RESELLER CHANNEL: Smooth Operators

Posted: 8/2003

Smooth Operators

By Khali Henderson

NEW
WHOLESALERS EASE ENTRY INTO HOSTED IP TELEPHONY MARKETThe Yankee Group published
research in April indicating 30 percent of wireline service providers
interviewed identified IP Centrex offerings to be the application most demanded
by their customers. All of the service providers interviewed either have an
offering in place today or plan to do so in the next 12 to 18 months.

"The new offerings are based on
open architectures, are sleeker and easier to manage, and represent an
innovative service for their target market. So to shake the inflexible and staid
perception of Centrex, we are coining the phrase ‘hosted IP telephony’ for these
services," says analyst Danny Klein.

"These new hosted IP telephony
services can be offered not only by an ILEC but by any carrier with POTS or
high-speed connectivity to a business. This flexibility gives IXCs and
international service providers the opportunity to compete for the enhanced
voice revenue they would otherwise sacrifice to the RBOCs," says Klein.

With exponential growth on the
horizon and the distributed nature of IP telephony systems, hosted IP telephony
by whatever name you call it — hosted IP PBX or even IP Centrex — seems like a
no-brainer addition to services providers’ portfolios. However, it’s not as easy
as it sounds, say wholesalers that rolled out private-labeled services for CLECs
this summer.

"It’s a long cycle for somebody
to buy a switch, turn it up and do all the testing and development and
provisioning from the get-go," says Michael Barta, director of business
services for Go-Comm Inc., a CLEC that launched in June a wholesale hosted IP
telephony service based on its Watson retail offering. "We spent about 15
months to 18 months using the service ourselves before we ever sold it to an end
customer. It’s supposed to be simple and straightforward, but that’s not always
the case."

Barta cites aspects of the
implementation process — from number portability to directory listings — that
complicate service delivery.

Go-Comm has been providing Watson on
a retail basis in the Dallas-Fort Worth area. To extend its footprint, the
company entered into a resale deal with vNet Source Inc. to expand its reach
into 28 additional markets. vNet Source also has off-network alliances providing
complete international and domestic coverage.

Steve Welter, director, emerging
markets for vNet Source, says by adding local services it is leveraging its
existing nationwide VoIP infrastructure initially deployed for providing
traditional long distance services. This enables emerging providers like Go-Comm
to link up to its network with a single SIP (Ethernet) port, providing them with
an product suite, including local access, media gateway and long distance.

The VocalData Inc.’s VOISS platform
that Go-Comm uses to provide the hosted IP telephony services, supports an SIP
interface with Veraz Network’s softswitch platform and I-Gate 4000 media
gateways, which make up the vNet Source network. VOISS also integrates with Go-Comm’s
billing solution as well as other OSS-related programs to further facilitate a
quick rollout to service providers.

Welter says it will run resellers
about $25 per end point for a bundled set of long-distance minutes and unlimited
business local service. (Rates are lower for home office and residential
applications.) Rates include the back-office solution to provide resellers with
an automated provisioning and electronic billing system (optional printing and
mailing can be added).

Go-Comm has competition from
Kancharla Corp., which announced at SUPERCOMM 2003 its wholesale hosted-IP
telephony offering, which has been in development and pilots since last summer,
is available.

The company, which also uses the
VocalData platform, sold the service retail for about a year to get the kinks
out, says president and CEO Anil Reddy, who notes there are wholesale customers
selling its service live in Tier 2 and Tier 3 marketing in the southeast United
States.

The company also has PoPs in New
York, New Jersey, Massachusetts, Connecticut and North Carolina. "We are
enabling the cities and interconnecting the cities," Reddy says, noting
that the operational aspects already have been proved.

Kancharla’s experience operating the
hosted IP telephony business enables it to help its customer go to market in a
short time frame — as little as 30 days. Kancharla helps the wholesale
customers with its product development; sales and marketing support, including
ready made presentations, materials and Web site templates; sales training,
design and engineering, including integration with existing infrastructure;
implementation and branding; monitoring and management; and back-office
functions, such as billing and workflow management.

Reddy says Omniverse is "templatized"
so there is nothing for the customer to reinvent. This by itself makes the
implementation less expensive for the carrier, but Reddy adds that the
aggregation of service among multiple carriers also allows for a cheaper price
point.

In fact, he says, "we have made
it so attractive [based on pricing] that they won’t think about doing it
internally."

Kancharla charges $15 per month per
end point not including the IP phone. "It’s not about quick bucks,"
Reddy says, "It’s about how do we get it [hosted IP telephony] out
there."

Along this line, Reddy says his
contracts restrict end user pricing to $30 per end point while the market is
typically at $50 to $75 currently.

Further, he is working with
distributor CommuniTech Inc. to bring cheaper end points to his wholesale
customers. Presently, business-quality IP phones retail for about $300 to $400,
which represents a barrier to adoption. CommuniTech is representing a new
Swiss-made business set, Swissvoice IP10, that costs $99 as well as a
business/remote worker USB telephone and speakerphone, the Claritel i750,
Communitech company developed that retails for about $90.

Reddy says these advances combined
with Kancharla’s cost-effective platform should drive adoption among SMEs.

Another option for resellers is the
Zultys Technologies ZIP 2 IP phone, which was rolled out in June, and retails
for $140. The ZIP 2 supports all common PBX functions and in addition provides
two simultaneous call appearances and three-way conference calling. SIP support
means the ZIP 2 is compatible with Windows Messenger and any IP telephony system
using SIP. The phone has G.729 speech compression, which is important when
bandwidth is limited. Speech quality of the ZIP 2 is guaranteed by QoS at the
Ethernet and IP layers.

"Customers like choice,
especially when implementing a new phone system," said Greg Still, managing
partner at Xiologix, a reseller based in Oregon. "Zultys’ line of IP
phones, including the ZIP 2, allows us to offer our customers the right
equipment for their needs. Because Zultys’ products are based on open standards,
customers have the peace of mind that they will work with their current or
future systems."