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January 25, 2012

Cloud Growth Will be 'Exponential' in Coming Years: Cloud Communication Expo Speaker

By Beecher Tuttle, TMCnet Contributor

One of the hottest collocated events at ITEXPO East 2012 will surely be the Cloud Communication Expo, which brings together service providers and technology partners from around the globe to take an in-depth look at market trends and future developments in the cloud communication space. 

With the conference less than a week away, TMC (News - Alert) CEO Rich Tehrani reached out to Hugh Goldstein, VP of business development at Voxbone, to get his thoughts on the cloud and how it is changing the telecom industry. Voxbone provides DID services to help ISPs, global carriers and national operators extend the reach of their voice services internationally.

Goldstein saw 2011 as a landmark year for cloud, as hosted solutions became simpler to use and easier to manage. That said, he anticipates that the cloud market will grow exponentially in future years as adoption rates in the enterprise and SMB space continue to rise.

For this to occur, service providers will need to address the security concerns of large corporations and the demand for simplicity among small and medium-sized enterprises, says Goldstein. 

The pervasiveness of the cloud will have a significant impact on a number of services, Goldstein continued, the most obvious of which is video calling and conferencing. He believes that the strength of the cloud – along with future advancements in the standardization of formats and codecs – will make video a major external communication tool in the coming years.

Tehrani and Goldstein touched on a number of other hot topics in the communications space, including the viability of Windows Phone (News - Alert) and the effect that the cloud will have on the on-premise PBX.

Read below to hear more of Goldstein's thoughts or head to booth 809 at ITEXPO East 2012 to talk with him and the rest of the Voxbone team. Goldstein will also be taking part in a seminar called The Post PSTN Telco Cloud, which kicks off at 3 p.m. on Thursday, Feb. 2.

How has cloud computing changed the communications landscape over the past year?

Cloud computing has been a buzzword for some years now. However 2011 was the year when these services gained market acceptance and cloud service providers' business took off. The impact on the B2B communications market today is still limited in terms of revenues, but growth will be exponential in the coming years.

Cost savings are the important driver. Yet we noticed in 2011 that cloud communication services have become simple to order, manage and use. Companies like Anveo and Invox allow the user to configure their hosted PBX with just a few mouse clicks. The fact that these services have become easy and accessible has convinced many enterprises to make the step this year.

What are enterprises looking for from their communications providers and how can those providers leverage the cloud to deliver on those expectations?

Bigger multinational corporations see telecommunications as a strategic IT application. Although they are attracted by the cost savings cloud solutions may bring, they are still concerned about security issues. A lot of corporations still struggle with how they can securely and efficiently share their employees’ electronic identities between internal and cloud applications.

Cloud communications service providers aiming for the large corporations should provide appropriate answers to these concerns. Small and medium-sized enterprises are looking for simplicity in the first place because managing telecommunications solutions is a burden for them.

For this market segment, service providers can benefit from creating all-in-one service packages that include hosted PBX, client software and devices, as well as SIP trunks. What is certain is that, as telecommunications have become IP-based and networks have become software-based, small, focused and global service providers are positioned to seize this opportunity.   An example of such a well positioned player is Sonetel, which offers a free but full-featured hosted PBX for SMEs. Its business model is about bundling a free entry-level hosted PBX with paid voice service and premium PBX services. 

Cost savings is always the first thing mentioned when it comes to benefits of the cloud. Aside from cost, where is the value proposition in cloud communications?

“PSTN + PBX like” quality of service will always be a requirement for many companies when they are about to change their communication strategy. Today, the Internet and broadband access networks have become a lot more robust than 10 years ago. In addition, VoIP protocols and platforms have improved considerably regarding redundancy and resilience in case of packet loss or jitter. 

As a result, hosted PBXs provided through redundant broadband Internet connections offer uptime comparable to that of their PSTN equivalents. What's more, long-distance VoIP calls are usually of even better quality than long-distance PSTN calls. Voxbone would not be where it is today if it were not for the impeccable quality of our VoIP services. Security and simplicity are key.     

How has your own business benefited from cloud-based communications?

