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Hosted
IP Telephony
Revenue from time-division multiplexing (TDM) voice access
is eroding, displaced by that from alternate technologies
such as wireless, e-mail, instant messaging, and the increasing
use of IP telephony, including IP private branch exchange
(PBX) systems. Attracted by its productivity-enhancing
features and superior manageability, businesses have begun
migrating to IP PBX systems from legacy PBX systems and
traditional Centrex services.
Service providers can replace eroding TDM voice access
revenue-and gain a new revenue stream with even greater
potential-by offering new, IP-based managed voice services.
The most profitable voice services share two attributes.
One is a "success-based" capital expenditure
model, which accelerates return on investment (ROI) because
the service provider can expand the network as additional
customers are acquired. The other attribute is an underlying
IP infrastructure that service providers can use to deliver
incremental services, so that revenue per customer increases
with time.
Hosted IP Telephony is an attractive alternative to customer
premises-based PBX systems. The service provider hosts
the feature set for IP PBX, unified communications, and
integrated management in its central office or data center,
where it can be shared by multiple business users. The
service provider's business customers gain access to commonly
used subscriber and group-level calling features, as well
as value-added capabilities such as self-provisioning
of services; direct management of moves, adds, and changes;
integration of instant messaging; video; click to conference;
directory services; unified communications; virtual assistants;
and others.
The hosted IP telephony service is compelling to business
customers because they can take advantage of feature-rich
voice services while reducing operational and capital
costs. This advantage particularly applies to enterprise
branch offices, teleworkers, and small to medium businesses
that want to access a full range of IP telephony services,
but prefer to outsource.
Market Drivers for Hosted IP Telephony
Recent changes in the market have opened a window of opportunity
for service providers to offer hosted IP telephony services.
Outsourcing on the Rise
Small and medium businesses (SMBs) with 40 to 200 employees
want control over their phone systems and are willing
to pay for additional features, as demonstrated by their
purchases of PBX and key systems. This makes them prime
prospects for outsourced services. In a recent survey
of this customer segment by Research First, over 60 percent
of respondents stated that they would outsource communications
if the service supported subscriber self-management and
the advanced features available through hosted IP telephony.
Another important segment interested in outsourcing was
distributed enterprises. They are seeking hosted services
to support branch offices with fewer than 100 people and
teleworkers who need to access the full range of corporate
communications services.
Although outsourcing has long been popular for payroll
and human resources and has recently become so for Web
hosting, it is just becoming an attractive option for
telecommunications. The barrier until now has been the
time delays and high costs associated with Centrex administration.
Moves, adds, and changes typically took a week to implement
and cost US$75 to US$150 apiece. In addition, there was
a significant feature disparity between premises-based
and central office-based PBX systems.
More Enterprise LANs Are IP Telephony Ready
According to Gartner Group, nearly 50 percent of all PBX
sales will be IP based in 2005.
The increasing sales of IP telephony-enabled switches
and routers implies that business customers are preparing
to adopt IP telephony, but have not yet decided whether
to deploy an in-house IP PBX system or to outsource. Therefore,
service providers that quickly introduce hosted IP telephony
services position themselves to capitalize on a significant,
long-term service revenue opportunity. Fast time to market
is crucial: According to Gartner Group, if the enterprise
makes a decision to install a premises-based PBX, it will
not reevaluate that decision for at least five to seven
years.
Business Customers Are Discovering the Advantages of
IP PBX Technology
Market researcher RHK reports that since the introduction
of IP PBX technology, incumbents have lost 1.8 million
lines and more than US$1 billion in traditional Centrex
services revenue. Probe Research found that when a major
university implemented an IP PBX solution, its incumbent
carrier saw monthly Centrex revenue decrease from US$40,000
to US$6000. Offering hosted IP telephony services is a
way to target a new set of business customers who have
been interested in outsourced approaches, but unwilling
to accept the limitations to this approach that have existed
to date. And because a hosted IP telephony service offers
a rich feature set and high customer flexibility, the
long-term monthly revenue potential is compelling.
Service Description
An alternative to PBX or key systems based on TDM switches,
the Hosted IP Telephony solution delivers the most commonly
used subscriber and group calling services, as well as
other valuable features enabled by IP. These include presence
management, preferential call treatment based on calendaring,
call logs, unified communications, instant messaging,
and basic interactive voice response (IVR) and automatic
call distribution (ACD) functionality. The service represents
a "hosted" alternative for enterprises and SMB
customers who want to reduce up-front capital outlay and
outsource solution design and support.
To turn traditional features on and off, business customers
use a simple, Web-based interface instead of difficult-to-remember
star codes. A Web-based interface is also used for moves,
adds, and changes, dramatically reducing call center requirements
for the service provider while cutting costs and saving
time for its business customers. Service providers can
customize the Hosted IP Telephony solution by using Extensible
Markup Language (XML) to change the behavior of the phones.
This speeds new service introduction, helping service
providers retain high-margin business customers and attract
new ones. Churn is further reduced because the service
provider can strengthen the customer relationship by offering
value-added services such as directory-based calling and
personalization of communications services.
Because hosted IP telephony is network based, the service
provider can take advantage of the network to deliver
new services. For example, if a service provider wants
to deploy a service that integrates Microsoft Outlook
with voice applications, it can simply e-mail the upgrade
to the end customers, who install the upgrade themselves.
Similarly, the service provider can "push" additional
value-added applications directly to the IP phones. This
new service deployment model allows for more rapid service
deployment, more innovation, and competitive differentiation. |
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