TelCentris Talks CLEC Rollout, Agent Program

TelCentris Inc., based in San Diego, has been around since 2006 as a unified communications platform provider. But now the company is branching out. It serves end users with its VoxOx software; businesses with its hosted IP PBX, call center and SIP trunking products; and it wholesales its services to other carriers.

The expanded focus has TelCentris itself expanding – it’s getting certified as a CLEC in different parts of the United States, and may well end up in all 50 states. For now, though, it’s starting in the five where it has received regulatory approvals – California, Florida, Illinois, New York and Texas.

As it revs up its CLEC focus, TelCentris sells directly and through agents, and it’s working to bring on more indirect partners. To that point, TelCentris launched its agent program at the Fall 2009 Channel Partners Conference & Expo and continues to firm up its partner support.

The company is facilities-based, meaning it uses its own softswitches for call control capabilities, to dampen some of the operating expenses. Still, TelCentris does have to buy some access to ILEC and even CLEC networks to provision its VoIP services, and pay interconnection fees. Nonetheless, executives say the TelCentris business model bypasses most of the onerous costs that burden other CLECs.

PHONE+ Business and Regulatory Editor Kelly Teal spoke with TelCentris CEO Bryan Hertz about rolling out as a CLEC in a tough economic environment, its indirect channel vision and the company’s plans for growth. Here is the edited transcript of that interview:

TelCentris’ Bryan Hertz

Talk about how and why TelCentris is going nationwide in the current economic climate.

Hertz: It actually allows us to save money and pass savings on to end users, especially in the markets where we have some decent saturation so far. We’re able to save money by not renting a lot of these services from other CLECs and ILECs. We’ve come up with a very cost-effective way of rolling out our CLEC infrastructure, our SS7 network, and as far as the savings there, and part of the reason we can do that, the service delivery platform that we’ve built in-house has TDM capabilities. It’s allowed us to avoid a layer of cost of purchasing some of the other switches out there, be it Sonus or whatever. We have a strategy that allows us to roll out into areas where we have more saturation and typically by the time we pull the trigger, we’re entering a market profitably from day one.

How has TelCentris structured its partner support? Is it localized?

Hertz: Right now it’s based in San Diego and the greater Los Angeles area. It’s a pretty new program for us so we’re evaluating a lot of the other programs out there and getting a lot of feedback from partners, as well as the people we’ve hired to be channel managers. We’re building the program partners want. Part of that will include localized support as we roll out a little bit deeper.

When will the program be fully fleshed out?

Hertz: In the first quarter of 2010. It’s there now in a certain form – there are a lot of tools and things we’re adding. And we’ve got some very aggressive cost structures [commissions] we’re rolling out.

What are your most saturated markets?

Hertz: A lot of our network is in Southern California – it was the first one that we opened up. The other ones are certain markets in Florida, Texas, New York and Illinois. That’s where we’ve gotten regulatory approval and where a lot of our customer base lies. We’re continuing to roll out in order of states that have largest MSAs. Being nationwide from the beginning essentially, we pick up more business in areas that are more densely populated.

So the goal is all 50 states?

Hertz: The goal is as many states as really make sense for our business. We’re not sure yet whether it will be all 50. Our plan right now is to address each state on a case-by-case basis. There are about 22 states right now where we are planning on opening. We probably will eventually be in all of them, we’re just not exactly sure of the timing.

It’s interesting that you’re going nationwide now, given the competitive pressures even the more-established CLECs are facing.

Hertz: One of the reasons we’re doing this is so other companies don’t really have to. We have a wholesale offering that gives our customers access to our networks and I think we can provide services that are competitive on a wholesale basis that allow Internet telephony service providers to get the best of both worlds, using our platform.

So why now? I think the competitive situation is why we’re doing it. Because you have a lot of companies out there, various CLECs and ILECs, that provide services to end users, and now they’re coupling them with their VoIP services. And really, our services are primarily voice over Internet services. Now, renting services from your competitor – in some cases you’re forced to do it but in other cases it’s nice not to have to. So part of what we’re able to do is get a little bit closer to the customer by having our own DIDs that aren’t coming from a third-party network, and being able to terminate our own traffic out to end users without going through an array of various other carriers. And that translates into cost savings and higher quality for our end users.

One thing I wanted to clarify is we’re not selling POTS lines, things like that. The strategy is to couple some of these services that are normally rented from other CLECs and ILECs into our service offering but let them be part of the same network.

Is TelCentris active, or does it plan to be active, in the movements for special access and Universal Service Fund reform?

Hertz: We haven’t really been. Our strategy has been just to play by the current rules that are set. We haven’t gotten into trying to change the rules – we’re just seeing how things go. I think our business model is designed in a way that we benefit regardless of what the rules are.

What about challenges, like taking on the big guys as a new nationwide provider?

Hertz: A lot of the services we’re selling are differentiated enough that we’re not really running into them. But, having to rent services from these other LECs, with the kind of markups they have, sometimes prevents us from providing the cost savings we want to provide to our end users. That’s really the main competitive challenge.

Does TelCentris have a wireless focus?

Hertz: Not at this time. We’ve licensed our service-delivery platform to some up-and-coming mobile operators and, to the extent that those really get off the ground, that could mean our infrastructure has a wireless component to it. But we don’t have a specific plan to engage in selling wireless services at this point.