Why "One Talk" Now?

source: Software Advice

One obvious question about the new Verizon “One Talk” service, a unified communications offer that, among other things, forwards landline calls to mobiles, is whether Verizon can take significant share from other existing providers such as 8x8, RingCentral, Vonage or West, for example.  

One other obvious question is why the new offer, and why now. And a high level, the issue is that Verizon now is mostly a mobile services company, with a declining business customer base.

A new business phone service heavily based on the mobile network suits Verizon more than a number of other providers.

At the same time, if hosted PBX is a business Verizon really wants to be in, it has to make moves to gain market share. While Verizon is not an “also ran,” neither is it in the top ranks of the business, based on seat licenses.

To some extent, the offer also aims to provide a solution small businesses say they want. Some 29 percent of small businesses surveyed by Software Advice want a phone system that forwards calls to alternate devices.

That survey also found that small businesses tend to rely more heavily on mobile devices than on other kinds of phone system endpoints such as softphones and traditional desk phones.

The price for One Talk is typically $25 per month per user, but customers also need to buy new IP desk phones.

Of course, there are other potential savings, for any business considering a full installation or replacement of a premises phone system.

source: Software Advice

Factoring in hardware costs (the hardware itself, plus the installation), along with the wiring and the man-hours to run and terminate all those cables, plus the new phones to work with the system you’ve bought, you’re looking at costs between $500 and $800 per user, says John Macrio, Edgewater Networks VP.

For a 25-user installation, that’s between $12,500 and $20,000. With the VOIP option, the phones are all you buy, which will run you between $100 and $250 each.

If much of the cost now is the cost of buying a switch, and wiring or rewiring a location, then the attraction of a mobile-based offer is clear: no switch, no wiring.

Adding the Verizon One Talk dialer to a certified device (e.g., Samsung Galaxy S6 or Galaxy S6 edge at launch) with no shared endpoints on the same mobile line, costs $15 a month.

The Auto Receptionist and Hunt Group numbers are $20 each month (buyers get one feature free of each) per business account. Each additional number is $20 is month.

The Software Advice survey confirmed that small businesses rely on auto-attendant features, so the auto receptionist feature offered by Verizon is significant.

Verizon One Talk Feature	Description
6-Way Conference	Expand a voice call to include up to 6 participants without dialing in a conference bridge.
Account Codes	Codes that allow you to associate individual calls with a specific code for tracking purposes. The system administrator can later view the calls placed using each code.
Anonymous Call Rejection	Your business will not receive calls unless there is a Caller ID number from the caller.
Automated Receptionist	The Automated Receptionist will answer incoming calls to your business and allow the caller to select which department or person they wish to speak with.
Automatic Callback	Automatically redial a busy number until it is available.
Bridge Line	You can allow your number to ring on one additional desk phone.
Call Forwarding	Keep your business in touch with callers by automatically forwarding incoming calls to the best available resource. There are various options available to best fit your business needs.
Call Waiting	Alerts you and allows you to take a second call while you are on the phone with someone.
Caller ID Blocking	Prevents your number from being sent on outgoing caller ID.
Calling Line ID Delivery	Define a number from your Simple Talk group that will be sent to other callers when you call them.
Calling Plan	You can require authorization codes for dialing outside of the Simple Talk business group; that could include calls to Local/Long Distance and/or International numbers.
Custom Ringback	Use the default or upload a custom audio file that gets played when callers dial a Simple Talk business line. This would replace the standard ringing tone.
Group Forwarding	Quickly forward multiple user lines to the same destination/number; most commonly used for business continuity.
Hunt Group	Set and apply rules for passing incoming calls to the first available line in the pre-defined group of users/lines.
Messaging	Mobile devices associated with either One Talk Dialer or One Talk Mobile App can send and receive SMS messages.
Pre-Alerting Announcement	Play an audio file of your choice while the caller waits to be connected when your number is called.
Remote Call Pickup with Barge In	Allows other members of your business to remotely pick up your line while it is ringing or join your call in progress with or without a warning tone.
Remote Group Pickup	Ensures calls are answered by allowing you to remotely pick up someone else's ringing line in the group from your phone.
Schedule	Allows the company to set office hours of operation and holidays. These scheduled hours can be used for call management features at the user and group level.
Selective Call Acceptance/Rejection	Only accept specific calls based on conditions you define, or reject incoming calls based on pre-defined conditions you set.
Simultaneous Ring Service	Have more than one phone number ring when someone calls your number.
Video Calling	Telephone numbers associated with video capability can receive and send video in a 2-party call.

