Covad Accessorizes Its VoIP Options with VoIP PBXi Plus

On January 19th Covad announced Covad VoIP PBXi Plus, a business-class offering aimed at small businesses and distributed enterprises with existing on-premise phone equipment. Covad VoIP PBXi Plus runs over Covad's Voice-Optimized Access (VOA) T1 lines. This product is based on the Covad hosted platform and supports both the features of the PBX system and some of its own, including new online management and configuration capabilities.

Recommended Competitive Responses

► Covad competitors should point out that among the underdeveloped elements of PBXi Plus - lack of SDSL support, vague enhanced feature availability - there’s also a lack of integration with Covad’s Web dashboard portal, already online for vPBX, which brings audio and Web conferencing, call log information, find me/follow me, and hosted voice mail to customers.

► Covad competitors can throw FUD (fear, uncertainty and doubt) on PBXi Plus by pointing out the fact that Covad doesn’t offer it over SDSL, even though the service is built on Voice Optimized Access technology, which supports both T1 and SDSL.

► Considering the importance of Covad’s hosted Sylantro platform to the overall service, Covad has released few details on just what enhanced features customers can expect aside from those enabled by their own PBX.

Recommended End User/Customer Responses

► Small businesses should take a look at Covad’s VoIP PBXi Plus. IP-based, dynamically allocated bandwidth with integrated access T1 isn’t always the best deal in town (sometimes a T1 for voice and ADSL for data is a better bet), but adding VoIP features make this an attractive deal, especially since PBXi Plus carries the features of the customer’s PBX and those of its own hosted platform, augmenting the total functionality available to the customer.

► Customers should evaluate VoIP PBXi Plus carefully, as Covad has been a bit unclear as to exactly what features are available through its hosted Sylantro platform. Its press release was extremely vague, making reference only to “new online management and configuration capabilities.” This gives the customer no sense of the individual features available, nor those for the administrator, or any sense of the programmability involved, if any.

► Customers need to be aware that the service is only certified to work with a particular Cisco IAD. If customers choose to go with a different CPE device, Covad requires the customers to sign a non-standard service addendum.

Verizon Quietly Completes MCI Merger

On January 6th Verizon Communications Inc. and MCI, Inc. closed on their merger following the completion of federal and state regulatory approvals. Following the merger, Verizon, which continues to be based in New York, has approximately $90 billion in annual consolidated operating revenues and approximately 250,000 employees, serving customers in 150 countries. Verizon Business is the name of the new unit encompassing medium-large business and government customers of the former MCI as well as the former Verizon Enterprise Solutions Group.

Recommended Competitive Responses

► The new AT&T needs to stress that, although it may be number two overall, it is still number one in business network services, with an enterprise business that is larger than that of the former MCI.

► Sprint, Qwest, and other smaller IXCs need to highlight the fact that bigger is not always better, and while the two mega-carriers dual for dominance of the large enterprise market, the second tier operators can focus on providing superior service to existing base of customers of all sizes.

► Foreign PTTs such as BT and international carriers such as Equant need to stress that Verizon may be one of the largest U.S. carriers, but it is not number one overseas.

Recommended End User/Customer Responses

► Customers of the former MCI can rest assured the financial worries are over, but should cast a wary eye on management changes and look for continuity in account teams. Customers can take comfort in the fact that MCI’s most experienced technology executive Fred Briggs will be in charge of the operational side of the new Verizon Business networks, in whatever form the business unit ultimately emerges.

► Verizon enterprise customers should be on guard for any risks of disruption that may be caused by efforts to integrate the two company’s networks, and seek assurances that any forced migration from one network to another will be seamless for their subscribed services.

► Customers of other major business carriers such as AT&T, Sprint, Qwest, or BellSouth should entertain sales calls from the newly combined Verizon Business account teams, if only to compare with their current services contracts, and to exert leverage on their carrier’s sales reps for better terms when negotiating contract renewals.

Fixed Wireless Broadband Experiences an Investment Baby Boomlet

First Avenue Networks, IDT Spectrum, and XO Communications are major holders of fixed wireless broadband spectrum licenses in markets nationwide. These carriers are coming back onto the scene after spending several years away from the public eye. Investors appear to be buying into fixed wireless again, particularly in unlicensed spectrum, where they appear to be looking to ride the rising tide of activity in fixed wireless broadband around unlicensed national information infrastructure (UNII) 5.2/5.8 GHz spectrum.

Fueled by the hype of equipment standardization under WiMAX, a mix of innovative small players is establishing itself in metros around the country, and big incumbents are also dabbling in fixed wireless broadband. These factors suggest that there could also be more action at 24 GHz and above, where licensees hold as much as an entire 1 GHz of spectrum to offer business services at fiber-equivalent speeds.

