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 Channel Futures

Telephony/UC/Collaboration


Unification:

  • Written by Khali
  • December 31, 1998

Posted: 01/1999

Unification:
Messaging’s Mantra
By Khali Henderson

"The medium is the
message." Marshall McCluhan’s sage words have been used to analyze the advent of
every new communications medium from television to the Internet. With so many new media,
however, the message to consumers only can be "confusion." Part of the challenge
of today’s service providers is to change that message to "simplicity" and
"convenience." That cannot be done with a slick marketing piece; as McCluhan
says, the medium speaks for itself.

By seamlessly integrating voice mail, fax and e-mail, unified messaging is one service
that is sending the right message (no pun intended).

According to a new study from The PELORUS Group, Raritan, N.J., demand for unified
messaging–once limited to mobile workers–soon will flow into mainstream corporate
America. "The allure of multiple-media message notification and access, plus the
added convenience of message management, is enticing many large and small companies to
embrace [unified messaging]," the report states. The average office worker is
inundated by day-to-day communications tasks, receiving more than 160 messages a day,
including e-mail, faxes, voice mail and standard mail, acoording to Deloitte and Touche,
New York.

Today, unified messaging primarily is offered as a customer premise equipment (CPE)
solution. But service providers–incumbent local exchange carriers (ILECs), competitive
local exchange carriers (CLECs), long distance carriers, wireless carriers, Internet
service providers (ISPs) and even broadcast and cable TV companies–have begun offering
unified messaging as an enhancement to basic service offerings. In fact, say analysts at
The PELORUS Group, revenues from service provider unified messaging solutions will outpace
that of CPE solutions. Worldwide revenues from the CPE segment will increase from $49.9
million in 1997 to $970 million in 2002, whereas service provider revenues will grow from
only $26.8 million in 1997 to $2.3 billion in 2002, they predict. (See chart,
"Worldwide Unified Messaging Revenues.")

Utility Sells

The primary pitch for unified messaging lies in its utility–one-number and/or
one-address access to a single mailbox for wireline voice, wireless voice, fax, paging and
electronic messages. Vendors are making it possible for users to program the forwarding of
messages and message notifications from a single access number to multiple phone numbers,
allowing users to track the transmission of messages with their own changing physical
locations.

The theory, at least, is that customers who can access any message from any phone–or
computer-based access device–from anywhere will use their network services longer and
more often. That is to say, utility equals "sticky minutes."

Carriers expect such messaging utility to open new markets and to breed loyalty among
customers, even in the face of heavy price competition in any one wireline or wireless
service segment. "We have statistics to support the theory that unified messaging can
prevent churn," says Gus Bottazzi, vice president of sales and marketing for Edison,
N.J.-based Call Sciences Corp., a provider of single-number and unified messaging
services, in many cases under the brand name of carrier and ISP partners. Using Call
Sciences’ service, he says, British Telecommunications plc subsidiary CellNet Data Systems
Inc. reduced its customer churn by 80 percent over a six-month period.

"In the face of price competition, carriers can make the minutes they bill today
more meaningful," Bottazzi says. "Customers do more with single-number access
and unified messaging because the usage is more productive, and that utility can then
warrant a few pennies more per minute."

A study by Mary Ann O’Loughlin and Roger Walton for the London-based research house
Ovum states that offering a unified messaging service will provide direct revenues two to
three times greater than that of voice mail alone, in addition to indirect revenues gained
through increased traffic.

"With falling margins from basic services affecting many telcos and ISPs, unified
messaging promises increasing traffic and higher spending per user as well as competitive
differentiation and increased customer loyalty," O’Loughlin and Walton say in their
report.

They warn, however, that prompt market entry and effective marketing "out of the
gate" are critical for success. "Users lost to your competitors now will be even
harder to regain, and you will lose your ‘power users’ first–a major blow to your
revenues," they write.

