By Dave Lewis
For several years, independents have faced a number of challenges that have created material barriers to growth. Factors such as wireless substitution, a challenging economic climate and intercarrier compensation/USF reform have conspired to constrain their ability to maintain top and bottom line revenues, much less grow them. Yet, against the backdrop of such challenges, independents have a clear path to reinvigorate their growth prospects through the deployment of cloud-based hosted unified communications (UC) services.
The telecom market for small to medium-size businesses, those with fewer than 100 lines, is roughly a $15 billion a year market with independents serving less than 5 percent of that total. This means that in more than 95 percent of the market, the independent is the non-incumbent and can use disruptive technology to move outside their traditional service territories to gain market share, revenue and margin.
The economics surrounding hosted UC are game changers for both the subscriber and provider.
The subscribing business can save roughly 50 percent off of traditional telephony costs by adopting the technology and no longer face the prospect of capital commitments for premise-based solutions that quickly become outdated. Further, hosted UC solutions offer businesses the ability to have a dramatically expanded scope of features and functionalities that can be accessed anytime, anywhere on any device over any network. With these factors in mind, its easy to see why hosted UC services are projected to grow at strong double-digit rates over the next five years.
From a providers perspective, independents can deploy hosted UC with little to no capital requirements while enjoying margins in excess of 50 percent. Historically, moving outside ones service area to provide telecommunications services has been a complex, costly and low-margin proposition. Today, however, providers can deploy applications such as a hosted UC solution to quickly and easily expand their geographic footprint, effectively creating a CLEC in a box DID acquisition, 911 connectivity, interconnection, done.
With the removal of all geographic constraints, its just as easy to serve a business customer in a distant city as it is to provide service to the establishment next to your central office. Given wireless substitution and the impacts of intercarrier compensation/USF reform, thats a tremendously liberating and commercially appealing proposition a gigantic market, strong consumer adoption, no geographic constraints, nominal capital requirements and 50+ percent margins.
VoIP-based solutions have been around for some time. However, the technology has matured over the last several years, rendering it a solid foundation by which to provide service to even the most discerning business customer.
More to the point, the broader ecosystem has also evolved.
Specifically, the near universal availability of broadband, the widespread use of smartphones and tablets, and the unmistakable movement to an application-driven” world have created a near perfect environment for the general adoption of cloud-based UC solutions. Businesses want to avoid the large capital commitments for premise solutions. They crave the convenience offered by an any device, anytime, anywhere platform. Ubiquitous broadband, smartphone/tablet proliferation and the cost advantages of cloud UC services are joining together to rewrite the rules of the game and create incredible opportunities for providers willing to embrace the new service construct.
Why the cloud? The reality is that our world is changing quickly and the rate of marketplace innovation continues to accelerate. Our ability to remain relevant in tomorrows world will be defined by two measures: 1) our ability to quickly innovate and 2) our ability to do so economically/efficiently. Simply put, its easier and cheaper to innovate once, at a centralized core, and push technology to the edge, than it is to replicate the resources and capital necessary to create such innovation hundreds of times over. Hence, the advantage of the cloud.
There are doors of tremendous opportunity opening for todays independent and hosted UC is custom-tailored to help them seize those opportunities.
Dave Lewis is CEO of ANPI. A 30-year veteran of the telecommunications industry, he was the conceptual founder of ANPI. He developed the business plan and has since directed all aspects of the organization’s transformation from a switchless reseller to a facilities-based provider of integrated communications solutions.