Hold the Line: Does Web 2.0/Voice 3.0 Live Up to the Hype?

If industry speculation is realized, service providers not offering the latest in Web 2.0/Voice 3.0 content and connectivity could be overtaken by the Googles and Skypes of the world. But many service providers, even the CLECs often viewed as being more forward-thinking than incumbent telcos are taking the hype in stride. Yes, they know they need to provide unified communications, and quite a few do. And sure, theyre keeping an eye on social networking opportunities. But a new study of telcos by IBM Corp. shows service providers, while aware of the new Web 2.0/Voice 3.0 trends, have been slow to incorporate them because revenue from their bread-and-butter service, voice, hasnt dropped off as predicted. And, as a rule, telcos arent willing to mess with what works unless the new technologies prove their worth as money makers.

Defining Web 2.0/Voice 3.0 applications can be tricky. Making the business case for implementing such capabilities can be even trickier.

Web 2.0 generally refers to blogs, podcasts, wikis, social networking and so forth. But theres crossover now as Voice 3.0 joins the fray. If Voice 2.0 is plain VoIP, Voice 3.0 includes multimedia interactions across time and devices. Presently, unified messaging and desktop conferencing represent some of the applications converging to create new dynamics for enterprise and mobile workforces. It all sounds exciting, but many of these applications are so new that telcos are opting to wait a while and see what lasts.

Still, even if adoption of Web 2.0/Voice 3.0 products is slow, its good for agents and resellers. Many already sell UC products, which seem to herald the start of the Web 2.0/Voice 3.0 trend, and demand is growing. By 2012, integrated UC product deployments (such as audio conferencing bridges, Web collaboration servers, and presence and instant messaging systems) will reach $12.5 billion, according to a joint study by In-Stat and Wainhouse Research. Integrated UC services will total $4.1 billion in sales, the firms found.

It looks like indirect salespeople will be key in promoting Web 2.0/Voice 3.0 use. “Hosted applications are in huge demand among the channel partners,” says Ken Schulman, CTO/CIO of Broadview Networks Inc., a CLEC in the northeastern United States. Broadview offers (and says sales grow 100 percent each year from) hosted applications including UC, IP contact centers, voice-over-Wi-Fi and fixed-mobile convergence. Its also experimenting with speech-to-text software like the kind SimulScribe Inc. is perfecting. Other evidence of CLECs stepping out of the comfort zone includes XO Communications recent deal with Tech Data Corp. whereby VARs and systems integrators can sell converged IP voice and data services from Cisco Systems Inc.

The real opportunity from Web 2.0/Voice 3.0 sales remains unclear, however. “Its kind of like the Wild West of the late 90s again with startup after startup that has another tweak on the same old story,” says Schulman. Broadview, which targets the SMB space, is one of the companies that wont add new services just because theyre cool. Still, when it comes to Web 2.0/Voice 3.0 applications, “it would be a terrible mistake to not recognize where things are going and not do something about it,” Shulman says. “The challenge is not just jumping on a bandwagon, but understanding what bandwagon youre jumping on and why.”

According to IBMs survey, conducted by the Economist Intelligence Unit, Broadview is typical of many providers. Hosted applications are easy to use and, along with device management, “are all central to the delivery of new content and advertising-based services but they are not yet key priorities for many service providers,” says Noel Taylor, general manager and global communications sector leader for IBM Global Business Services.

For one thing, upgrading networks originally designed for voice communications and Web browsing is expensive, says Marty Slatnick, telecom solutions lab manager for IBM. “The returns on these network upgrade investments remain uncertain and are likely to be positive only in the long term,” says Slatnick.

Spokane, Wash.-based OneEighty Networks agrees. The CLEC, which runs a small agent program, sells unified messaging but is waiting to roll out more extensive applications. “We need to see the business case develop first,” says CEO Gregory Green. “Otherwise, it would be like putting the cart before the horse.”

Another regional CLEC that works with partners, Access Integrated Networks, is in the same boat. Technology and customer demand have to be aligned, says CEO Vincent Oddo. Right now, SMBs arent clamoring for Web 2.0/Voice 3.0 applications, but he sees that changing “rapidly” over the next few quarters.

Some analysts seem to have drawn the same conclusions. For example, last year, Burton Group senior analyst Richard Monson-Haefel held a telebriefing during which he said there doesnt seem to be a good business model for Web 2.0 at all. Corporations might use blogs and wikis for internal purposes, he said, but those dont generate sales unless the companies in question run social networking sites or are the next YouTube.

But for those CLECs and telcos that can justify investment in Web 2.0/Voice 3.0, partnering may be the way to go. Indeed, 72 percent of the telco executives polled by IBM said service providers must pair with outside companies such as search engines, content creators, outfits that help provide targeted advertising, and the like, to be successful in a Web 2.0/Voice 3.0 world. CLECs couldnt agree more, and indirect channel partners would be among the beneficiaries.

“If anything, these Web 2.0 companies will need to partner with CLECs, not compete against them,” says Chad Couser, a spokesman for XO. “They wont have the networks with which to deliver these services unless they partner.”

Couser says XO has teamed with Sotto Wireless, a company that has combined cellular voice/data and office phone features, to offer Voice 3.0 applications. The companies are providing the so-called unwired office; it brings together a PBX system, and broadband and mobile phone services so users get the same communications experience inside and outside the office, on fixed or mobile networks. The service will be available initially as part of a trial in Seattle.

Those kinds of services are only the beginning of the Web 2.0/Voice 3.0 trend. IBMs survey found that more than half of respondents expect to see continued convergence in messaging, location, presence, conference calling and more. Yet IBM warns that service providers (and, by extension, agents and resellers) shouldnt lose sight of customer requirements as they embrace new technologies. “[S]ervice providers will need to place greater emphasis on ease of use and simplicity despite the underlying complexity of the services and devices, and support it with outstanding customer service,” says IBMs Taylor.


Access Integrated Networks Inc.
Broadview Networks Inc.
Burton Group
Google Inc.
IBM Corp.
OneEighty Networks
SimulScribe Inc.
Skype Ltd.
Sotto Wireless
Wainhouse Research
XO Communications

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