Looking only at the number of seat licenses sold, in 2016 the market leaders were RingCentral, 8x8 and Vonage.

source: 8x8

T-Mobile US "Unlimited" Offers (Not)

T-Mobile US, touting the end of all usage plans (data buckets) with its new  T-Mobile One plan, has emphasized that the new plan offers unlimited data, text, and calls starting at $70 per month for the first line, $50 for the second line, and $20 for the third up to eight lines.

What that plan does not support is high-definition video streaming or tethering at any speed faster than 2G. Customers seem to have objected to both those limitation, so T-Mobile US has now introduced a One Plus plan that, for an incremental $25 per line, per month, supports unlimited video streaming in high-definition format,  along with tethering at 3G speeds of 512 kbps.

The move shows that execs now are willing to alter new mobile offers as soon as consumer irritation emerges, a possibility most would agree is due to social media, which allows dissatisfaction to be expressed fast.

The new offer also shows how subtle the crafting of new offers has become, as well. Though some might see the new “unlimited” offers as strategically damaging in the long term, the actual details show some important limitations of potential stress.

One concern some observers have with “unlimited” plans is that they potentially limit mobile operator ability to tie consumption to revenue, at least broadly. But the way T-Mobile US has constructed its plans (limiting One image quality to standard definition, while limiting tethering speed to 128 kbps), limits the potential impact.

High-definition quality generally consumes about four times as much bandwidth as standard definition video. In addition, streaming  on 4G rather than 3G networks likewise boosts data consumption (some would argue by as much as an order of magnitude).

Tethering likewise boosts data consumption, by as much as an order of magnitude per unit of time.

source: GigaOm

And some of us who tether quite often might consider 2G tethering unacceptably slow, and 3G highly bothersome.

Limiting tethering to 2G or 3G speeds effectively discourages such usage. So T-Mobile US has limited its exposure to dramatically-higher data consumption driven by the end of usage limits.

The new One Plus plan will likely apply mostly to users who want to watch significant amounts of HD video on their mobile devices. Most likely, few consumers who really need to tether are going to be much happier with 512 kbps access.

The point is that the new “unlimited” offer actually is constructed in such a way that some highly-intensive apps (tethering and high-definition streaming) are limited.

For consumers who want HD video, the premium plan costs an extra 25 percent for the first line, 33 percent more for the second line and a premium of 56 percent for the third and subsequent lines.

Many consumers are going to find that image quality on a smartphone screen at standard definition actually is good enough, compared to high definition quality. The implication is that incremental usage, and therefore stress on the network, will be limited.

Some of us would find it unlikely that a customer who really wants to tether on a significant or “mission critical” basis would even consider a tethering limit to 512 kbps.

The bottom line is that the T-Mobile US unlimited offers have been constructed in ways that limit the potential network stress that could result from too many customers actually watching more video or tethering.

Why Markets Consolidate

Source: Marketing Science Institute

Over time, markets tend to consolidate, and they tend to consolidate because market share is related fairly directly to profitability. One rule of thumb some of us use is that the profits earned by a contestant with 40-percent market share is at least double that of a provider with 20-percent share.

And profits earned by a contestant with 20--percent share are at least double the profits of a contestant with 10-percent market share.

That is why one of the main determinants of business profitability is market share. Generally, entities that have high share are much more profitable than their smaller-share rivals.

