By Wayne Epperson
This article appeared in the April/May 2005 issue of Web Host Industry Review magazine. Click here for a free subscription.
Web hosting has become just one feature of a more complete set of business Internet and communications tools, and recently, many Web hosts have had success in extending the scope of their own services to encompass more of that complete toolset.
Every additional business tool be it connectivity or marketing services or something new provides the Web host with not just a revenue opportunity, but with a means of becoming a more valuable partner to its customers.
One of the most promising new avenues of opportunity for Web hosting providers is the hosting of voice over Internet Protocol, the IP-based delivery of telephone service. Promising inexpensive rates and simple management, as well as a range of multimedia add-ons that take the technology well beyond the capacity of traditional phone services, VoIP technology has drawn some optimistic predictions about its potential to catch on among small to medium-sized businesses.
A recent forecast by consultants AMI-Partners (ami-partners.com) of New York leaves little doubt about the future of VoIP in the SMB market, saying “the SMB market adoption of VoIP will bring new levels of productivity and allow service providers a more strategic position in the SMB IT value chain … SMBs increasingly note the importance of VoIP service. While less than six percent of small businesses reported VoIP to be important in AMI-Partners’ 2003 survey, this number swelled to 25 percent in some market segments during 2004,” says AMI-Partners. “The SMB market for hosted voice services will grow at a 55 percent CAGR over the next three years.”
But while hosted VoIP solutions hold plenty of promise, service providers face a challenge from existing do-it-yourself premise-based solutions from companies like Avaya, 3Com and Cisco, which already have a degree of acceptance and understanding within the SMB market. Part of the challenge will be convincing customers of the value of a hosted solution.
“There are advantages to both premise-based and hosted,” says Michael Lauricella, vice president of telecommunications practice at AMI-Partners, “however, many businesses irrationally dismiss the hosted alternative, given its newness. The fact is, hosted solutions present a reliable and viable solution to many of this nation’s 6.3 million small and medium businesses as well as enterprise customers.”
OneConnect (oneconnect.ca), launched in February 2004 by Globalive Communications of Toronto, is the first independent service provider to deliver an advanced IP multimedia communications suite to Canadian businesses.
“VoIP offers a lot of value to businesses,” says Nicole Mumford, vice president of sales for OneConnect. “It’s been around for some time. This isn’t a new technology, but it’s going through new adaptations and new evolutions. It hasn’t reached maturity in the general business market today.”
VoIP is a fairly complex technology requiring quality of service, traffic management and security, she says. Those things can make people hesitant about hosting the service. It’s crucial that the provider has the expertise and resources to not only implement VoIP, but to make sure it’s a good fit for a particular business.
“Making sure you can operate, manage and keep it up to date is a challenge,” says Mumford. “Not unlike any other service that is hosted, hosting Web services or IP multimedia offers a lot of value to the [customer]. They can get going faster and therefore take advantage of the savings, the business value of the productivity enhancements, the tools that really add to the business’s top and bottom lines.”
OneConnect targets its VoIP services to small to medium businesses with between 100 and 400 employees, or distributed businesses, such as retail or franchise operations. It says this is the business segment that can best benefit from the technology.
The company provides a turnkey solution, using IP phones, and takes care of upgrades and patches along the way. According to OneConnect, the constant upgrading and enhancing of the service is one of the key advantages of hosted services in general, and IP-based services in particular.
“We are continually adding new value as we go,” says Mumford. “That’s one of the things we think is important, because that’s the promise of IP, that you have access to new applications and features. You are never obsolete. That’s been typical of both kinds of premise-based systems, whether it’s a traditional phone system like a PBX or an IP-enabled IP-PBX. The cost isn’t the upfront cost, the cost is owning, managing and maintaining it.”
OneConnect chose the Nortel Networks (nortelnetworks.com) Multimedia Communication Server 5200 as a platform for delivering a converged solution of IP voice, call management, video, collaboration and conferencing services. The system is based on the Session Initiation Protocol, a standard for initiating a user session involving multimedia elements.
