By Konstantin Nikashov, VP, External Economic Activities, MERA Systems
VoIP should grow considerably in the next 3-5 years, as will the market share of hosted VoIP.
Europe welcomes hosted solutions more than other parts of the world, but hosted VoIP, even
there, is still used mainly by smaller businesses. European service providers expect that the use
of hosted VoIP services by large companies will grow given the speed and ease of deployment,
the limited capital investment needed, lower operating and maintenance expense and the
increasing availability of special features.
Hosted VoIP (voice over IP) services appear,
today, to be a competitive alternative to
premise-based equipment. The rapidly
developing market is expected to grow to
US$5.9 billion by 2010 in the US alone,
galvanising life into similar processes in
other countries. Indeed, hosted VoIP is a
type of service advantageous for all parties
involved. Software manufacturers, service
providers, and end-users that explore the
option, find it both beneficial and costeffective.
Manufacturers that design IP
Centrex solutions and VoIP softswitches
with partitioning capabilities obviously
win more customers. Renting out a VoIP
solution to other carriers is profitable for the
host provider since the business model can
be extended to a limitless number of clients.
Thinking rationally, enterprises are inclined to
use hosted VoIP services, because this choice
allows them to save system maintenance and
management resources (Figure 1).
Although European service providers are
adopting hosted VoIP solutions more eagerly
than their American counterparts, the VoIP
market in the region today resembles a patchwork
bed quilt in terms of bandwidth cost
prices, one of the key factors that influence
the choice of a host provider. Average
bandwidth prices allow a wider choice of hosts, which makes companies more open
minded about the whole idea of hosted VoIP
services. High bandwidth prices, as in the
UK, often leave companies with just one
possible modus operandi - sticking to proven
telco leaders. Consequently, enterprises there
reject hosted VoIP more easily, if they are not
happy with the offer. As a result, proliferation
of hosted VoIP services within Europe is now
an erratic process.
At the same time, software manufacturers say
there is a growing demand for VoIP solutions
with partitioning capabilities in Europe.
Small service providers that consider the
transition to next generation technologies see
the proposition to rent VoIP capabilities from
large carriers as a low-risk, low-cost way
towards communications convergence. Large
European service providers have
always benefited from hosted
VoIP (Figure 2) but they demand
high quality hosted solutions to
meet the needs of their numerous
customers. Moreover, although
European software manufacturers
have been designing VoIP
solutions with partitioning
capabilities for years, it is only
now that they have started to
revise the very notion of hosted
VoIP. The proposition has evolved
from a cheap offer to a premium
one. Slowly but surely, the region
is giving in to the temptation of
hosted VoIP.
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Carriers: play wise - learn to resize!
Initially, the hosted VoIP market has been
focused on SMEs (small and medium sized
enterprises) and European service providers
still stick to this unspoken rule. IP Centrex
(Hosted IP PBX) is a service traditionally
popular among businesses with less than 400
employees. However, carriers active in the
small business market in Europe face tight
competition from cable and other alternative
service providers. Therefore, telcos have to
look for innovative strategies that help them
maintain their market share.
One of the possible strategies is to be very
scrupulous about choosing the hosted VoIP
solutions they deploy. Apparently, IP Centrex
solutions with the most appetizing mixture of
features attract more end-users. The ability to
offer enterprises advanced features, such as
‘find me/follow me’, integrated with email
applications, user-friendly Web interfaces and
various dial plans is a competitive advantage
for carriers hosting IP Centrex services.
Another strategy is to reconsider the current
business model. Offering a hosted IP PBX
to large enterprises rather than to SMEs is
becoming more popular in Europe. On the
other hand, large service providers often opt
to rent out, virtualise, VoIP capabilities to
smaller telcos. The latter option seems even
more lucrative when host carriers realize that
apart from fees paid by the enterprises they
get increased traffic volumes generated by the
growing customer base.
Enterprises: a penny saved is a penny earned
Carriers still see SMEs as their main target
audience for hosted VoIP solutions, but today’s
market challenges make service providers
broaden their horizons in terms of defining
their customers’ profile. Small businesses
always welcome hosted VoIP solutions.
They would rather rent a hosted IP PBX and
pay for the number of lines they really use -
without incurring additional costs - instead of
employing a sizeable IT staff to take care of a
premise-based PBX deployment, monitoring,
management and upgrade. Large companies
might have sufficient resources to deploy
their own solutions, but
renting VoIP capabilities
might also be quite costeffective
for them.
While small enterprises
usually choose to rent a
VoIP solution only when
some significant event
forces them to - end of
lease or Centrex contract,
or a relocation - larger
organizations opt for
hosted VoIP solutions to
deal with their immediate
business requirements
without the need to make a
sizeable investment in equipment, operations
and maintenance. The use by large enterprises
of hosted VoIP solutions will certainly begin
to grow throughout Europe in the near
future. Given the cost advantages, the ease
of installation, operation and maintenance,
hosted VoIP services are likely to benefit
almost any kind of company irrespective of
its size.
Although hosted VoIP is still considered a
budding market, European service providers
should not be in a hurry to write off the
novelty. Once it is treated as a real alternative
to premise-based equipment, hosted VoIP
brings additional revenues, efficiently
addresses market challenges and offers a
variety of new business opportunities to
explore.
