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The worlds of telephony and the Internet are
converging. If your reaction to this statement is, "Tell
me something that I don't know," you may want to think
about it a little bit more. Do you really know how
this convergence will affect your business? Are you
fully aware of the opportunities it will bring? The
worlds of telephony and computing are changing. And
they are changing fast. It started with telephony's
increased reliance on Internet Protocol (IP) as the
telecom network technology of choice, and it has
continued with a migration toward software-based
telephony networks that incorporate software-based
switches and standard protocols such as Session
Initiation Protocol (SIP) that are modeled heavily
after Internet protocols such as HTTP.
This convergence has led to the development of a
wide variety of new, innovative telecommunications
applications. These applications enable users to do
everything from dial a phone number simply by clicking
on a listing in their personal databases to forwarding
specific calls when traveling just by logging onto an
Internet page -- just as they change their voice mail
when they are out of the office today.
Other innovative advancements include the emergence
of virtual private branch exchange (PBX) services,
which eliminate the need for businesses to purchase
costly on-site equipment, as well as applications such
as personalized ring tones -- not to mention standard,
more cost-effective voice mail and caller-ID services.
THE EMERGENCE OF THE TELEPHONY ASP
In addition to a wealth of new applications,
convergence has also driven the emergence of a new
type of service provider: a telephony ASP. Telephony
ASPs take advantage of the telephony networks' new
client/server, software-based design to host telephony
applications -- and to partner with broadband service
providers and system integrators to offer these
applications to end customers such as businesses.
Thanks to this new model of telephony, broadband
service providers can now easily tap into an ASP's
architecture to provide telephony services to their
small and medium-sized business customers using their
existing broadband pipes. System integrators can sell
a whole new range of their services to customers. And
both service providers and system integrators can sell
telephony services without having to hire voice
engineering expertise or having to build out
additional network components to support voice
services.
Unlike yesterday's competitive telephony carrier,
which was limited to offering a nearly identical
telephony service as that offered by incumbent
operators, today's broadband service providers and
system integrators can pick and choose from a variety
of enhanced applications hosted by the telephony ASP --
or even those offered by third-party providers -- to
differentiate their services from the competition.
And because telephony ASPs spread their
infrastructure costs across many channel partners,
they can pass those cost efficiencies onto their
partners. This means that an ASP's channel partners
can provide voice services with differentiated
applications for competitive prices -- thus giving
them a trump card that helps them steal customers away
from existing players.
CHANGING SALES STRATEGIES
It's a fact: enterprises are already clamoring for the
next-generation networks and services that convergence
enables. According to the New Jersey-based consulting
firm InfoTech, "Enterprise adoption of complex,
multi-site converged and next-generation networks will
surge over the next few years.... Manufacturers of
convergence equipment, value-added resellers, systems
integrators, consulting firms, and network service
providers are racing to invest in resources and
expertise to provision these services."
For system integrators and value-added resellers,
the race can be won simply by partnering with a
telephony ASP. Through this partnership, system
integrators can quickly fill gaps within their
existing product lines. Better yet, they can achieve
something many have never experienced before: a
recurring revenue stream.
For instance, if a system integrator's customer
does not wish to buy its own on-premises PBX system,
the integrator may not currently have another
acceptable solution in its equipment portfolio --
meaning that it loses a potential sale. By partnering
with a telephony ASP, that same system integrator can
now offer its customers a network-based virtual PBX
system, which can cost the customer half as much
because that customer no longer needs to purchase an
on-site PBX system.
And system integrators that sell only local area
network (LAN) solutions today can now expand their
product lines simply by plugging in a voice
application for their existing customers.
Next-generation networks' reliance on familiar
computing architectures means little new training is
needed before LAN integrators can support new
server-based voice applications.
In addition, system integrators selling ASP-based
enhanced voice services now can receive a commission
from selling these services, thus providing them with
access to a recurring revenue stream. Because voice
services generally comprise 75 percent or more of a
typical business' communications spending, this
represents a significant new revenue opportunity for
many system integrators.
For broadband service providers, the race to offer
next generation services can be won quickly as well.
Partnering with a telephony ASP means expanding their
existing product line to sell voice services to their
customers -- something they are ideally positioned to
do. In fact, broadband service providers today already
provide Internet services to more than 80 percent of
small and medium-sized businesses. Unfortunately, they
are typically the "other" service provider, providing
data services to companies whose voice services are
predominantly supplied by incumbent local exchange
carriers.
Thanks to the ASP model, service providers can now
offer enhanced voice services to their customers
within about a month using their existing broadband
pipes -- without having to build out their own
switching or back-office infrastructure. Because
next-generation telephony networks have been developed
using a client/server, IP-based architecture model,
providing telephony services no longer means
installing huge switches into expensive facilities and
paying fees to keep it there -- or having to build
complex back-office systems.
Instead, broadband service providers can obtain
their voice services, network management, billing
systems and customer care services -- which can exceed
entry costs of $20 million or more -- from the ASP.
One final key benefit is that broadband service
providers can offer voice services without taking on
the regulatory burden of obtaining local competitive
local exchange carrier (CLEC) certification -- not to
mention not having to take part in the complex
negotiations and expense required to interconnect with
arcane public switched telephone network (PSTN)
systems.
In fact, broadband service providers can actually
pick and choose which ASP sales model they wish to
follow. They can either act as a sales agent that
simply provides the broadband interface to the
customer -- and lets the telephony ASP do the rest --
or they can act as a full reseller by creating their
own marketing schemes, developing their own pricing
models and obtaining their own CLEC certification,
primarily relying on the ASP for the voice network and
its services.
MOVING BEYOND YESTERDAY'S MODEL
Everyone realizes that broadband service providers
cannot no longer live by access alone. Combine that
with the fact that small business interest in bundled
telecom solutions is on the rise -- in fact, last
year, more than 58 percent of small business
respondents told the research firm IDC that they would
like all of their services bundled -- and the idea of
offering both voice and data services is an appealing
one.
Even voice providers and system integrators are
facing changes that mean the traditional way of doing
business will no longer help them thrive in today's
marketplace. Earlier this year, InfoTech observed that
U.S. companies are beginning to convert their
corporate phone systems from the traditional PBX model
to IP telephony faster than expected. In fact, 17
percent of businesses in the United States replaced
their existing phone systems with IP-based systems in
2000.
That means that shipments of traditional PBXs and
smaller key telephone systems -- the bread and butter
of many system integrators -- declined by almost 10
percent, according to InfoTech.
In today's converged world, service providers and
system integrators must offer a combination of
next-generation -- not legacy -- telephony and
Internet services to their customers, thus increasing
their profits while delivering the best products and
services and the greatest convenience to their
customers.
By partnering with a telephony ASP, broadband
service providers can position themselves as full
service providers, and system integrators can easily
expand their existing product portfolio. Using the ASP's
high-speed, flexible, server-based core network, these
players can effectively compete with incumbent service
providers that have already added Internet services to
their original voice offerings.
Tony Surak is the Chief Marketing Officer and a
Founder at Wilmington, N.C.-based TalkingNets,
the first telephony ASP. Using its next-generation
local exchange network, TalkingNets provides wholesale
telephony solutions that enable broadband service
providers and system integrators to offer advanced
voice services to small and medium-sized businesses.
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