What to Do with the PBX?

Though we take it for granted that businesses "must" use a business phone system, that might be quite so true in just several years. In fact, Gartner predicts that by the end of 2011, IM will be the de facto tool for voice, video and text chat at the largest global enterprises.

Gartner estimates that 95 percent of workers in leading global organizations will be using IM as their primary interface for real-time communications by 2013. If that proves correct, we may now be witnessing the last wave of business phone system upgrades, as lucrative as the IP phone business, in its managed, hosted and premises-based incarnations, now appears to be.

There are other possible changes in store. Voice has been a one-to-one sort of communications pattern; mostly real time but with an ever-increasing asynchronous format. But with wikis, blogs, Plaxo, Facebook and other tools with a social and "push" updating capability, more forms of communication shift to a one-to-many, asynchronous mode.

One sort of "broadcasts" what one is doing, working on or needing help with, and the network just sort of responds as appropriate. Not good for control freaks, the ego-obsessed, the self-absorbed or mildly incompetent. People who are more respected, more trusted, more helpful, more knowledgeable and open will get more help than those who are in some significant ways "non-social." Winners and losers will be produced by the shift of communication modes.

As AOL's third IM survey shows, "everybody" now uses IM in their "consumer" life roles. The issue is how that will play out in the business context.

And though one might not yet see the change in the small business market, IM systems have moved from the fringe to become a key part of an enterprise’s collaboration infrastructure and increasingly are displacing existing forms of communications from ad hoc telephone calls and emails to pre-planned meetings and video conferences, says Gartner.

For many knowledge workers, instant messaging (IM) is as critical as having access to a telephone or to e-mail and enterprises that haven’t already done so should start incorporating IM into their critical business processes immediately, say analysts at Gartner.

“Although consumer IM use has been predominant in business, we expect penetration levels for enterprise grade IM to rise from around 25 percent currently to nearly 100 percent by the end of the decade,” said David Mario Smith, Gartner research analyst.

Doesn't Qualify as a Headset

So we won't be sumbitting this to Jajah's "ditch your headset" contest. Besides, my granddaughter wouldn't want the Jajah T-shirt in any case. It would have to be pink, and illustrated with horses. My wife wouldn't be caught dead wearing a headset, it goes almost without saying. If I really want to know whether some new innovation is thoroughly mass market, she's the market sample. She wouldn't intentionally use VoIP; doesn't use instant messaging or SMS, either. Will not check email at home after work, for any reason. Does think the iPhone is worth owning. That's significant.

Not Convinced, Eh?

Canadian small and mid-sized businesses remain more than a little unsure about the wisdom of out-tasking their information and communication systems and services, say researchers at The Yankee Group.