XO Enhances VoIP Portfolio Appeal for Small Businesses and Large Enterprises

| Aug 14, 2009 | Business Network Services - U.S. | Competitive Update

| Analyst: Cindy Whelan

Current Perspective: Slightly Positive
Vendor Importance: Moderate
Market Impact: Moderate

Event Summary

August 12, 2009 –- XO has announced new VoIP features targeting multi-site businesses. XO has expanded its VoIP coverage area to reach all 50 states, enabling the carrier to deliver VoIP services in 80% of major metropolitan markets. In addition to an expanded footprint, XO has expanded the list of IP PBX platforms certified with its XO SIP trunking solution to add platforms from Avaya, Digium, NEC, Sutus and Toshiba. Finally, the carrier has added Automatic Call Routing, a business continuity feature that routes incoming calls to alternate numbers automatically in the event of an outage.

Analytical Summary

• Current Perspective: Slightly positive on XO’s enhancements to the reach and features of its VoIP portfolio, because XO’s broadened VoIP footprint and the expanded set of IP PBX platforms certified with its SIP trunking solution offers something to customers of all sizes. XO began building up its VoIP service portfolio in mid-2007 (see “XO Expands IP Services Portfolio,” September 28, 2007) and has since followed through on plans to expand the portfolio. The range of certified IP PBX platforms coupled with a nationwide reach to 80% of major U.S. metros will give small businesses as well as multi-site enterprises another alternative when evaluating VoIP providers.

• Vendor Importance: Moderate to XO because the carrier already offered VoIP services to businesses in 75 major U.S. markets; the carrier can now be a “one stop shop” for companies with distributed locations both in and outside its footprint. XO’s extended reach for VoIP services follows on the heels of the expansion of its MPLS/IP VPN service to all 50 states and 22 countries (see “XO Expands MPLS/IP VPN Service Nationwide and in 22 Countries via Partnerships with Two Leading Telcos,” August 6, 2009). XO's nationwide reach for VoIP and MPLS/IP VPN services will put it in a stronger position to compete for contracts from distributed enterprises.

• Market Impact: Moderate on business VoIP competitors because XO’s enhancements help it at the high end and the low end of the market. Larger, multi-site customers that previously would have looked to other providers with a more comprehensive reach can now put XO on their list of potential bidders. XO has certified a range of IP PBX products that include popular platforms from Avaya and Cisco, which are often favored by larger companies, as well as open source options from Digium Asterisk, a turnkey solution from Sutus, and platforms such as Fonality that are often favored by smaller businesses.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Tier 1 providers such as AT&T, Sprint and Verizon Business can remind customers that they’ve been serving a nationwide footprint for years. They can position XO as a relative newcomer in serving enterprise customers, and can imply that they have the depth and breadth of experience in serving out-of-region customers that XO does not.

• Competitors can imply that XO’s move to partner with another carrier to extend its reach is not only common, but the carrier is late in even initiating such an arrangement. Partnering with other carriers to fill in geographic coverage gaps something that carriers have done for decades, and the aspect of XO’s announcement that is the most surprising is that it hadn’t done this sooner.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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