March 2004

Hosted Communications Comes Of Age

BY FRANK PETKOVICH & MICHAEL KHALILIAN

In late 2003 VoIP began an earnest move towards the mainstream, heralded by coverage in leading business press outlets such as the Wall Street Journal, Bloomberg and Time magazine and a flurry of press releases issued by service providers and vendors. While many of these articles and product announcements related to consumer-oriented services, another class of packet-based communications services � moving in parallel but even more full-featured � grew in popularity during that time period, as well: Hosted communications services designed for business users, sometimes called IP Centrex services.

Most of these announced consumer VoIP services transport calls over the public Internet, with no management to ensure voice quality. Further, these services provide only the minimal set of features that consumers tend to need, such as voice mail, limited call forwarding, and Caller ID.
Hosted communications services (however, designed for businesses) are typically housed in a service provider�s serving office, and delivered to the customer site via managed broadband service such as T1 or Frame Relay. Bandwidth is carefully managed to ensure business-class voice quality, and service-level agreements are often put into place. Service providers delivering these IP-based, hosted services to their business customers have thoroughly tested these applications, with a focus on voice quality and scalability to millions of users. Hosted services offer the same �five nines� reliability as traditional Centrex or premise-based PBXs.
Further, business-class hosted communications services focus on offering more advanced features capable of replacing existing business phone systems, and offering advanced IP-based features that contribute to worker productivity and flexibility. These capabilities are now being offered to businesses in wide-scale deployments by leading carriers and other service providers both in the U.S. and internationally.
SBC, for example � a Fortune 30 company and one of the largest carriers in the world � announced its all-in-one type service, Hosted IP Communication Service (HIPCS), in November 2003. Targeted toward businesses, HIPCS offers PBX replacement features plus �click-to- call� functionality from PCs, �find-me, follow-me� call routing, voice mail, conferencing, and many other options.
In addition, another major carrier, Level 3 Communications, announced its (3) Tone hosted voice service in September, designed to augment or replace PBX, IP-PBX and Centrex business communications systems. (3)Tone was named product of the year by this magazine in December. These new service offerings add to previously announced services by Verizon, Telia, and others. Through hosted communications services, service providers gain new revenue-generating and differentiating services for their product lines, and regain some of the lines lost to PBXs and IP-PBXs.
For business users, perhaps one of the most attractive characteristics of hosted communications is its ability to reduce both capital and operational expenses. Unlike PBXs, IP-PBXs, or key systems, the hosted services typically require no capital outlay other than desk phones � and the service can be scaled up or down as needed to accommodate changing staffing levels without requiring the purchase of additional cards or cabinets. Business users also gain support for remote and mobile workers, productivity enhancing features such as click-to-call and find me/follow me. Hosted communications services hold the potential to revolutionize the way businesses get their phone and related communications services.
Management of these services is another distinguishing aspect for both the users and administrators of a business. Users gain convenient new methods of accessing and controlling communications features and functions, such as browser-based portals; full integration and synchronization with popular desktop applications such as Microsoft Outlook; and even WAP-based access for Internet-enabled mobile phones. These features allow workers to adapt their communications services to their work styles, location, and device of choice � whether working remotely or in the office. A wide range of desktop and other devices are supported, giving businesses a choice of new IP phones, soft phones, or even IP-enabling their existing digital or analog sets to conserve their previous investment.
For IT or telecom administrators, business phone services have never been so easy to manage. Hosted communications services offer browser-based administrative interfaces that allow office personnel � without requiring third-party expense or special IT or telecom training � to make standard moves, adds, and changes on-the-fly, from any Internet-connected browser. Adding a new employee or changing feature permissions no longer requires a wait of several days and/or an expensive truck roll by a telecommunications contractor.
For service providers, hosted communications services provide a new, differentiated product offering that can help regain lines lost to other wireless and wireline services. These services provide a value-added offering that gives business users a competitive edge in the marketplace through productivity-enhancing features and new flexibility in communications. Through enhanced services such as hosted communications, service providers gain higher margins from their services and build a strong partnership with their business customers, a true �win-win� proposition.
Service providers gain unprecedented flexibility in deploying new hosted communications services, as well. Because of the distributed architecture of these service offerings, servers and other associated equipment can be deployed on an as-needed basis to accommodate new markets or geographically distributed enterprises. Wholesale arrangements are also available that allow service providers to ramp up their own offerings very quickly, without requiring investment in infrastructure. The bottom line: there are many ways for service providers to pursue this new and exciting revenue opportunity whether in existing markets or as out-of-region services.

Frank Petkovich is Director of Product Marketing, Sylantro Systems (www.sylantro.com), an International Packet Communications Consortium (IPCC) member company and a leading provider of hosted communications and IP Centrex applications.

Michael Khalilian is Chairman and President of the International Packet Communications Consortium (IPCC), an industry consortium of carriers and solutions providers advancing packet-based communication technologies For more information, visit www.packetcomm.org.

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