All posts by elka

A Strong Consolidation Wave Sweeping the Next-Gen Services Market

By elka | May 5, 2011 | Hosted VoIP for SMB | Comments Off

Today’s announcement of TelePacific’s Acquisition of Telekenex provides another boost to a strong consolidation wave that started some time back in 2009, but gained more power in 2010. This acquisition enhanced TelePacific’s CLEC portfolio, which includes next-gen trunking services, with a set of additional capabilities, such as:

  • A robust hosted PBX platform with nationwide voice capabilities
  • A nationwide PCI-compliant MPLS backbone
  • A fiber network in the San Francisco-Oakland Bay Area
  • Managed network services providing advanced configuration and support for complex network deployments and
  • Managed security services through a cloud-based firewall

According to my estimates, Telekenex is adding between 15,000 and 20,000 hosted telephony seats (mostly multi-site SMBs) and about $30 million to $50 million in annual revenues to TelePacific’s portfolio.

As the market becomes increasingly competitive, it becomes compelling for LEC organizations with managed network services to merge with hosted/cloud applications providers so they can diversify their portfolios and offer customers a broader set of communications solutions and capabilities. Examples of similar developments over the past year include:

  • Comcast acquired NGT
  • Covad and MegaPath merged
  • Cypress Communications acquired Reignmaker Communications and merged with Broadvox
  • M5 Networks acquired Geckotech
  • Paetec acquired Cavalier Telephone
  • Vantage Communications acquired Digital Ingenuity
  • West Corporation acquired Smoothstone

Further M&A activity is expected over the next couple of years. With over 60 providers in the North American hosted telephony market, there is plenty of room for providers to join their forces for healthier competition going forward. As businesses look for a trunking or hosted communications provider, they need to take the following factors into consideration in order to make a good choice:

  • Network reach
  • Service management and demark: does the provider manage the service all the way to the desktop
  • SLAs on network reliability, availability, quality
  • Failover, redundancy and disaster recovery capabilities
  • Pricing
  • Channel partnerships
  • Knowledgeable sales force
  • Customer service and tech support
  • Depth & breadth of product portfolio (access network, UC, CEBP, hosted email & IM, contact center, managed data & security)
  • Simple, transparent and efficient billing and service provisioning
Written by Elka Popova - Visit Website

New Business Models Emerge in Hosted/Cloud Communications

By elka | April 29, 2011 | Hosted VoIP for SMB | Comments Off

I have written some earlier posts on Mitel’s and Siemens’ strategies for the hosted IP telephony/cloud UC market. But  there are others that have tapped into this space previously reserved for the telcos (ILECs, CLECs), MSOs, ISPs and some ASPs. I get a lot of questions about BroadSoft, Cisco, Microsoft, IBM, etc. I have now completed my study on North American hosted IP telephony and UC services markets and have some new insights to share. Unfortunately, the individual vendor analysis is too lengthy to post here, but I will share excerpts that more broadly discuss the value proposition of these new business models.

A key new development in the hosted IP telephony and UC services market is the entry of PBX vendors with their own multi-tenant or virtualized (multi-instance) solutions designed specifically for carriers and partners or intended for service delivery out of their own data centers. Cisco’s Hosted Collaboration Solution (HCS) architecture, Mitel’s various hosted/cloud solutions and Siemens’ OpenScape cloud architecture are some examples of these new business models. These platforms are typically more feature-rich than the carrier softswitches and application servers traditionally utilized to deliver multi-tenant business telephony services, but they also offer some additional benefits. For example, Verizon’s UCaaS services based on Cisco’s HCS are positioned as most suitable for the highly demanding large enterprises who wish to integrate the hosted service with their existing Cisco premises-based infrastructure. Also, most of these new architectures are not truly multi-tenant, but are instead using shared hardware and dedicated software, thus addressing some security concerns associated with hosted services.

The new business models are likely to cause some re-alignment in the value chain, with potential advantages and disadvantages for all market participants. Their impact on end users, however, is going to be mostly beneficial as they will be able to choose from a larger number of alternative solutions. For the supply side, the key benefit is ability to focus on core competencies – vendors will be able to leverage their software expertise, data center providers will deliver the most cost-effective server hosting and management, and the diverse range of service providers will focus on customer acquisition and ongoing management, as well as the integration of typical carrier services such as SIP trunking.