One new carrier in the newly opened French telecom market, CyberOffice, reportedly grew
its customer base 300 percent in six months on the strength of its unified messaging
product.

Building

Data-centric service providers argue that unified messaging systems are best and most
cheaply developed on a single, general-purpose platform, using off-the-shelf computer
services, software and Internet protocol (IP) technologies rather than circuit-switched,
mainframe-based intelligent network (IN) systems.

Incumbent telephone carriers using a traditional IN system may enjoy an advantage in
their own brand recognition, existing customer relationships and ample marketing funds,
but the new and smaller entrants have an advantage in speed to market. Says Mary Stanhope,
director of market development for Priority Call Management Inc., Wilmington, Mass.,
"The new entrant sees an advantage in entering the market with a large feature set
and the single platform for all calling card, one-number and enhanced messaging
applications translates to a lower initial investment for [carriers] who need low capital
expenditures."

In addition to Priority Call’s Oryx server, there are many other potential vendors with
systems built on programmable switches, such as Call Sciences; Simplified Telesys,
Houston; InterVoice Inc., Dallas; IEX Corp., Richardson, Texas; and Pulsepoint
Communications, Carpenteria, Calif.

And there are more on the way: Call Technologies Inc., Reston Va., announced Dec. 1 its
Call Courier Unify, a unified messaging en-hancement to its Call Courier Universal
Messaging platform, a hardware-independent, open systems software package.

Partnering

For smaller carriers and resellers or those entering emerging markets, reselling from a
service bureau may make more sense economically, Stanhope says.

Linx Communications Inc., Newton, Mass., is using Priority Call Management’s Oryx
server platform to prove demand for its universal number, enhanced voice mail and unified
messaging services initially via direct sales to customers including Compaq Computer
Corp., Houston, and 3Com Corp., Santa Clara, Calif. "In six to 12 months, we believe
the service providers will want to catch up, so we’ll have wholesale operations" for
carrier partners, says Linx President Joe Gately.

Also serving carriers is messaging specialist Call Sciences. Its network of mailboxes
and switching devices also ties into carrier partner networks. "We sit behind the
carrier and allow it to rebrand our service," Bottazzi says. "We’re a carrier’s
enhanced services carrier."

The only downside to outsourcing is that it can eat up as much as half of a provider’s
margins, so reaching critical mass to support its own platform is desirable. At 20,000
subscribers, a provider can begin to justify deploying a platform of its own, Stanhope
says. For example, pricing for a Priority Call ORYX platform outfitted with unified
messaging and supporting up to 10,000 to 20,000 users starts at around $200,000. Of
course, there are personal computer (PC)-based options that are less expensive–$100,000
or less–but it is easy to outgrow them, she notes.

Marketing

Whether a provider builds or partners, the next major challenge to a successful unified
messaging offering is marketing.


Image: Messaging Revenues

Frequently, says the PELORUS Group, unified messaging will not be the end product in
and of itself, but part of a bundled offering, integrated with collaborative tools such as
audio- and videoconferencing, one-number follow-me services, whiteboarding and document
sharing.

Priority Call’s Stanhope says that an educational focus is necessary and the marketing
message must avoid intimidating the customer with too many features and functionalities.
Simplicity is key.

Another part of the sell may involve overcoming integration with existing voice mail
systems–some of which are not based on open architectures. "The ideal solution is to
get rid of their voice mail system and use mine," Stanhope says, but she says that
doesn’t always go over well and a second-best Windows-based link can be used until which
time the entrenched hardware vendors are forced by the larger carriers and system
integrators to open their systems.

Fortunately, she says, many companies are now re-evaluating proprietary systems
installed over the past 10 years with an eye toward replacing or upgrading them, which
creates an opportunity for new providers to go in with the bundled solution without any
integration hiccups.

Khali Henderson is editor-in-chief of PHONE+ magazine. Features Editor Peter Lambert
contributed to this article.

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