Service providers jostle with telcos in voice

Carriers should find ways to work with equipment vendors and channel partners to offer co-branded services, says Frost & Sullivan.

SINGAPORE--Competition is intensifying for traditional carriers as Internet service providers (ISPs), systems integrators and platform vendors, make their foray into the burgeoning Asia-Pacific next-generation enterprise voice (NGEV) services market, says Frost & Sullivan.

New analysis from the consulting company reveals that revenues in this market totaled US$114.7 million in 2005 and is expected to reach US$1.13 billion in 2011.

According to the company, although the NGEV services market in the Asia-Pacific region comprises diverse countries with varying levels of adoption, the overall market is experiencing "strapping growth".

Frost & Sullivan added that the growth of the NGEV services market will be primarily driven by factors such as the growing demand for business voice services due to declining prices, the adoption of hosted telephony by new users, particularly small and midsize business (SMBs), and the migration of Centrex users.

Centrex refers to a set of specialized business applications built primarily, but not exclusively, for voice services where the equipment providing the call control and service logic functions is owned and operated by the service provider, and hence, is located on the service provider's premises.

Frost & Sullivan senior research analyst Krishna Baidya, noted in a media statement, that the Centrex market is fairly saturated and is expected to be largely replaced by products that offer enhanced features and cost benefits, leading to a technology shift from Time Division Multiplexing (TDM) Centrex to IP-based NGEV services.

"By 2011, we expect emerging IP-based NGEV services, including IP Centrex and managed IP-PBX, to account for nearly 87 percent of the total enterprise voice market in the Asia-Pacific region, up from a mere 15.7 percent in 2005," Baidya said.

As a result of this trend, traditional telecom carriers in the enterprise segment will face increasing competition, he said, where smaller emerging service providers, especially ISPs, are targeting SMBs by offering hosted telephony applications.

These products are frequently bundled with local calling capabilities, Internet access, a leased T1 line or DSL (Digital Subscriber Line), unified messaging and selected business telephony features, he added.

"Such bundled packages are offered at a flat monthly fee, and represent a competitive alternative to all these capabilities from multiple vendors," Baidya said.

He noted that at the same time, platform vendors are also continuously enhancing their offerings by adding new features such as unified messaging, Web-based service management and conferencing, in order to be more competitive.

Given the intense competition, telecom carriers may need to forge strong relationships with equipment vendors and channel partners to offer co-branded services.

Baidya said: "At this early stage of market development, NGEV service providers will need to build customer awareness, attract early adopters, and secure competitive market positioning.

"Strategic partnerships and alliances could facilitate better market penetration," he added. "Companies ought to focus on core competencies and find the most competitive position in the value chain."

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