Selling VoIP

From the Business Journals: TW vs SBC
& other articles this week
http://www.bizjournals.com/industries/high_tech/telecom/2005/03/07/sanantonio_story6.html
March 5, 2005

Less than six months after launching in earnest its new digital telephone service in the Alamo City, company officials say Time Warner Cable San Antonio is outpacing the rest of the Time Warner Cable markets across the nation in ringing up new telephone customers. According to Jon Gary Herrera, vice president of governmental and public affairs for Time Warner Cable San Antonio, what was supposed to be a slow start has turned into a growth chart that now "looks more like a hockey stick."

Herrera says the local cable company is adding more than 1,000 new telephone customers per week on average. He also says SBC finally seems to be taking notice.

Meanwhile, some industry analysts say one of the things traditional phone companies like SBC fear most these days are companies like Time Warner Cable coming after their core business. That concern accompanies another -- the growing number of people using their cellular service rather than traditional land lines to make their local and long-distance calls from home.
Serious business

There are doubters who suggest that companies like Time Warner Cable will be nothing more than a nuisance to SBC with regard to telephone competition once the dust settles. But officials with The Yankee Group, a Boston-based technology consulting firm, are not so sure. The Yankee Group predicts that by 2007, more than 80 percent of America's households should be able to receive their telephone service from a cable company if they choose.

[This will lead to a price war in these markets. It's going to get bloody.]

RAD-INFO, Inc. reps these VOIP vendors:

Various industry sources say VoIP can lower long distance costs by as much as 75 percent, depending on the carrier or the plan. Some carriers sell a "bucket" of minutes a month, just as cell phone carriers do now, starting at $20. Some VoIP service providers also offer free calling to people who use the same service.

But some concerns remain. If a company has a sizable investment in its traditional PBX system and it isn't yet fully amortized, it may not be ready to replace the old system. With long-distance rates already falling, there is less pressure on companies to convert to IP to save money. And for some, the upfront costs to convert can be substantial, depending on the network they have in place already.

Yet, by many measures, enterprise demand for VoIP is growing and many companies serving the market say their sales charts are starting to show a steep upward curve.

The IDC research firm forecasts the worldwide market for IP PBX -- office switchboards that work on an IP network -- to grow to $8.9 billion by 2009. From 2004 levels, that's a compound annual growth rate of more than 23 percent. When IP-enabled phone handsets are added, the 2009 spending forecast tops $10.9 billion.

Companies that have converted to VoIP are reporting greater satisfaction with voice quality; earlier VoIP calls were choppy and distorted.

"Those kinds of concerns, over the last three years, have dissipated," says Chris Neal, research director with Sage Research, of Natick, Mass., a market research firm that focuses on enterprise use of IT. A Sage survey showed 71 percent of respondents who've deployed VoIP are "somewhat satisfied" or "very satisfied" with the voice quality.

Case in point

Condra said Stock Yards' multiple locations were the primary reason the company switched from a traditional phone system to VoIP, which allows users to make phone calls using a broadband connection instead of a regular (analog) telephone.

Stock Yards' old phone system was out of capacity, Condra said. Some branches had voice mail, but some didn't and branch systems weren't always compatible.

VoIP solved that problem and also saved money, he said, and the system also is able to expand as more bank branches are added. Condra declined to disclose costs of the VoIP system.

"Now if an employee moves to another branch, they just literally take their phone with them," he said. "It would have cost a lot more to replace or upgrade our traditional system."

Covad Communications Group Inc., of San Jose has seen VoIP sales grow by 30 percent over the past six months, says Jeff Ahlquist, vice president of product development. "Our lead generation is increasing," he says, as customers increasingly call Covad to inquire about VoIP.

Enterprises are also beginning to see VoIP not just as a way to save money but to make it, says Ed Camarena, senior director for product marketing at Veraz Networks Inc., of San Jose. If an airline operates multiple call centers, for instance, calls can more easily be routed to centers with operators available or where a representative can answer a caller's particular question. Carriers can make money from enterprise customers by offering 3-digit dialing; an employee in one office can dial a three-digit extension to reach a coworker in a different office in a different country. In both cases, increased efficiency means more money.

VoIP brings together voice mail, instant messaging, voice mail and live phone calls together on one computer screen for Mr. Shaddy at Pacific Capital, which increases productivity.

"The faster you can move information, the more money you can make," Mr. Shaddy says.

These types of reports are music to the ears for Josh Henderson, president of Louisville-based Lightyear Alliance, the division of Lightyear Network Solutions LLC communications company that handles VoIP sales.

Henderson said Lightyear has installed VoIP for more than 100 residential customers in Louisville and is launching its sales effort geared to small businesses -- "mom-and-pop" types of operations -- this month.

Henderson said early VoIP adoptees have been part of a rollout that will last for the next 12 to 36 months.

Lightyear charges $29.99 per month, which includes local and long-distance calls. Installation for residential customers costs about $50 plus other fees, Henderson said. Lightyear plans to start selling VoIP packages to larger businesses early next year.

Get new subs by try the Lightyear Alliance plan (MLM)
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A recent Consumer Reports article found that buyers may realize savings on their phone service by as much as 40 percent by switching to VoIP.

"If they are using both traditional and VoIP, then for good quality all the new routers and switches have to be of a certain caliber and quality," Fallot said. And those components must be able to work with the existing system.

TARGET Markets

Companies with many satellite locations and significant long-distance costs typically benefit most from VoIP, sources said.

Smaller companies and those without multiple locations don't need to rush out and purchase VoIP-enabled systems, but traditional phone systems are on their way out, Marro said.

