Hosted IP telephony in the U.S. market continues to grow, but remains a business that many would argue has not yet achieved its potential. In fact, according to IDC, the U.S. hosted IP telephony and hosted unified communications markets represent an annual services revenue stream of a bit more than $500 million.

It would be reasonable to expect hosted IP telephony to reach $1 billion in annual revenue at some point in the near future, perhaps by 2014 to 2015 or so. Unified communications by itself is a bigger business, representing $1.4 billion or so, according to the Telecommunications Industry Association.

Videoconferencing service revenue likewise already stands at $2.6 billion, while web conferencing services now are a $2 billion annual revenue stream. Audioconferencing is a $3 billion annual revenues business. Taken altogether, conferencing is a $7 billion to $8 billion revenues business.

But much lies within the operational and marketing grasp of service providers who might be missing the mark in many cases, says management consultant Dan Sachar of Inzenka. In some cases, hosted IP telephony services are marketed to customers who actually have legacy equipment incompatible with a particular approach to hosted IP telephony, or sales representatives have no knowledge of the customer’s existing voice infrastructure, says Sachar.

In some cases, customers also are sophisticated about the difference between a traditional business phone system approach and a hosted service. But that awareness can be an obstacle, not an advantage. “After three years, a premises investment reaches breakeven with a hosted approach, and some potential customers know that,” says Sachar.

Also, too few providers attempt to consistently pitch features and values to the particular industry vertical, even though most features apply to any vertical. In other words, too many sales pitches start with features of the service, not the value for an end user.

At the same time, too few service providers have effectively created bundles that prospects say they are interested in. There is significant interest in bundled offers, says Sachar. To be sure, the “Internet access plus voice” bundle has been a staple of IP telephony offers for some years.

But prospects also are interested in phones bundled with broadband and hosted IP telephony. But 39 percent of respondents to an Inzenka survey said they were interested in data storage services and 20 percent to 22 percent were interested in security services as part of a bundle. Between 24 percent and 28 percent also were interested in data backup services.

The next wave of hosted IP telephony growth might well come in the under-penetrated segment of businesses with 20 to 50 employees, Sachar says, and simplicity also will be important in that segment, given that the economics of choosing a premises phone system get better as the number of users grows.

Join the Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *

Don’t Miss Any of Our Content

What’s happening with broadband and why is it important? Find out by subscribing to Telecompetitor’s newsletter today.

You have Successfully Subscribed!