“We chose the Nortel platform because it’s SIP-based and because we felt there was a lot of openness in the architecture so that we could bring in new value-added applications like Multimedia Contact Center,” says Mumford. “Businesses want to be able to provide contact center types of environments to interact with their customers.”
Cost and the complexity of implementation were previously barriers to contact center functionality, and had almost kept that capability out of the reach of the small to medium-sized business, but that is no longer the case.
Using the MCS 5200, engineers at OneConnect built in a broadband services node and some advanced redundant switching architecture to provide a highly scalable solution that would be suitable for deployment from one user all the way to a full-size enterprise.
The broadband services node provides for centralized subscriber aggregation and management for up to 32,000 subscribers via cable, DSL, private line, dial-up, wireless or other access medium into a single platform. It also permits IP services such as firewalls, IP virtual private networks, network address translation, filtering and quality of service to provide high voice quality and multimedia services.
In addition to traditional telephony features and services, the IP-based network provides OneConnect customers with video calling, Find Me/Follow Me service to answer calls anywhere, Meet-me Conferencing to begin a voice or video conference without pre-arranged facilities, personal and group business contact directories and white-boarding or co-browsing and Web push services to enhance communications.
For those customers who don’t want to abandon their existing PBX or key system telephone infrastructure, the MCS 5200 allows for a flexible migration path to VoIP. Customers can use the multimedia services separately.
Nortel says its multimedia portfolio, including the MCS 5200 and MCS 5100, delivers advanced multimedia and collaborative applications through the same commercially available hardware and open-standards software. The portfolio is designed to deliver the scale and functionality necessary for service providers to address their target market segments.
Shortly after its launch in 2004, OneConnect signed a five-year agreement to invest $20 million in technology and professional services with the Toronto-based communications manufacturer.
“Service providers worldwide have endorsed Nortel Networks multimedia communications solutions, and this win with OneConnect is yet another example of how we are empowering our customers to drive new revenue opportunities and facilitate mass market deployment of new, hosted multimedia services,” Sue Spradley, president of Nortel’s wireline networks said when OneConnect made its commitment.
OneConnect offers its VoIP service throughout Canada and is involved in pre-launch activities with prospective partner organizations to offer the service in the United States.
In March, OneConnect and Telecom Ottawa joined forces to offer IP multimedia communications services to business customers in Ottawa and Eastern Ontario.
OneConnect says its service features high fidelity voice quality with near-zero latency because of Telecom Ottawa’s high capacity all-optical network. Multiple redundancies make it more reliable than traditional telephone services.
“We’re turning IP telephone services into a tool that businesses of all sizes can use to improve their bottom lines,” Telecom Ottawa chief operating officer Dave Dobbin said when announcing the venture as the first telco-provided VoIP offering in Canada. “While we certainly deliver the phone line replacement and long distance cost savings of other VoIP offerings, the benefits of our service go well beyond that.”
Customers will have access to a host of new plug-and-play communication services, including secure, unified voice messaging, file sharing, one-number service and collaboration and desktop video-calling, along with savings on long distance and conference calling.
The one-number, Find Me/Follow Me feature allows customers to use a Web-based interface to consolidate all their home, office and cell telephone numbers into a single number. When a call comes in it is routed to the first phone to be answered. And remote users can access all of the same features as they would from their office. OneConnect’s Mumford echoes the prediction of AMI-Partners about the future popularity of VoIP, and puts a first-hand spin on what’s happening in the converged world of voice and multimedia. And she offers some predictions about how the technology fits in with other hosted services.
“Voice and multimedia communications is a big part of the business,” she says. “The next step is to go beyond and think about other things like other network-based hosted services such as backup and storage, enterprise-grade hosted email services, grid computing and more shared services. Hosting is really evolving into the shared services or ubiquitous services arena. There are a lot of businesses that have a lot to gain from that kind of approach.”
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