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Last week I wrote Porkbellies and Hosted VoIP, where I asserted that hosted VoIP and hosted UC are rapidly becoming commodities. You and I know there is huge variation among service provider offerings, but for various reasons stated, the end user perspective typically boils down to price. I thought I would test this theory by taking a look at the market in Hawaii. Although most service providers insist they service a national (or larger) footprint, Hawaiian business tends to be locally oriented (Island Syndrome). Furthermore, the Hawaiian economy has been tough – business is earned not given. There’s no shortage of hosted providers there. As with most markets, the telecom services business is dominated by the LEC, in this case Hawaiian Telecom which offers hosted UC backed by a Broadsoft UC platform. The stage is set – a cash tight market, a dominant provider, and slew of independent providers selling hosted voice and UC. I checked in with a few providers to see how they are differentiating their services and competing in what I fear is becoming a commodity market. The reality is the firms I spoke with aren’t really competing at all, at least not like I was expecting. One of them doesn’t even list voice services on its website. Business is good, but from what I gather, the prospects aren’t insisting on head-to-head comparisons. These firms are competing the old fashioned way, via customer relationships and addressing a variety of customer needs. Hawaii is seeing an increase in hosted voice as is the mainland, but it isn’t as much about price there (and it isn’t a commodity). What surprised me is the differentiation isn’t in the voice part of the equation. I spoke with two large ITSPs: Systemmetric and Wavecomm Solutions. Both offer hosted voice services, one with a MetaSwitch and the other with its own Asterisk implementation. Both are offering basic hosted voice, that is, neither has yet expanded into a broader UC offering. Most providers on the mainland are under competitive pressure to expand in UC capabilities such as presence, video, and integrated mobility solutions. Both indicated the primary competitor isn’t other providers, but the legacy systems in place. Migrations to hosted aren’t about feature functionality, but cost reductions and office relocations. Neither company felt low pricing described their competitive strength. Both cited their technical prowess, loyal customer base, and breadth of services. Both combine their voice offerings with dedicated circuits and avoid BYO bandwidth, and both are seeing significant growth in data center services including co-lo and cloud based services. The trick, if that’s a fair word, is to create a comprehensive bundle that offers overall savings and benefits that shopping isn’t necessary (or simple). These vendors are completely avoiding the hosted voice price and feature battles we are seeing on the mainland. They are upgrading customer computing and access and offering a discounted voice solution as an added bonus. I got the impression that hosted voice is the fries to the data center burger. However, Hawaiian Telecom is preparing to stir things up, the company intends to go broad – with a full UC solution set in a hosted voice market. The company has undergone some major changes including recently listing on NASDAQ. My initial assertion was that hosted voice is rapidly becoming a commodity, differentiated (to the end user) only by price. Turning a highly complex and feature rich service into a price-based competition doesn’t seem to be in anyone’s best interest. However, I wasn’t looking at the whole service. In Hawaii at least, the providers are creating unique value, but not particularly via hosted voice. On the mainland, we are seeing more competition in unbundled services. Is bundling the key to differentiation? Are there providers successfully differentiating voice services without bundling?
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Communications Integrated to Optimize Business Processes.
UC integrates real-time and non-real time communications with business processes and requirements.
Uses presence capabilities for coordination, and presents a consistent unified user interface and experience across multiple devices and media types.
Learn more at What is Unified Communications all about?