Broadvox Expands into Hosted Services, Offers Unique Twist on Its Pricing Strategy

Cover Story

Broadvox Expands into Hosted Services, Offers Unique Twist on Its Pricing Strategy

By Paula Bernier, Executive Editor, IP Communications Magazines  |  September 01, 2010

This article originally appeared in the Sept. 2010 issue of INTERNET TELEPHONY.

Broadvox is known as a SIP trunking services specialist. The company caters both to carriers and small and medium enterprises in the U.S. and Canada. But now the company, which has an eye on expanding its penetration in enterprise accounts, is broadening its portfolio to include cloud-based services liked hosted IP PBX (News - Alert), which it sees as complementary to SIP trunking.

Embracing the Cloud

“We’re focusing our product development … on everything in the cloud,” says Broadvox CEO, President and founder Andre Temnorod. “We’re about to roll out a virtual and hosted PBX product. We will also have hosted Microsoft (News - Alert) Exchange and several other hosted e-mail systems. And we’d like to bundle it together with our SIP trunking product.”

Given the market already has seen a plentiful supply of hosted PBX solutions, Broadvox intends to differentiate its offer based on the way it packages, prices and supports the services, says Temnorod.

“The majority of providers out there – and you’re right, the product has been around for quite some time – the way they’re pricing their product, it’s per seat with the included voice calling regardless of how many calls your entire domain can make at any given time,” he says. “We separate voice and hosted PBX, we take the voice out of each seat….”

That, Temnorod says, gives customers the flexibility to vary how many calls they can make in and out of the PBX. David Byrd (News - Alert), Broadvox’s vice president of marketing and sales, says separating the pricing of communications usage from per seat licenses reduces overall costs by around 50 percent.

“If you take as an example a current PBX deployment: You pay for the PBX, for the phones, and then you also pay for a certain number of PSTN trunks,” Temnorod explains. “We try to emulate the same model, so this way when the customer is making the decision to move from a traditional PSTN PRI/PBX model into the hosted model they can still calculate their savings – how much they’re going to save on a monthly basis for moving their on-premises-based PBX to a hosted platform, and how much they’re going to save by moving their PRIs into the SIP trunks.

“So, basically, our product is a combination of pure hosted PBX without voice, and virtual SIP trunking that will handle VoIP,” he says. “That will help customers to figure the savings better, and it’s more flexible.”

Broadvox intends to introduce the hosted/virtual PBX services this fall. Hosted Exchange and other hosted mail solutions from Broadvox are expected to launch starting in the fourth quarter, Temnorod tells INTERNET TELEPHONY.

Positioning for Growth

Those services, paired with Broadvox’s SIP trunking services, which Temnorod says come with strong engineering support, could help the company further expand its penetration in enterprise accounts.

Indeed, businesses’ interest in hosted voice and related services is clear.

Service provider revenue from residential/SOHO and business VoIP services increased 20 percent between 2008 and 2009 to $41.6 billion. IP connectivity services are the fastest growing segment, followed by hosted VoIP and unified communication services and managed IP PBX services, according to Infonetics (News - Alert) Research.

“From our IP PBX survey, it appears that businesses are increasingly embracing a hosted services model, as their capacity needs will depend on how robust the economic recovery is, and hosted services allow them to more easily ramp their capacity needs up and down without a huge cash layout for equipment,” says Matthias Machowinski, directing analyst for enterprise voice and data at Infonetics Research.

As reported recently on TMCnet, Diane Myers, directing analyst for service provider VoIP and IMS at Infonetics Research, says there was an increase in business VoIP service revenue growth in late 2009 and service providers are reporting increasing interested in hosted VoIP services across all sizes of businesses.

"We expect this trend to continue as more companies turn to hosted services for their voice needs, with business VoIP services making up almost a third of all VoIP service revenue by 2014,” says Myers.

Expanding SIP Trunking

But although many organizations have deployed VoIP on their premises, they still use legacy technologies to connect to the PSTN, with T1 lines the most commonly used trunking service today, according to Infonetics. However, SIP trunk use is growing, and by 2012 will be the second most commonly deployed trunking service, according to Infonetics forecasts.

“I believe that going into the future SIP trunking will have a big portion of the market, anywhere from 40 to 50 percent,” says Temnorod. “There are still a lot of companies who would like to use on-premises equipment and they’re simply not going to go for a hosted solution.”

He says that includes customers using open source IP PBXs and companies with the budgets and know how to purchase and operate brand-name PBXs from companies such as Avaya (News - Alert), Mitel and Panasonic.

Delivering Certification & Support

“We’ve certified will all these guys,” says Temnorod. “Broadvox has most certified SIP trunks in the industry.”

In addition to its broad slate of services and certifications, Broadvox is also unique in the support it offers to customers, Temnorod goes on to say.

“Everybody knows that VoIP is 50 percent about savings,” he says, “and everybody knows that if you go with VoIP you’re going to save.

“With Broadvox you can save more,” he continues. “I don’t want to pitch us as some sort of a cheap services provider; we are not the cheapest in market. But we will give customers better price and performance when you compare it to the big guys.”

Part of the Broadvox value proposition has to do with engineering expertise.

“When a customer is going through a turn-up process, in a lot of cases with VoIP things don’t work from the get-go,” he explains. “It requires engineers to get involved and do things like packet captures, trying to figure out a customer set up, how the customer is sending us packets, what type of information they have inside of those packets. Our engineers have been at this for many years, and they’re capable of helping customers with difficult problems. I’ve seen other providers simply give up; we do not give up on our customers.”


 More About the Company

In 2001: Broadvox enters the telecommunications market, beginning as a small provider of VoIP services to other carriers.

In 2003: The company begins offering SIP origination and termination.

In 2007: Broadvox sets out to expand its network capacity by more than 50 percent. It also  launches its retail SIP trunking business.

In 2008: The network expansion is completed in February, with new Sonus platforms deployed Dallas, Los Angeles and New York City. The sales of Broadvox GO! SIP Trunking, which the company now reports is growing at double digits every quarter, begins after the company adds numerous master agents and independent agents to its VAR Partner Program.

In 2010: Broadvox is approaching 1,000 members in its VAR program, and a nationwide group of channel directors and managers to support partner sales efforts in every region of the country. The company has nearly 100 employees and has been adding personnel every month. More than 3,000 businesses will enjoy the benefits of SIP trunking as provided by Broadvox before the end of the year. And this year Broadvox adds hosted IP PBX and hosted e-mail to its service mix.

Edited by Stefania Viscusi


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