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Hosted Telephony: Both a Threat and Opportunity for IT Data VARs

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Scott StewartBy Scott Stewart

For the past 12 years I have been working with large carriers to deliver products that enable telecom solutions at SMBs and large distributed enterprises. The products and services have evolved from very simple voice and data solutions to extremely complex VoIP solutions delivered by cutting-edge products.

The new solutions add a ton of features and functionality that historically were very difficult for large carriers to scale and support to the masses. Large carriers usually opted to leave these solutions to the IT data VARs and stick with what they were good at, delivering circuits. The VAR owned the customer and provided a premise-based PBX to deliver the desired features. This model gave the IT data VAR equipment resale and services revenue to support it.

Today the carriers are going aggressively into this space. The PBX features are hosted in the cloud and the equipment at the premise can range from just IP phones plugged into the SMB's existing data network, to phones, switches and routers building a parallel data network for the voice solution.

This model is a threat to the traditional key system or PBX sale. Loss of hardware sales is then compounded by the loss of the services revenue that goes around the support of that hardware. The market for premise-based phones systems may shrink quickly and is a very real threat to the traditional IT data VAR.

While that is an obvious threat, I feel like it creates a great opportunity for those VARs to shift their business models.  The first opportunity is to become an agent for carriers in this space. The knowledge and skill set that was instrumental in making the successful VARs good at positioning premise-based telephony solutions will be key to helping customers identify the right hosted solution for their needs.

I think the next opportunity is to strike deals with the carriers to provide the installation services and Day 2 support should the customer's network need troubleshooting. The carrier will have many tools available in the cloud to provide support, but in order to implement a carrier class solution there will be work needed at the customer premise. Site surveys and cabling for Ethernet fed phones is needed. If the carriers decide to rely on the customer's LAN it will need certified to ensure a successful service. LANs may need upgraded providing opportunities to resell switches, routers and Wi-Fi.

All of these opportunities seem to fit into the breadbasket of the VAR that has sold and supported premise-based solutions in the past. These VARs in my opinion seem to be in the best position to capitalize on the threat of hosted IP telephony solutions pinching the addressable market for legacy phone systems.

Scott Stewart is director of sales – competitive service providers for networking and communications equipment provider ADTRAN, which focuses on solutions that enable carriers to deliver Ethernet, internetworking and converged voice solutions into the SMB marketplace. He has 15 years of telecom sales experience working with a diverse set of customers including Tier 2 and Tier 3 IOCs, wireless service providers, CLECs and MSOs. He is a graduate of the Pennsylvania State University and a member of the 2012-13 Channel Partners Advisory Board.

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