Talkingnets Re-Emerges With Direct Sales Strategy

Talkingnets Re-Emerges With Direct Sales Strategy

Dan O’Shea

Byline: Dan O’Shea

Calling itself “the telephony ASP” seemed like a can’t-miss moniker three years ago when TalkingNets launched an ISP voice business that many expected to blossom. But now that the ISPs on which it staked channel partnerships are folding, the firm is changing direction in hopes of guaranteeing its own survival.

The Wilmington, N.C., provider, which was founded by three former colleagues at test equipment company TTC (now Acterna), is re-focusing as a direct carrier of IP-based local services over dedicated T-1s to small and medium-sized businesses. In doing so, the firm is chucking a program that originally targeted ISP channel partners in 25 NFL cities to deliver services such as managed IP voice and Centrex to enterprise users.

“We’re no longer a telephony ASP using other broadband service providers to reach the customer base,” said Tony Surak, co-founder and executive vice president of business development and marketing for TalkingNets. “There are no more channel partners. Because a lot of the players we did trials with failed to survive, it became a secondary activity.”

Greg Mycio, director of research and analysis at NPRG, said the change of plans is a welcome one. “The ASP [strategy] seemed designed to capitalize on the whole ASP craze of a few years ago, and I don’t know if anyone ever understood the subtleties of what they were doing. This strategy is pretty clear.”

TalkingNets has tested its new sales channel only in Washington, D.C., but with positive results. It has collected about $1 million in customer contracts over the last six months, said Mark Cortner, vice president of marketing at TalkingNets.

“The Washington, D.C., market has 125,000 of our target customers, and 20,000 of those are in communications-intensive vertical markets that require a lot of voice and Internet services,” Cortner said. TalkingNets has CLEC certification in about 20 states.

How quickly TalkingNets can expand its new business plan beyond the nation’s capital depends entirely on a new round of funding – the company’s third – which it expects to close in “the next 30 to 60 days,” Surak said. The money will come from existing and new investors, but Surak declined to reveal an amount. “It’s not pretty trying to get funding as a carrier these days,” he said.

Still, Mycio said, “There’s VC money out there, and this play is unique.”

The company’s new strategy allows it to launch markets for less than $400,000, Surak said. It buys its T-1s from RBOCs or other providers. RBOCs’ T-1 prices in major markets range anywhere from $400 to about $800, depending on the provider.

The provider has reorganized its IP product offerings into two new service bundles. TalkingNets One includes a non-channelized T-1 supplying free local service, a block of 2500 long-distance minutes and Internet access for eight phone lines for $749 per month. The package requires no CPE investment and is not considered an alternative to a customer’s existing PBX or Centrex service, Surak said. A 16-line version is available for $999 per month.

Under TalkingNets One Virtual PBX, an alternative to premises systems, the enterprise customer outsources everything to TalkingNets for $849 per month.

These monthly costs compare favorably with the average pricing from other service providers, which runs more than $1500 per month. Surak said he is not afraid of starting a price war with other service providers – particularly RBOCs able to supply their own long-distance – because he doesn’t think one will erupt. “Other companies could compete on price, but the RBOCs don’t care much about this business,” Surak said.

The relationship between TalkingNets and the RBOCs could be an incestuous one. While it is competing directly against Verizon for enterprise business in Washington, D.C., and will battle other Bell companies in other markets, Surak admitted that partnerships are possible if the RBOCs turn their attention toward the small and medium-sized business market. “We’ll be staying engaged with the RBOCs because as they look out-of-region to sell to enterprises, we may be able to help them,” he said. “For now, I think they’re all very in-region focused.”

Surak did not rule out the potential for TalkingNets to be acquired by an RBOC, but he also said the company could expand on its own. In that case, its biggest hurdle may be its identity – or lack of one – with mainstream enterprises. The company will plug some new funding in marketing. “Enterprises probably were not aware of us before. Some folks may still view us as an ASP, but we’re not going to reach out to them that way anymore,” Surak said.

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