Inflexion works with cities to allocate cost savings to job creation

VoIP plays role in economic revitalization: inflexion works with cities to allocate cost savings to job creation

Al Senia

VoIP with a social conscience?

That may be an odd notion for a still-developing technology. However, VoIP has spawned a variety of business opportunities and investment ventures, primarily in the enterprise space.

Now Dwayne Goldsmith, former president of the public communications unit of former RBOC Ameritech, has a different notion for VoIP: Take it out to underserved markets such as small municipalities, schools and other customers who can really benefit from the cost savings the technology provides. Then, help the smaller communities and redeveloping areas redirect the dollars saved through IP telephony into business initiatives that can spark economic development.

Goldsmith recently spun out a new, niche-based IP phone company called Inflexion to market VoIP and other telephony services to underserved markets. “Our effort is really focused on the private IP telephony market. We are able to help cities take money they are spending on their telecom budgets and move it into areas that promote jobs,” explains Goldsmith.

ACQUISITIONS

Inflexion, originally founded in late 2003 with funding from Fleet Bank (now Bank of America), is presently a certified carrier in 22 states. Goldsmith says the company services “thousands” of customer lines across the eastern half of the United States. Inflexion, which has offices in the Detroit and Baltimore areas, started out by acquiring three prepaid telephone service companies last September: Easyphone, Local Lines America inc. and In-Touch Communications Inc. Those three companies formed the basis of a national consumer, prepaid VoIP service that Inflexion launched in February.

Inflexion also offers a hosted service, supported by a Broadsoft VoIP-based solution, as part of its product portfolio. It provides two different programs to business customers: A FlexIP program (providing IP services to companies with on-site, circuit-switched PBX equipment) and the XtendIP program that helps customers extend existing phone service to redeveloping areas.

The Detroit Economic Growth Corp. was the first customer for Xtend, deciding in February to help the city deploy VoIP communications and use the 20% savings for other revitalization efforts.

The small city of Benton Harbor, Mich. signed up for Xtend in early July. The municipality will save an estimated $70,000 deploying VoIP and will use the savings to hire an economic development director to bolster local job prospects. Goldsmith says as part of the program, Inflexion is establishing a Telco partnership with Benton Harbor to help start the development effort.

In fact, Inflexion is hosting a conference in August for 100 small cities explaining how VoIP savings can be translated into economic development initiatives.

TAPPING E-RATE

The company also replaced SBC as the local phone service provider for the 17,000 telephones of the Detroit public school system starting July 1, although that deployment isn’t VoIP-based. The school contract was awarded under the E-Rate program, established in 1997 to provide eligible schools and libraries with affordable access to modern telecom equipment. The program distributes as much as $2.25 billion annually for authorized services, with money raised through a fee levied monthly on every phone bill. The E-rate program has drawn criticism from some lawmakers amid allegations of waste, fraud and mismanagement. Congressional hearings into the program began in June.

Goldsmith estimates that about 20% of Inflexion’s current business is composed of its original prepaid consumer niche market, which includes low-income customers who can’t afford traditional phone equipment, yet need to make international calls to their native countries. The prepaid service can bring the cost of such calls down to less than 4 cents a minute, he says. There’s little financial risk in the business because the bad debt issue is eliminated through the prepaid card arrangement.

While Goldsmith says this market segment has been lucrative, it is really two business market segments that he views as particularly ready for the VoIP service: Small government municipalities and schools, and small enterprise businesses. Goldsmith believes the elementary school and community college segments of the education market have been largely ignored by traditional RBOCs. Small cities with a population between 30,000 and 50,000 fall into the same niche. Both are underserved, he believes, because they aren’t large enough to merit special attention from traditional phone service providers.

However, Inflexion offers these customer sets a hosted IP-based solution with bundled features such as conference calling, unified messaging and voicemail that can save significant money, especially if legacy equipment needs replacement. “Our cost points are dramatically lower, Goldsmith says. “And with budgets the way they are, anything that can save them money, they are interested in.”

PERSONAL PROFILE:

Name: Dwayne Goldsmith

Title: President and CEO

Company: Inflexion Communications Corp.

Description: Service provider delivering voice, video and data services over private networks in 22 states.

Background:

* Former vice president and business unit president at Ameritech. Various marketing, sales, business development posts for Fortune 500 companies.

* Registered professional engineer.

* MBA University of Michigan; BS Electrical Engineering, Wayne State.

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