SMBs Seen as Fertile For VoIP Growth

Voice-over Internet Protocol (VoIP) start-up NuCall Communications is the latest major foray into the underserved small and medium size business (SMBs) market.

And though several challenges still hamper VoIP adoption in the massive SMB space, including unresolved regulatory and cost issues, many analysts and industry players agree that NuCall should face plenty of competition relatively soon.

“With major players entrenched in the enterprise and consumer segments, there is no doubt that the SMB space is a sweet spot for VoIP growth moving forward,” said Scott Testa, COO of Mindbridge Software, a Norristown, Penn., software company. “Remember, something like 98 percent of all businesses in this country employ less than 100 people. Still, it is a challenging space, with most SMBs lacking the IT infrastructure or deep IT resources and staff to plunge into VoIP.”

VoIP is a next-generation telephony architecture that utilizes standard Internet Protocol (TCP-IP, a packet transport protocol) to convert an analog voice signal into data packets, pass them over a data network in real time and assemble the packets into audible signals on the other end to complete a call. While VoIP uses the Internet transport protocol, VoIP traffic may, or may not, go over the public Internet.

NuCall will now provide its customers with a single point-of-contact for all of their communications by essentially repackaging VoIP services provided by Level 3 Communications.

Equally important, in terms of attracting SMB interest, NuCall said it would provide implementation analysis and architectures, provisioning, customer service and support to its customers.

By providing a managed, multi-faceted VoIP offering, NuCall is banking SMBs will see an opportunity to achieve substantial savings, while saving on IT costs.

“We come in offering a managed, full-service VoIP solution and cost reduction program that provides a demonstrable return on investment, operational efficiencies, and productivity tools,” said Paul William Gregory, NuCall’s chief executive.

“Not only do we feel this is a segment that has been overlooked, but we expect it to get crowded rather quickly,” said Robert Strayton, NuCall’s vice president of marketing. “I am sure in the next three to five years, there will be plenty of opportunities for mergers, acquisitions, and IPOs. But for now, we have focused on acquiring customers and keeping them happy.”

While NuCall offers what is essentially a turnkey managed service aimed at companies without a sizable IT force, it is by no means the first VoIP foray into the SMB space.

“We’ve seen efforts to capitalize on this opportunity before, such as 3Com’s NBX system, which has sold thousands of units, which is an internally deployed and managed solution,” noted Pierce Reid, vice president of marketing at Qovia, a Frederick, Md., company that provides VoIP monitoring services.

“Obviously, you need to have the ability to internally deploy and support these products,” Reid said. “But if you look at the SMB market as a whole, it’s a market where people are creative and quick moving to take advantage of technology that makes sense for their operations. So, I think that as more of these turnkey solutions become available, you will the momentum building.”

Meanwhile, despite the lucrative market opportunity for VoIP services in the SMB space, very real challenges exist.

For instance, outstanding state and federal taxation issues have yet to be finalized. Federal legislation is pending in both houses of the U.S. Congress. And there is uncertainly over whether carriers and service providers will be forced implement 911 emergency services, develop software to permit wiretapping, contribute to universal service funds, to name a few of the related issues.

“These all have the potential to increase costs, which small businesses are very conscious of,” said David Roddy, managing director of FTI Consulting’s telecom practice.

“However, I feel strongly that not only will the growth continue, but the big challenge is going to be avoiding a VoIP bubble over the next year. And as more entrepreneurs enter the field and SMBs adopt VoIP, we should see an extreme amount of pressure exerted on the federal government to keep regulations light and taxes low.”

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