And that is likely to be especially true for business products that are not purchased frequently, or are hard to understand, such as business communication products and services.

Source: Marketing Science Institute

For infrequently purchased products, the return on investment of the average market leader is about 28 percentage points greater than the ROI of the average small-share business.

For frequently purchased products (those typically bought at least once a month), the correspondingly ROI differential is approximately 10 points.

There are reasons for that differential.

Infrequently purchased products tend to be durable, higher unit-cost items such as capital goods, equipment, and consumer durables, which are often complex and difficult for buyers to evaluate.

One might argue that communications services also are products buyers generally find complex to understand and hard to evaluate on metrics other than recurring cost or upfront investment.

Since there is a bigger risk inherent in a wrong choice, the purchaser is often willing to pay a premium for assured quality.

Frequently purchased products are generally low unit-value items where risk in buying from a lesser-known, small-share supplier is less crucial.

Source: Marketing Science Institute

Such differentials also occur when buyers are fragmented, and no small group of consumers accounts for a significant proportion of total sales.

In such cases,  the ROI differential is 27 percentage points for the average market leader.

However, when buyers are concentrated, the leaders’ average advantage in ROI is reduced to only 19 percentage points greater than that of the average small-share business.

When buyers are fragmented, they cannot bargain for the unit cost advantage that concentrated buyers receive.

And that tends to be true even for highly-fragmented markets or sub-markets. So it is that six regional master agencies (sales organizations for telecom and cloud services)  have teamed up to form Technology Solutions Exchange (TSX).

The stated goals include broadening their footprints, improving negotiating power with suppliers and growing revenue. All of those motivations are consistent with the general principle that market share matters.

TSX members include P2 Telecom, TDM Inc., Connectivity Source, CTG3, Netstar Inc. and Telcorp International.

The entity is lead by Bill Patchett, founder and CEO of P2 Telecom, and Robert Bowling, president of TDM, who were elected as co-chairs.  

The formation of TSX illustrates the business advantage of market share.

source: Glen Berg

Value is What the Customer Says It Is

Value, in the end, is what a customer says it is.

With all of the marketing hype now underway in the U.S. mobile market, you might think any of the four largest U.S. mobile service providers have a lead on some metric deemed important to customers.

And with the caveat that end user perception of value includes both performance (or “quality” proxies of various types) and price, plus other terms and conditions (bundle offers, discounts, contracts, usage limits, exemptions from usage charges for entertainment video, device availability), customers keep saying that Verizon has the best network, while other networks have less consistent performance.

All marketing hype aside, Verizon customers across the United States consistently say they have fewer network problems, according to J.D. Power.

Performance by other tier-one providers varies by region.

In the Northeast and West regions, AT&T scores worse than all the others. In the Mid-Atlantic, Southeast, North Central and Southwest regions, T-Mobile US scores the worse. Sprint is not at the top, or at the bottom, in any region.

But Sprint finished number two in the Southwest and West regions.

Customers, rightly or wrongly, keep saying Verizon has the best network.

Ignore Marketing Hype About Network Quality: Here is What Customers Say

All marketing hype aside, Verizon customers across the United States consistently say they have fewer network problems. Performance by other tier-one providers varies by region, according to J.D. Power surveys.

In the Northeast and West regions, AT&T scores worse than all the others. In the Mid-Atlantic, Southeast, North Central and Southwest regions, T-Mobile US scores the worse. Sprint is not at the top, or at the bottom, in any region.

But Sprint finished number two in the Southwest and West regions.

As big a problem as rural mobile coverage might be, most people--and the most demanding customers--live in urban areas. For that reason, the sheer volume of coverage or capacity problems will happen in urban areas.

That explains both moves to “densify” mobile networks, use of distributed antenna systems, use of small cells and moves to release new spectrum, share spectrum and make better use of unlicensed spectrum.