  • PBX vendors: PBX vendors are likely to benefit from gaining access to a customer base looking to outsource both infrastructure and infrastructure management from a third party. They will also be able to deliver greater value to their channel partners by enabling them to generate recurring revenues by either hosting the platforms themselves or reselling services hosted in a third-party data center. Potential pitfalls for PBX vendors include channel conflicts, if the vendors are also selling hosted/cloud services directly; customer mismanagement, if tiers of support and responsibilities are not clearly defined; and some loss of professional and managed services revenues. Also, customer churn is likely to be greater compared to that experienced in the premises-based business.
  •  Telcos: Service providers stand to benefit from the opportunity to deliver hosted/cloud services to more demanding customers using advanced telephony and UC platforms previously only available as premises-based solutions. Also, they can realize cost savings and reduce time to market, if the solution is hosted in a third-party data center, as the deployment and integration of multiple servers and software stacks is typically costly and time consuming. Virtualized solutions such as Mitel’s Virtual MCD and Cisco’s HCS also enable them to provide more secure hosted services to customers requiring their own dedicated software while leveraging the benefits of shared hardware and a hosted model. Potential challenges for service providers include the need to maintain multiple versions of vendors’ software stacks (as in the case of Verizon’s implementation of Cisco HCS), and more limited ability to customize the solution when hosted in a third-party data center. Furthermore, the new business model lowers barriers to entry thus potentially leading to increased competition.
  • VARs, SIs and MSPs: For VARs, SIs, MSPs and smaller LECs this is an excellent opportunity to expand their portfolio and generate recurring revenues by introducing hosted/cloud-based services without the cost and hassle of acquiring, integrating and running the systems in their own data centers. The cost and complexity of next-generation architectures has prevented this group of market participants from exploring hosted services in earnest. Now they can more successfully compete against larger telcos and premises-based solution vendors by presenting several alternatives to their customers – from premises-based systems, managed in house, to provider-managed on-premises solutions and fully hosted services. With their strong expertise in CPE installation, integration and management and typically better customer service and support, smaller, regional interconnects will now be able to serve their customers even more effectively.
  • Business customers: Business customers will benefit from increased availability and diversity of hosted/cloud solutions. As more service providers introduce hosted IP telephony or UC solutions, businesses will be able to choose a partner from a broad range of providers – from large telcos with a substantial brand-name reputation to trusted local system resellers with whom they have long-standing relationships. The increasing competition is likely to result in more competitive prices and better customer service. Also, service offerings now include a large spectrum of alternatives – from low-end basic telephony offerings to comprehensive UC bundles and packages of tightly integrated communications and business applications (e.g. CRM). Furthermore, along with the cost-effective multi-tenant services, providers are now able to address the needs of businesses with high security requirements by using virtualized solutions based on shared hardware but dedicated software.
Written by Elka Popova - Visit Website

Once Upon a Time

By elka | March 7, 2011 | Hosted VoIP for SMB | Comments Off

This post may not be exactly what you expect to see on this site, but I thought it would be fun to share.

I am reading “Love at the Time of Cholera” by Gabriel Garcia-Marquez and I came upon a fun paragraph that talks about the way telephones were used in the past. The events take place some time in the beginning of the 20th century somewhere in the Caribbean, most likely Colombia.

“Two days later, however, he received a letter from Fermina Daza in which she begged him not to call again. Her reasons were valid. There were so few telephones in the city that all communications took place through an operator who knew all the subscribers, their lives, their miracles, and it did not matter if they were not at home: she would find them wherever they might be. In return for such efficiency she kept herself informed of their conversations, she uncovered their secrets, the best-kept dramas of their private lives, and it was not unusual for her to interrupt a conversation in order to express her point of view or to calm tempers.”

We have all seen the early operator-managed phones in the movies. But I still remember the amusing experiences with mingled phone conversations from my childhood in Bulgaria. I would be on the phone with a friend when we would hear some other two people talking because the lines got crossed. Imagine that happening today in business communications – with all the privacy and confidentiality issues!

With the fast pace of technology development, I am wondering how shocking or amusing our grand-children will find the way we communicate today. Will they have more or fewer “oops”-type situations than we ever did? Will they accidentally broadcast an opinion in the social media when it was only intended for a private chat (I know I’ve typed on Twitter instead of Sametime when both screens were open)? Will their capendars regularly show their doctors’ or hairdressers’ appointments on their status updates? Will they become easier prey to unlawful behaviour as they consciously or unconsciously (think GPS presence updates) notify the world they are “@Starbucks on 59th & 3rd”? What kind of compromising information will video calls reveal until we learn to better control our communications environment?

No matter what, it will be fun to watch the world and more specifically communications evolve. Maybe I will see you in a virtual reality next time?