Businesses that are considering relocating or new construction, in particular, should examine VoIP closely, Marro said.

"New office buildings can forget about voice cabling and just build in data cabling for VoIP," said Marro. "That should save from 30 to 40 percent of cabling costs. Infrastructure is much cheaper, and broadband is widely available at low costs."

Downsides

One of the downsides of VoIP is that customers lose their phone service with power outages -- unlike traditional phone service, which remains in service during power outages, according to Consumer Reports.

Data security and voice quality, as mentioned earlier, also are considerations.

Fallot said that VoIP remains an emerging technology. Many of his clients ask about it, but then for technical and/or financial reasons, decide to wait until they totally switch systems.

He estimated that 70 percent are opting to stay with their current carrier and modify existing configurations.

"The return on investment is seldom justified based on cost savings," Fallot said. "The short-term savings are in long-distance costs. In order to really take advantage a company would need to make a fairly big investment."

Level(3) released a VOIP study, which surveyed more than 1,400 adult consumers throughout the United States, that shows 71 percent of respondents are open to considering Internet calling services. However, while many consumers are interested in VoIP, they require more information before adopting the services. Level 3 released the research results in conjunction with the Spring 2005 VON (Voice on the Net) Conference and Expo.

Additional survey highlights include:

-- Young adults, minorities and recent college graduates may be the next wave to adopt VoIP. Survey data show those aged 18-34 (36 percent), Hispanics (39 percent) and recent college graduates (35 percent) have higher levels of interest in VoIP than the market as a whole.

-- Nearly 73 percent of surveyed respondents would prefer to purchase VoIP as part of a bundle of telecom services. The most desirable bundle, according to the survey, was VoIP bundled with broadband, a fact which seems to play to the hands of cable companies as they increasingly compete with incumbent telephone operators.

-- Of those who are "definitely" interested in VoIP, respondents identified "cost savings" as one key factor in making the switch to VoIP. A discount on broadband services, guarantees about quality and new features not available via traditional phone service also appeared prominently.

-- When asked to rate their interest in specific VoIP features, messaging/screening features and enhanced wireless capabilities topped the list. Call screen, call alerts and 911 personal information were also near the top of the list.

-- Early adopters of VoIP are 50 percent more likely to consider switching providers than the market as a whole.

"Our survey results highlight the immense interest that Internet calling is generating among U.S. consumers," said Cynthia Carpenter, vice president of marketing for VoIP services at Level 3. "We feel strongly that as education on Internet calling increases, consumer adoption will grow more rapidly. Therefore we are focused on increasing consumer awareness of Internet calling and the benefits it delivers through direct, vendor-neutral education. Among other things, consumers need to be aware that all VoIP services are not created equal and that the levels of quality, reliability and safety can vary."

"Additionally, the results show that meaningful savings and high quality service, delivered by a trusted brand, are the key ingredients to mainstream VoIP adoption," added Carpenter. "Interestingly, the survey also indicates that potential buyers view heavily discounted services with skepticism. We believe these findings point to value and consistent service quality, rather than 'rock bottom prices,' as the primary drivers of mass market VoIP adoption."

While the survey indicates that costs savings and a broadband bundle are the most critical drivers of initial interest, advanced features and integration with other elements of the on-line experience seem key to getting consumer to actually make the jump to VoIP, a dynamic which may give ISPs with large existing customer bases a powerful head start in marketing VoIP services.

http://www.smallbizpipeline.com/59301999

For companies that need extensions and services that are more closely identified with PBXs found in the corporate world, Vonage is not a good choice. Its Small Business Plan is based on a single line, similar to a residential line, and doesn't provide facilities for multiple extensions, call transfers, administrative functions, and the other tasks most corporate users take for granted. Two other vendors are better suited for the corporate environment.

When you buy TalkSwitch, you are buying hardware, not phone service (a.k.a. "dial-tone service"). As for phones, you can use any analog phone, or buy a full-featured desk phone from TalkSwitch for $99.

Where TalkSwitch shines is in its features as a PBX and its ability to connect remote offices and treat them as a single phone system.

Packet8 provides a "virtual office" by means of a hosted PBX that you can connect to from any broadband connection. The equipment consists of one DTA and one phone for each extension. Minimum configuration for a Packet8 system is three extensions, but there is no upper limit to the number of extensions. Each DTA and phone combination costs $100, and there is a $40 activation fee per line.

Because all the extensions connect to the same PBX, calls to extensions and calls to outside numbers are made just as they usually are in a corporate office. The phones have a large LCD with soft-buttons for voicemail, do not disturb, and every feature you would expect in a corporate PBX.

AT&T this week announced the availability of its new CallVantage Small Office Plan, which provides small offices or home offices (SOHOs) with Voice over IP broadband phone service. The two-line offer includes unlimited local and long-distance calling throughout the U.S. and Canada, plus the ability to send and receive faxes, for $50 per month.

Built on AT&T's CallVantage Service platform, the plan lets customers subscribe to as many as nine telephone numbers, either local or with other area codes, on the primary line. For an additional charge of $7.50 per number per month, each number's inbound behavior can be managed independently while all numbers share the same line. Other add-on features include call filtering, mass-messaging, and 10-person conference calling.

One key in selling VOIP is going to be handling the provisioning which is a hassle and a half.

But I suggest that you approach the sale of VOIP as the answer to scenarios, such as:

Do you ever have an employee that has to stay home with a sick child?
Wouldn't it be great if that employee could still be involved in his/her job?

Want to offer tele-commuting? SIP Phones.
Want to save some office space?
Hiring a contractor? Give them an extension at their office.

reps these VOIP vendors: