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At this time of year we’re all evaluating the current year’s results and planning how best to move forward in 2010. Overall IP communications growth has been very positive.
I’m sure that many of you have seen the Infonetics report indicating significant growth in VoIP and unified communications – with revenue exceeding $21 billion in the first half of 2009. They forecast that the second half of 2009 will top $22 billion—7.3 percent growth in just six months.
Many of us have experienced similar growth rates in our businesses. We are all well positioned to leverage this growing demand for IP-based communication services.
At BroadSoft we are very pleased with where we’ll end 2009—most likely up 26 percent year-over-year in shipped lines. More encouraging is comparing that result to PBX shipments, which are down about 20 percent.
These statistics reflect a shift in the communications industry. End-users are seeking more interactive, advanced communication solutions. BroadSoft has kept pace with solutions that are designed to delight the end-user.
As we prepare for 2010, it’s a good time to share our thoughts on the current environment and our strategies for moving the communications industry forward. There are key indicators that IP communications solutions are the future of our industry.
Our mutual growth starts with broadband adoption. Fixed broadband penetration is about 440 million subscribers today, and it is expected to grow to more than 600 million by 2013. Today VoIP is provided on approximately one-third of all broadband lines.
Broadband penetration will continue to grow at a rapid pace. There will be exponential growth of mobile broadband and new devices. As rich communication options become available, they will require broadband access to ensure a superior user experience.
As end-users quickly embrace IP and hosted communication services, service providers are well positioned to focus on innovative services and applications that deliver greater value to consumers. We must all ensure that we evolve our network architectures so that products and solutions easily integrate with new applications that can be delivered quickly and inexpensively.
To build on our business success, BroadSoft will focus on four key areas going forward:
- Smart Devices – new innovative multimedia, always-connected devices
- Personalization – the ability for users to customize communication services for their devices and preferences
- Rich media – moving beyond voice to video, messaging and content sharing
- Mobility – communications anywhere, anytime and any device
Our goal is to enable service providers to integrate a set of smart devices with network services to maximize the user experience. You will see BroadSoft define solutions in which BroadWorks services complement our partners’ smart devices. We are working on end-to-end solutions that are pre-integrated with partner devices to ensure that service providers can take them to market quickly. As the penetration of smart devices increases and end-users have multiple devices, it becomes more important to ensure that service data end management is centralized.
Storing data directly on devices is problematic due to the need to synchronize the data between the devices—for example, the problem of synchronizing contacts across two mobile phones. It’s better to provide an end-user with a service profile in the network. A single service profile will work across all of the end-user’s devices—their desk phones, soft clients on a netbook, IP media phones, smartphones, connected consumer electronics and so forth. With a network-based service profile, end-users can configure their social interaction or communication preferences. Basically they can define the how, when and where rules for their communication services.
BroadSoft’s strategy is to transform BroadWorks from a VoIP platform to a multimedia, real-time communications platform. The goal is to provide a comprehensive set of user and group features that work independently of the medium. For example, simultaneous ringing should work for voice calls, video calls, text messages and content sharing. Smart devices working together with hosted services will deliver a superior user experience.
It is good to talk about where we are going, but it is always better to SEE where BroadSoft is focused. We just demonstrated more than 25 innovative new solutions at our recent users’ conference. Here are two applications that will give you a sense of the evolutionary trend.
Hosted Home Monitoring . See how a home monitoring system can be converted to a surveillance tool to care for your home and watch over family members.
The Mobile Office. Imagine a more flexible and productive work environment through UC solutions for the Mobile Business.
So our strategy on the user front is to enable a smart user experience, which will be critical to success. Our focus is on communication services that are intuitive, easy to use and available from any device.
With a 10X increase in transmission speeds and a significantly lower cost per bit, Long-term Evolution (LTE) represents a tremendous opportunity for operators given the prospect of converting more than 4 billion mobile subscribers worldwide to 4G or fourth-generation technology. The evolution in wireless communications is driving operators to change the way voice services are delivered.
Voice over LTE is an important topic for providers today. LTE is all about data so trafficking circuit-based voice services onto IP networks is a big issue. There are a number of technical and business challenges associated with Voice over LTE. While there are questions over when Voice over LTE will be deployed, one of the big technical impediments until recently was a unified standard.
A few weeks ago a consortium of service providers, equipment vendors and device manufacturers came together in support of a standard for delivering voice and SMS services on LTE networks, One Voice. The One Voice specification will use components of the existing IP Multimedia Subsystem (IMS) framework (which already defines how to provide data, voice and multimedia content over IP) to route voice calls between circuit switched and IP networks…meaning LTE mobile calls will become VoIP calls.
Prior to One Voice, a competing approach — the VoLGA (Voice over LTE via Generic Access) initiative — was put forth as an interim LTE voice solution using existing circuit-switched networks …instead of IMS. VoLGA supporters claim this would allow operators to get there sooner rather than later. While we understand the problems VoLGA attempted to address, we think they’re greatly exaggerated. Since the One Voice announcement, many in the industry are now questioning the livelihood of VoLGA.
In our opinion, VoLGA’s time has passed. Here’s why…
- T-Mobile is the only operator backing VoLGA. Now compare that to the list of heavy hitters behind One Voice…AT&T, Orange, Telefonica, TeliaSonera, Verizon, and Vodafone.
- The addressable market for VoLGA is minuscule compared to that of One Voice. Handset manufacturers and network equipment vendors follow the lead of service providers. Given the first point, it is obvious where the opportunity is.
- Given VoLGA is a temporary solution, vendors are not likely to invest in it — innovation will occur with One Voice though.
- IMS is MORE mature than what VoLGA proponents pushed. BroadSoft has more than 50 live IMS deployments worldwide and with an inside view of 450+ providers’ network roadmaps, we can validate this is real. Many carriers in the US and most European providers have already deployed IMS.
As providers continue to lose landline assets and look to collapse their networks into one, IMS is critical. Since IMS simultaneously serves broadband wireline and LTE wireless networks, this provides operators with a path to service convergence. Fixed-line providers have been moving in this direction for some, and now converged and mobile operators need to follow suit. This is huge opportunity for them.
BroadSoft believes One Voice is the best approach for delivering voice and SMS services on LTE networks and will help accelerate the process of moving to all-IP. Providers should not be sidetracked with an interim solution that doesn’t address the primary goal.
UPDATE – It’s really dead now – Ericsson leaves VoLGA Forum, from Unsprung: http://bit.ly/4nSnAI
In the coming months, cloud-based enhanced services like Google Voice are poised to fundamentally change the landscape of the communications industry. This presents both a threat and opportunity to traditional, mobile and fixed line carriers, faced with decisions about adjusting their strategies in this new environment.
BroadSoft sees several possibilities:
- Resale – The traditional service provider engages in a resell arrangement with Google for Google Voice.
- Replicate – The traditional service provider replicates the Google Voice functionality and delivers a comparable offer.
- Differentiate – The traditional service provider combines the concept of Google Voice with assets that are unique to them.
The last option is obviously the one we recommend…. because there is a clear path for providers to pursue. Here’s why: while Google Voice certainly has a number of things going for it – the Google brand and the free factor being the most compelling, as well as integration with Google apps –there are a number of ways in which it falls short.
The most obvious is the need for a new phone number—an obstacle for both businesses and consumers. Another hurdle for both groups is the clunky factor—created by the fact that most Google Voice activities (voice call and SMS) need to be initiated through the web portal. The solution also lacks several important business features such as auto attendant, attendant consoles and corporate directories.
When you put these factors together and then consider the existing strengths that providers bring to the table – the trust factor, a proven track record of reliable service, and a traditional customer support model – service providers are well positioned to use the buzz and demand that Google Voice is creating to their own advantage.
Google Voice is not a passing fad – it’s going to catapult the market into wanting and soon after, needing enhanced VoIP services delivered from the “Cloud”. But who better to deliver on this promise than the service providers who have been doing this in small pockets for a more than a decade?
If you are not familiar with super blogger Andy Abramson’s Voice 3.0 Manifesto – I recommend you take a look at an interesting blog post from Alec Saunders’s SquawkBox that crisply captures the premise. At a high-level, the concept centers on three main tenets – the given being that carriers will survive. Second – they must change, even more than they have, what they offer customers. And lastly – and perhaps most importantly is that they need to see their platform – as just that – a foundation for applications that enhance both business and personal communications. This means it’s time they boost their interest in working with and supporting the third-party developers who bring these applications to market.
The good news is that many providers are already embracing this – not just the newer next-gen service providers– large Tier 1 operators like Orange have been early adopters in this area.
However getting to the next level will take work and several significant commitments on the part of carriers. First, they must open their networks, then they need to create channels that provide an easy path for developers to connect with them, and lastly, they must make the user experience the top priority. Let me expand on each point.
Open Carrier Networks — This is a critical requirement. A carrier network can’t be a platform unless it’s architected as such, obviously. BroadSoft supports the “carrier is the platform” requirement via the technology leg of the BroadSoft Xtended program. Fully-documented RESTful APIs built into the core platform allow a BroadWorks-powered service provider to enrich their offer with external applications.
Linking Developers and Service Providers — Linking developers and service providers is also of great importance since very few providers will have the time, resources or interest in developing all of the apps consumers and businesses are demanding. Some providers, like Comcast, are acquiring applications (see their Plaxo acquisition), others have the internal R&D staff to write their own applications, but the reality is that because of limited engineering resources and lack of domain-specific knowledge, most service providers will need to partner with third-party developers to bring apps to market.
BroadSoft supports this ‘meet up’ of service providers and developers through the second and third legs of BroadSoft Xtended – a Developer’s Program that gives developers all the code, documentation, and test beds needed to build innovative apps, and an e-commerce-enabled Marketplace that allows service providers to launch their own apps stores with third-party apps sourced through the Xtended program.
The User Experience — Finally, the user experience is ultimately what drives success…it’s not the technology mash-up. What BroadSoft brings to the table is not only Xtended-powered integration into the Apps service providers’ customers use every day (Microsoft Office, Salesforce.com, Sametime, and on and on), but also integration into the Devices their customers use every day (video phones, mobile phones, smartphones, IP phones, televisions, and cool new devices like the ‘fourth screen’ by Openpeak shown at Connections). Our ecosystem, and unique relationships with device vendors, means we’re committed to making sure innovative communications apps aren’t web-only, but are tightly integrated into the myriad of devices used today…to ensure a seamless user experience.
We expanded on these concepts at our executive users’ conference last week, Connections 2009, demonstrating how the integration of Web 2.0 technology, independent developers, and devices result in compelling apps and a unified user experience. In our coveted Show Me the Apps session, we brought this to life showcasing several innovative solutions, including a new hotel hospitality application from Ingenius and a powerful doctor’s office prescription management application from DiamondPhone. Both are practical examples of the integration that is possible as a result of the Xtended-powered linkage between developers, BroadSoft and service providers.
Finally back from our annual executive users’ conference, I’m still running on the energy from this year’s event – our biggest and best so far. We had almost 800 attendees from 30 countries this year spend two and half days with us. More than 60 exhibitors filled the Solutions Showcase hall, which industry analyst Jon Arnold claims in his wrap-up conference blog post generated more buzz than SUPERCOMM.
While there were a number of insightful and exciting presenters, such as Nicholas Carr’s keynote and our much-anticipated Show me the Apps demonstrations, the most satisfying part of the conference for me was the overall enthusiasm and validation of how BroadSoft and its partners are driving innovation in the communications industry. While quality and reliability are still important in telecommunications – we see a great opportunity in enhancing the user experience. As most conferences promote vaporware and talk in the future tense, Connections 2009 showcased the consumer and business communications applications of tomorrow …which are ready for service providers to take to market today.
I heard throughout the event that Connections has become the de facto IP communications event …as it brings the best and brightest minds in the industry together to share best practices, learn and collaborate. At BroadSoft we see our role as being the center of this ecosystem, facilitating important dialogue and providing a core platform in which others can innovate off of, all with the objective to enhance the communications experience of end users.
I want to extend a big thank you to Microsoft, our event sponsor for the second year, along with our other sponsors, as well as to our customers, some of who flew across the globe to be with us. Without their support, Connections would simply not be possible.
Michael Tessler
Scott Hoffpauir
Leslie Ferry
Alex Doyle
Curtis Hartmann
Shirish Andhare
Paul Adams