Written by Elka Popova - Visit Website

Siemens (Finally) Launches a Cloud UC Service

By elka | March 1, 2011 | Hosted VoIP for SMB | Comments Off

 Siemens Enterprise Communications has launched a new cloud communications solution. Leveraging SIP, open standards and its highly scalable softswitch-based OpenScape suite, it is looking to provide partners and customers with more flexible deployment options. The cloud solution includes virtualized, multi-tenant versions of Siemens’ OpenScape Voice, OpenScape UC and OpenScape Web Collaboration software, hosted in four geo-redundant data centers. The service features top-notch availability, survivability, governance and data privacy features, including:

  • Highest availability, TIA-942 class data center, voice redundancy, secure endpoints
  • Edge survivability option, local trunking, IPSec VPN, local firewalls, SBC and media server
  • Multi-tier role-based access management, automated management and provisioning, application-level data center protection
  • End-to-end encryption in the cloud, local country data storage, multitenant capability, data protection audits

Cloud-based voice and UC services will be available only through partners, who will handle customer needs assessment, CPE installation, billing, 1st and 2nd level tech support and ongoing equipment maintenance. The service will be first launched in the U.S., Germany and the Netherlands. Initial partners include Black Box in the U.S., mr.net and Telefonbau Schneider in Germany, and Televersal, ICT Trends Group and onecentral in the Netherlands.

The cloud solution is considered optimal for organizations with about 350 to 1,000 users, with a need for highly packaged, tightly integrated solutions. Users can choose from a variety of features and capabilities grouped in Base Packs and Booster Packs. The estimated end-user list pricing ranges between $5 and $30 per seat per month, based on required functionality.

What I like about this announcement:

Siemens has finally launched a cloud solution – something it started exploring about two years ago by demonstrating a proof of concept with Amazon’s EC infrastructure. With the incredible (I think, almost unreasonable) amount of hype surrounding cloud technologies and the cloud business model, it was about time for Siemens to finally bring this effort to fruition. I have to agree that there is a group of customers out there that would indeed appreciate the opportunity to outsource its communications infrastructure to avoid CAPEX, focus on core competencies or gain access to superior technologies and expertise. This customer segment would remain out of reach for Siemens, unless it finds an appropriate role for itself in the hosted/cloud-based communications marketplace.

It should be noted that Siemens has had a multi-tenant voice platform for years and some service providers such as Postrack and Engage have been using it to deliver services to end users just like others use BroadSoft’s or Metaswitch’s platforms. Other vendors such as Alcatel-Lucent, Cisco and Mitel have also deployed multi-tenant communication managers with service provider partners.

The new approach has significant advantages, however. It gives Siemens continued control over the platform and its capabilities. But more importantly, it empowers partners that cannot or do not wish to manage their own data centers to deliver services using Siemens’ feature-rich and highly scalable platform. Siemens allows partners to use its brand, co-market or white label their cloud services. This is an opportunity for them to gain differentiation as well as new recurring revenue streams. This model provides a fast and economical entry point for small MSPs and VARs to become hosted service providers. It is noteworthy that Siemens announces the new solution along with six partners already lined up.

Issues that Siemens will need to address:

Siemens is not alone in this market. Other telephony vendors are experimenting with new delivery models as well. For example, Mitel offers the Mitel Anywhere service, which it sells directly to business customers. Now it is exploring opportunities with data center providers such as Host.net and Hosting.com, which can host the platform on behalf of small MSPs and VARs. Siemens and other vendors will need to find ways to differentiate or be fast to market with the right partnerships while the market is still nascent and untapped.

 More importantly, this new delivery model is still unproven and it is not clear how all market participants in the value chain will reposition themselves for competition in the evolving marketplace. Will the MSPs and VARs be successful in penetrating the CPE customer base? Will the vendors be able to successfully manage their channels to ensure customer satisfaction and optimal benefits from the cloud services? How will carriers be involved to ensure proper bandwidth and QoS management – critical elements for real-time communications services delivered over the WAN? Who will manage the carrier relationship? How will the hosted IP PBX and UC solutions be aligned with SIP trunking and IP VPN services to provide superior benefits to multi-site organizations?

Written by Elka Popova - Visit Website

XO Taps into Cloud Communications

By elka | February 28, 2011 | Hosted VoIP for SMB | Comments Off

Today, XO Communications launched the XO Enterprise Cloud Communications services. XO Enterprise Cloud Communications integrates a wide range of IP telephony features, local and long distance calling, enterprise-wide HD voice and video, network services, and IP phone sets in a communications as a service, per-user pricing model. Features of XO Enterprise Cloud Communications include:

  • IP Telephony and unified communications applications
  • Free local and site-to-site calling within the enterprise
  • Long distance calling plans
  • Enterprise-wide HD voice and HD video
  • Choices of IP phone sets from Cisco and Polycom
  • Web portal for managing service for each location and employees
  • Quality of Service monitoring
  • MPLS IP-VPN network services
  • Robust Service Level Agreements for all services
  • Business continuity capabilities

XO is looking to target businesses of 50 to 1,000 seats per enterprise, primarily in the education, healthcare, professional services and retail verticals.

