VoIP pioneer Vonage (News - Alert) continues to step up its game with the planned acquisition of the unified-communications-as-a-service (UCaaS) provider, Telesphere. If the purchase goes through, the combined company would reduce long-distance costs of Telesphere's business customers while Vonage customers would have more advanced cloud-based unified communications features.

Vonage will pay $114 million in cash and stock for Telesphere if the acquisition goes through, and it expects the deal to close by the end of the year.

Telesphere should build on the 2013 purchase of IP PBX vendor Vocalocity (News - Alert), which transformed Vonage into a small business VoIP provider and not just a VoIP pioneer in the consumer space.

Currently Vonage has roughly 200,000 users on its Vonage Business Solutions (VBS) platform, and most companies using the service have fewer than 10 employees. According to research firm Frost & Sullivan, this makes Vonage the fifth-largest hosted IP PBX (News - Alert) provider in North America.

The acquisition of Telesphere adds a number of hosted UC services to VBS, many for the call center market. New features the company will bring to Vonage include audio conferencing, soft phones, speech-recognition dialing, visual voicemail and fax-over-email.

According to Frost & Sullivan (News - Alert) analyst Elka Popova, “the contact center is one of the biggest solutions (for Telesphere)." The average Telesphere customer has between 50 and 100 users, far larger than the business clients Vonage currently services.

The benefit of the acquisition for Telesphere customers would be lower long-distance rates. Vocalocity found that it was able to cut long-distance costs by 60 percent once they were a part of Vonage, since Vonage enables reduced call-termination costs.

One question is whether Vonage will operate two different UC platforms, since Telesphere licenses BroadSoft (News - Alert) technology and Vonage uses Vocalocity. Popova at Frost & Sullivan predicts that Vonage probably will not transition existing customers to a new UC platform, although long-term it probably makes sense for Vonage to use a single UC platform.