BellSouth Corp plans to throw a wider net over the US enterprise VoIP market by launching a hosted VoIP service next year – at least 18 months after it initially expected.
The Atlanta, Georgia-based regional telecom carrier began limited trials of the service in June, 2004 with the aim of rolling it out later that year. But demand proved sluggish and BellSouth pushed back its timing to 2006.
Like many of its bell counterparts in the US, such as MCI and Qwest, BellSouth insists VoIP is an opportunity not a threat. A number of bells, including BellSouth, have targeted enterprise customers to fill a void left by most pure-play VoIP providers, including Vonage, that case consumer and SOHO customers instead.
BellSouth has been in the VoIP space for about four years, and its enterprise offerings include an IP-PBX as well as a managed service in which network equipment resides on a customer premises. Charged a flat monthly fee, customers get local and long-distance calling, a desktop communications manager and usual features, such as follow-me calling, remote office, voicemail and unified messaging.
BellSouth’s new service will include web-based conferencing services. Steve Zimba, who heads VoIP strategy at BellSouth, said the company is evaluating other collaboration offerings. He declined to elaborate but said it is looking at some of the usual suspects, such as Microsoft, for offerings to bundle into its service.
The company expects to begin publicly touting its upcoming hosted service in the spring, followed by a roll out mid- to late- 2006 in its southeastern region, Zimba said. We’re considering rolling out elsewhere, but there are no firm plans, he said. We’re probably more likely to follow our customers’ lead on that.
The hosted offering will built around a BroadSoft platform and has been trialed by large enterprise customers in South Florida, South Carolina and Atlanta.
The move to offering a hosted VoIP service does not reflect a broader market shift to this kind of service, Zimba said. BellSouth, which has been in the VoIP market for about four years, historically has had a portion of its enterprise customers that outsource their traditional telephony needs.
When they move to VoIP they want to continue that [hosted] model, Zimba said. Other enterprises want to mix an outsourced VoIP service at specific locations, such as remote offices, while maintaining equipment at headquarters, for instance.
On the whole, most BellSouth enterprise customers are taking a hybrid approach to VoIP, that is a mix of traditional and VoIP telephony. The bulk of VoIP implementations have been spurred by green-field opportunities, such as a new office building, a major rehab on an existing facility or a major data network upgrade, Zimba said.
Nobody’s pulling the plug on the old technology overnight, Zimba said. They’re all looking for the compelling reason to get onto the VoIP path and quite often that will start with a specific location.
However, Zimba said the company is not seeing any enterprise customers wanting to move to VoIP unless they see a lower cost of ownership. With a new office location, for instance, enterprises don’t see it making much sense to install traditional phone technology, but where they have existing phone systems that are highly operable, there isn’t a lot of motivation to switch to VoIP, he said.
After all, he estimates it costs between $600 to $1,000 per user to migrate from traditional telephony to VoIP. That includes upgrades to a data, LAN and WAN networks to support VoIP, firewall updates, new handsets, staff training and operational revisions. These are not trivial things, Zimba said.
US enterprises also have many items competing for IT budgets and Zimba said he hears a lot of customer feedback that it’s difficult to justify a new VoIP system when the old system works fine.
The conversation is how can I operate a total voice system at a lower cost, he said. It’s unclear whether there’s any savings to be achieved here. Is it a matter of savings or improved functionality and capability? I think the jury’s still out on that.
As the VoIP industry matures, however, Zimba said providers would be competitively compelled to step up innovation and deliver more features and capability to meet enterprise needs. He said this would largely play out in the application layer in the marketplace, rather than in the network layer.
When these applications finally arrive, we believe that’s what’s going to be the tipping point for the enterprise market, he said. I expect over the course of the next three years, the VoIP marketplace is going to pick up significantly in the enterprise. Our challenge is going to be to get out in front of that.
In the meantime, BellSouth is developing an IP multimedia subsystem, or IMS, to facilitate the convergence of VoIP and other wireline and wireless components. BellSouth has the potentially to significantly broaden our capacity for convergence [offerings, Zimba said.
The company is aiming to trial some IMS-based services next year and through 2007, and is not yet ready to talk specifics. We’re evaluating technologies and trying to drive the individual IMS platform vendors to build capabilities that are going to allow us to enhance our portfolio and integrate these capabilities together, Zimba said. We do have a commitment to IMS technology and are moving in that direction.