What I like about the new offering:

XO has been tremendously successful with its XO IP Flex (also available with a VPN feature), XO SIP and XO Enterprise SIP offerings. The new offering nicely rounds up its SIP/cloud portfolio adding hosted PBX functionality for businesses choosing to outsource their voice communications infrastructure. Leveraging its SIP expertise, intimate knowledge of the BroadSoft platform and MPLS capabilities, XO will be able to deliver a highly reliable cloud-based voice service with managed bandwidth and QoS and carrier-grade SLAs. The option to include phone set costs in monthly recurring charges is likely to appeal to businesses concerned about the upfront costs of replacing existing phone instruments. XO has broad geographic reach and therefore the ability to address the needs of larger, multi-site customers migrating to hosted services. A web portal will allow customers to monitor and manage their cloud services.

XO appears to be a late-comer to the hosted telephony space. Several dozens of service providers have launched hosted IP telephony in the U.S. over the past eight years. However, its cautious approach may prove more successful as it has had the time to master SIP and develop the right capabilities for its target audience. Also, larger businesses are only now beginning to fully understand and appreciate the benefits of hosted/cloud communications which creates more favorable conditions for the delayed launch. Furthermore, XO is looking to position this new offering with a TCO improvement value, rather than the more traditional value proposition of inexpensive long distance or in-house staff replacement of early hosted offerings targeted at smaller businesses of less than 50 users.

Points to be addressed by XO:

Service providers that have been offering hosted voice for some years now are already looking to enhance their solutions with other communications and collaboration application such as conferencing, contact center, messaging, presence and collaboration. XO has contact center capabilities, as well as OCS, Exchange and SharePoint integrations on its roadmap, but immediate comparisons may tip the scales in favor of a competitor. I need to point out that not everyone (in fact, maybe few) larger businesses are looking to immediately outsource their entire communications infrastructure from voice to messaging from a third party. However, the sooner XO announces the ability to deliver a more complete UC package, the greater its competitive advantage is going to be. Also, service providers are increasingly looking to integrate communications with business applications (CRM being the typical low-hanging fruit) based on customer demand, which is something XO will need to explore in the future.

XO claims it has the tools and partnerships in place to manage this service all the way to the desktop. In fact, it offers on-premises probe, usage, network and support services. Hopefully, it handles this aspect properly, because many a service provider have failed associating cloud and hosted with a complete hands-off approach as far as the customer premises are concerned. But a reliable hosted communications service, especially when larger businesses are involved, requires a significant involvement in customer LAN, WAN and CPE upfront assessment and ongoing management.

Written by Elka Popova - Visit Website

Global Clossing Launches CaaS Suite

By elka | February 28, 2011 | Hosted VoIP for SMB | Comments Off

Global Crossing announced Global Crossing® Communications as a Service (CaaS), which it refers to as “the first phase of its network-centric, cloud-based solution set.”  It is positioned as combining Global Crossing IP Virtual Private Network (IP VPN), Session Initiated Protocol (SIP) Trunking, and Global Crossing Ready Access® hosted audio conferencing services to provide “a tailor-made collaboration experience”.  These combined capabilities also support the functionality of Global Crossing Connect Mobile, which enables users to join or host an audio conference from popular mobile devices by clicking on an icon and also syncs meetings with users’ calendars.

What I like about the new offering:

Global Crossing has a long and successful track record in network management and delivering network-based services to both service provider partners (using a wholesale business model) and directly to enterprise customers. Its expertise in IP VPN and SIP trunking technologies offers a solid foundation for the delivery of cloud-based communications applications. Also, the new shared-seat billing model (with monthly fees replacing per-minute plans) is likely to appeal to customers as it makes communications costs more predictable and easier to manage. Finally, the offering is integrated with the uCommand customer portal, which empowers in-house IT staff to closely monitor and manage the organization’s use of cloud services.

What begs further investigation:

It is not clear from the press release exactly how Global Crossing’s IP VPN, SIP Trunking and hosted audio conferencing services are coming together. Since these services have been around for a while, it is not clear what has changed, except for the new billing model. I am intrigued by the pending addition of telephony, video, messaging and presence services to the CaaS suite, which will mark Global Crossing’s foray into the world of cloud-based Unified Communications (UC).  What makes this potential move especially interesting is the fact that Global Crossing’s customer base consists of mostly large enterprises. Since, so far, most hosted telephony and UC services have been targeted at SMBs, Global Crossing has an opportunity to differentiate and offer unique value in an untapped (from a CaaS point of view) market segment.

Written by Elka Popova - Visit Website
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