ShoreTel and M5: Change In the Wind

With its acquisition of M5, ShoreTel’s new cloud division faces some integration and positioning opportunities. Currently, ShoreTel (700 partners) and M5 (100 partners) only share a small number of partners that offers both hosted and on-premise resold VoIP offers. 

M5 considers its go-to-market offer completely channel friendly; 70 percent of its offers, for which they receive a referral fee, are partner identified offers. These partners are never or almost never involved in the long-term support for customer service or renewal. M5, ShoreTel’s cloud division, handles quality of service, billing and customer support. M5 differentiates through its management of call quality (it owns the soft switches and PBX), data and the hops, providing live support and a view of customers. M5 uses phone and calls as strategic assets; however, the company does face the same problems other providers have when moving to cloud offers. 

The size of the legacy systems has changed because of demands for VoIP hosted offers; seats that were 20 to 50 now have increased from 50 to 500. Service providers are strategically positioned to meet enterprises’ SLAs for connectivity, and the expectation may be for more applications built on the relationship with the providers. However, the ability for providers to add managed offers to their connectivity offers is also hampered by traditional carriers’ sales teams generally not understanding the cloud or VoIP needs of their customers. While M5 is both a “provider,” hosting offers, it also is a manufacturer, and today, does not have a progressive service provider white label program. To be successful in hosted offers, providers need to develop new models to target and understand customers, their VoIP needs or PBX replacement requirements and how to proactively sell or manage the customers directly or offer white label SaaS offering from a company such as M5.

There are some best practices in cloud or SaaS offers in the market from which M5 can take a cue. Support.com offers a fully integrated OSS and BSS offer, which looks like a fully integrated provider offer but does not require changing the infrastructure or direct customer support from SPs’ sales teams. Support.com offers a SaaS based support team that looks and feels like the “provider’s” customer service but is in reality a sold, billed, hosted and offered by Support.com staff.

This model allows companies that have hosted offers to take advantage of trends:

• Enterprises moving to cloud offers
• Enterprises demanding SLAs for new applications like the ones provided by their telecom or carrier 
• Consolidation of providers will cause enterprises to demand more cloud offers from their providers
• Ability for providers to offer cloud offers and knowledge about their customers’ business processes and requirements are limited

M5 can improve its strategic reach to new clients by taking a page from white label offers and market to and support noncustomers with its own quality of service and sales program to spur growth and add value for customers already getting connectivity from traditional Telcos. M5, according to Keith Nealon, “is directly involved with cloud customers to ensure quality of service, support and escalation of real-time issues during a call.”

For more information about  ACG Research cloud service, click here or contact sales@acgresearch.net.

Lauren Robinette

lrobinette@acgresearch.net
www.acgresearch.net

Connecting America: Winners and Losers

The goal of the “Connecting America, The National Broadband Plan,” on which the FCC will be issuing a ruling on October 27th, is to bring broadband service(s) to nearly 100 million Americans who do not have access. As with any bill that hits Congress, all have the touch of special interest groups promoting their agenda. This bill is no exception.
One of the losers will be the small rural local exchange companies (RLEC). Why? Dig deeper in the plan and you’ll come across a “Notice of Proposed Rulemaking” (https://prodnet.www.neca.org/publicationsdocs/wwpdf/33111icore.pdf). To fully understand the repercussions of this document for RLECs one has to understand one of the major ways these companies make money.

Before fiber optics was widely used, carriers created Carrier Access Billing Settlements (CABS), which are a way to track termination fees (and origination as it pertains to toll-free calls). You use my network to terminate your customer or I use your network to terminate my customer. When you touch my network you owe me. When I touch your network I owe you. At the end of the month the call minutes that touched our respective networks and comparison on any overages are tallied and the companies settle payments. That’s CABs very simplified.

The RLECs receive more calls from ATT, Verizon, CenturyLink and other carriers than the other way around. At the end of the month or quarter these rural carriers can get hefty checks from the major carriers, which help to subsidize their network infrastructures and without which maintaining their existing customer base would be severely limited.
I recently spoke to the CEO of a RLEC and one of his big concerns among many is the slow erosion of his CAB settlements. This bill would add access fees and universal service fees to VoIP. The CEO estimates that over a four-year period his settlement agreements with ATT, Verizon, CenturyLink and other companies will drop precipitously, by nearly 80 percent.

The original purpose of VoIP was to avoid some of these access fees. Connecting America will benefit the large providers as they will see significant reductions in payments to RLECs while at the same time increasing access payments from VoIP service providers. These fees would, no doubt, have a negative impact on thousands of small and mid-sized VoIP companies and consumers by adding costs of doing business. Rural carriers manage all the customers’ complaints, service the current infrastructure, do the truck rolls and manage the overall satisfaction of their customer base. This bill, as it is written today, will affect their bottom lines and possibly put many of them out of business.

Broadband access for Americans should be universal if possible. I agree with and applaud this goal. Is there a way to bring all the benefits of the Internet to all Americans and not wipe out the RLECs or the small and midsized VoIP service providers? ICORE, Inc., believes it’s a noble and worthy cause to provide America with broadband access but not, however, on the backs of the small guys. Rather than funding this project through a government FCC mandate to the sole benefit of the large carriers, they propose that all instead abide by the same rules regulated through the PUC. In other words, let the states manage parity not the federal government. Second, enact strong penalties for the one percent of providers that are gaming the system and leave the 99 percent alone. And finally, have this commission exercise its authority to require VoIP, wireless and landline providers that use the public switched network to pay for that usage.

Tony Jones
tjones@acgresearch.net
www.acgresearch.net