Customers living in urban areas experience the highest number of overall network problems, at 15 problems per 100 connections (PP100), compared to 12 PP100 among those living in rural areas and 10 PP100 among those living in suburban areas.

Customers living in urban areas experience more calling problems than those living in rural or suburban areas (19 PP100 compared to 13 PP100, respectively); messaging problems (eight PP100 compared to five PP100); and data problems (20 PP100 in urban areas, 15 PP100 in rural areas).

Urban areas have a much higher proportion of younger mobile subscribers who are heavier users.

The overall number of network quality problems is 17 PP100 among customers 18 to 34 years old compared to 10 PP100 among those 35 years and older.

J.S. Power looked  at 10 problem areas, including dropped calls; calls not connected; audio issues; failed/late voicemails; lost calls; text transmission failures; late text message notifications; Web/app connection errors; slow downloads/apps; and email connection errors.

Marketing, Not End User Demand, Drives Gigabit Internet Access

Competitive dynamics, and not actual end user demand, frequently drive investment and marketing decisions in the telecom business. The gigabit Internet access trend provides an example.

Gary Bolton, Adtran VP says that two years ago, service providers told him that the biggest reason for deploying gigabit service was to satisfy future customer demand.

That's still a big reason today, but now the threat of competition is an even bigger one, with close to 70 percent of respondents surveyed by Adtran indicating competition is a top reason for deploying gigabit services, up from fewer than 50 percent in 2014.

In other words, gigabit Internet access is necessary for competitive reasons--to match other market offers--instead of being driven by actual end user demand.

You might argue that Google Fiber was the immediate catalyst for a change in marketing context in the U.S. market. But it now is Comcast, rolling out gigabit services to all of its consumer locations, that is the biggest competitive driver, given that Comcast is the biggest supplier of Internet access in the United States.

We sometimes also forget that among the other changes, the new gigabit push shows the importance of “non-traditional” or new platforms. Comcast, of course, bases its attack on hybrid fiber coax, a different platform from that used by telcos globally.

And other options are coming.

Starry is but one of the service providers attempting to prove that modern, fixed wireless networks are a better way to deliver gigabit Internet access to consumers and businesses, without necessarily building fiber to home networks.

Both Facebook and Google are developing or investigation use of platforms based on use of fixed wireless. AT&T has told the U.S. Federal Communications Commission that it is going to deploy many millions of fixed wireless access paths, while Verizon also has said it is looking at fixed wireless, especially as a result of its early 5G network deployment.

That said, there still are many--mostly smaller--service providers basing their gigabit networks on fiber. Cable TV hybrid fiber coax networks soon will be the main U.S. suppliers of gigabit services.

Consumer Satisfaction Seems Directly Related to Consumer Demand

You might not be surprised if told people who are most enthusiastic about a particular product are most satisfied with their purchases, while people who are less involved with that same product will report they are less satisfied.

That essentially is what a J.D. Power video entertainment satisfaction survey suggests.

Overall satisfaction with paid streaming video service is highest among cord stackers—customers who subscribe to a traditional cable/satellite service in addition to streaming video service—according to J.D. Power, and lowest among consumers who have abandoned linear video subscriptions, or people who never have bought a linear video subscription.

Conversely, overall satisfaction is lowest among cord cutters (802), followed closely by cord nevers (807), while satisfaction is highest among cord stackers (826) and cord shavers (822).

Satisfaction in all measures is lower among customers who do not have cable/satellite TV than among those who do, J.D. Power reports.

In other words, people who buy the most entertainment video tend to be more happy with streaming video, while people who buy the least are less satisfied.

In common sense terms, people who value video entertainment buy more of it, while people who value it less buy less. People who value entertainment video also seem more satisfied. Those who value entertainment video less seem less satisfied with streaming video.

But that might simply reflect appetite for the product: car enthusiasts are likely more satisfied with any number of vehicles. People with little interest in car ownership likely are less satisfied with any number of vehicle choices.