Voxbone enables cloud communications services, as we provide access to these services from traditional fixed and mobile phone networks. Because of the strong growth of this sector, cloud service providers and application providers have contributed substantially to Voxbone's growth in 2011. We have acquired many new customers in this area, and our existing customers that offer cloud-based services, such as Voxeo (News - Alert), inContact and, have grown significantly with Voxbone.

Will the cloud serve to fragment the industry or strengthen existing ecosystems?

The continued uptake of cloud communications will affect the telecommunications industry in many ways. The impact may be disruptive in the long term. First, telecommunication services are no longer the exclusive domain of local telecommunication service providers. As these services are often offered from the Internet, national boundaries do not matter. This development benefits the customer in that it leads to a wider choice of services and service providers, and hence a better prices and service.

As a result of this evolution, the role of local telecommunications service providers may be hollowed in the next five to 10 years. As companies continue to source their service with global service providers, the local service providers may see the scope of their services reduced to providing fixed and mobile data access to Internet and multinational enterprise VPNs.

Is cloud communications primarily an SMB service? How can enterprises benefit equally?

The value proposition for cloud services is indeed the strongest for SMBs. However, multinational enterprises can also benefit equally from the cloud. Cloud communications allow them to consolidate all their on-premises equipment in every site or country and to negotiate their voice service contracts globally instead of locally. Global service providers like Global Crossing (News - Alert) (now part of Level 3) have started offering one-stop data and voice services to multinationals.

What will be the greatest growth area as a result of cloud (e.g., mobility, video, social media, CEBP, etc.)?

Unified or “rich” communication services have the highest potential for growth, both for residential (aka mobile VoIP) and business (aka hosted PBX) markets. Cloud communications services are the best candidates for outsourcing by enterprises because they generally require little customization.

The growth of cloud communication will accelerate the use of advanced features such as video calling and conferencing. While video has been around for some time, the big breakthrough in this area is still ahead of us and depends mainly on standardization of formats and codecs. While many companies use video calling and conferencing internally, it does not play a major role external communication – yet. That will change over the next few years.

One of the greatest growth areas as a result of cloud is embedded multimodal communications in applications such as Skype and Facebook. What impact do third-party communications apps like these have on business communications providers?

We expect social networks like Facebook to make a move in the telecom space, but their service will primarily target residential users. Enterprise communication and collaboration services have different requirements.

Data security, SLAs and customization play important roles and can only be provided by specialized service providers. Hence, Facebook will not play a role in this area. Skype is a different story.   Microsoft is likely to integrate Skype voice services with Lync, Microsoft's enterprise PBX that can be installed on premises as well has bought as a hosted service. With this integration, Microsoft can offer an all-in-one communications package to enterprises of all sizes.

Can Microsoft make a splash with its promised integration of Window Phone and Windows 8?

Although Microsoft has a lot of catching up to do, I think it can still make a splash. By tightly integrating Microsoft Lync, the Skype service and Windows Mobile, Microsoft can build the perfect enterprise communication experience. 

Add to that the partnership with Nokia, still the world's largest mobile phone producer, and the fact that BlackBerry has had difficulties asserting its position in the business segment, and it's obvious that Microsoft still has a good chance to finally become successful in the mobile market. However, they would have to do it now. One or two years from now, it will be too late.

When will cloud make the on-premises PBX obsolete?

Even though the use of on-premise PBXs will start to fade, they will still play an important role for many years. While SMBs are increasingly turning toward hosted solutions, many large enterprises, which take longer to adopt new technologies, still have very specific requirements and rigid IT policies favoring on-premises PBXs.

Why is Cloud Communications Expo a must-attend event?

Cloud communications will be the fastest-growing cloud service in the next few years. Market demand is there already and will accelerate rapidly in the near future. ITEXPO and its collocated events are the only place where service and technology providers from around the world addressing this domain gather. For Voxbone, it's an opportunity to meet our current and future customers and to learn about future trends and developments. Also, the keynotes and conference sessions are always very insightful.

To find out more about Hugh Goldstein (News - Alert) and VOXBONE, visit the company at ITEXPO East 2012. To be held Jan. 31- Feb. 3 at the Miami Beach Convention Center in Miami, Fla.  ITEXPO is the world’s premier IP communications event. Hugh Goldstein is speaking during “The Post PSTN Telco Cloud.” For more information on ITEXPO registration click here.

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Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves


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