Bait and Softswitch
Network-based voice services may be the longest-running nonstarter in the services game. For more than a decade, the Bell companies have tried to use Centrex to battle PBX vendors for market share, but they’ve never come close to winning the war. Now, softswitch-based services are emerging to offer new hope for network-based voice. But it remains unclear whether telcos will embrace the opportunity or fend it off as a threat.
Self-styled telephony ASPs, startups including GoBeam and TalkingNets have begun using softswitches to deliver IP network-based voice services to small and midsized business customers. TalkingNets, which is using softswitches from Sonus Networks, is selling through Internet service providers in Washington, D.C., and Denver (see “Atlanta Bravery,” Far Forward, June 11). GoBeam, which has developed its own user interface to ride on top of a softswitch from Sylantro Systems, currently has 500 lines installed with customers in California. GoBeam plans to offer services nationwide by the end of next year.
GoBeam says it is not a threat to the Bells because its services appeal to a different market from Centrex’s. “The Bell companies should see us as an ally,” says Jeff Stern, cofounder and executive VP at GoBeam. “We’re talking to some of them about wholesale deals where we’d offer them a hosted service to resell. We can help them take back customers from the land of CPE.”
The Bells aren’t willing to discuss their plans for softswitch-based voice. Although SBC Communications and BellSouth both have toyed with IP Centrex services, there has been no big push from the telcos to deliver IP-based voice.
Presumably, the Bells are working closely with their Class 5 switch vendors, Lucent Technologies and Nortel Networks, on softswitch-based services. SBC also is evaluating Sylantro’s softswitch in its labs, but the company’s marketing department believes it’s premature to talk about what SBC might do with the switch.
Don’t expect the regulated side of the Bell companies to deliver softswitch-based voice on a widespread basis anytime soon, says Deb Mielke, president of Treillage Network Strategies, a consultancy. “On the regulated side, it’s a threat,” she says. “But on the unregulated side, it’s a killer voice over DSL application.”
There isn’t much research available to size the business market opportunity for network-based voice. Earlier this year, Sylantro commissioned Research First to conduct a study of nearly 1,000 small and midsized business customers nationwide to gauge interest in outsourced voice services.
“We originally thought our big opportunity was going to be migrating Centrex customers,” says Laura Thompson, VP of marketing at Sylantro. As it turned out, however, only 10% of the businesses interviewed were even using Centrex. About 90% of them had their own PBXs or key systems. But even though users opted for these customer premises–based products, 60% of them said they were interested in outsourcing, she adds.
The study also found that business customers are willing to pay as much as $61 a month per user for network-based voice services.
Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in The Net Economy.