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Level 3 Spends a Little to Gain a Lot with Progress Telecom

On January 26th Level 3 announced that it has signed a definitive agreement to acquire all of the membership interests of Florida-based wholesale network services provider Progress Telecom for $137 million in cash and stock. Progress Telecom is jointly owned by Progress Energy and Odyssey Telecorp, and generates approximately $70 million in annualized revenue. Network integration efforts are expected to begin in 2007, after Level 3 has completed the WilTel integration.

Recommended Competitive Responses

► AT&T, MCI, and BellSouth have about a year before the Progress Telecom and Level 3 network integration will begin. During that year, Level 3 is going to be focusing primarily on the WilTel acquisition rather than Progress and its customers, giving other carriers a chance to reinforce existing relationships and approach Progress Telecom customers with attractive packages and incentives to switch.

► Broadwing, Global Crossing, and other CLECs that are not in the midst of integration, consolidation and general upheaval can present themselves as safe, stable alternatives to Level 3 and Progress Telecom customers who may be concerned about deterioration of service as a result of distractions associated with the merger.

► All competitors in the region can point out that Progress was a nicely growing and profitable regional carrier that has been taken over by a large unprofitable national operator that may bleed the company of resources rather than investing for the future.

Recommended End User/Customer Responses

► Wholesale customers such as Vonage, Cox, and Comcast can initiate discussions with the Progress Telecom sales team to look to expand coverage in southeastern markets. Although they may already have wholesale relationships in place, Level 3 may be able to provide them with an attractive alternative that will convince them to move their business to Level 3.

► Latin America, specifically Brazil, is one of the fastest growing VoIP markets in the world. Existing Level 3 customers can utilize Level 3’s newly garnered subsea cables to expand voice and data services to this region.

IBM Gives Vote of Approval for Yahoo, Google, and AOL IM Services

On January 23th IBM announced its customers would soon be able to chat with instant messaging (IM) users from America Online, Yahoo, and Google. IBM announced plans by midyear to allow its Lotus Sametime corporate IM system to interoperate with the three consumer platforms, marking the latest move to break down barriers that have separated IM audiences from one another.

Recommended Competitive Responses

► The obvious move from IBM’s chief rival, Microsoft, is to eliminate IBM’s competitive advantage and bring the absent providers in its alliance with Yahoo! into is foray, including Google and AOL. Microsoft should also pick up the pace of its Q2 2006 rollout of its Yahoo! alliance to gain first mover advantages.

► All IM competitors in general will need to evaluate their own messaging strategies in light of this move from IBM and earlier moves from Microsoft, as this has the means of shifting the market in a new direction that these players can now dictate more easily.

► The closest public IM users have come to IM interoperability is through IM managers, such as Trillian, which lets users combine their AOL AIM, Yahoo! Messenger, MSN Messenger, IRC, Jabber, and ICQ identities under one console. Trillian should look to play up this fact in its marketing efforts and look to be the front end to these multiple systems.

Recommended End User/Customer Responses

► A customer wanting to avoid joining the mindset of IBM or Microsoft can look at alternative service solutions such as Trillian or Meebo, which allow IM users to have IM interoperability, often combining AIM, Yahoo! Messenger, MSN Messenger, IRC, Jabber, and ICQ identities under one console.

► Many users will be pleased with the news of this pending interoperability, but for most users, the software is free, so it has been only a minor annoyance when contacting someone on a different messaging system. Given that users may still have months to wait until this interoperability is available (mid-2006), users that need this service today will still need to look towards alternative providers.

AT&T Expands BusinessDirect to 88 Countries, Adds New Features

On January 10th AT&T enhanced its AT&T BusinessDirect customer network management portal, including AT&T BusinessDirect Map International and AT&T BusinessDirections, to include views of network operations in 88 countries and to allow customers to collaborate with a service rep over a secure Internet connection directly from the portal interface.

Recommended Competitive Responses

► Competing carriers such as MCI should highlight their own customer network management capabilities and be willing to provide direct comparisons with AT&T. Where they lack certain features in one area, carriers can highlight superior aspects in other areas.

► International carriers such as Equant or BT-Infonet should point out that AT&T has a smaller international presence, and that they have much more experience working with in-country carriers in a multitude of nations.

► Where possible, competing international carriers should seek to establish MPLS network interconnections with partner carriers to extend the reach of IP VPN networks into additional countries, as a means of countering AT&T’s overseas growth.

Recommended End User/Customer Responses

► Multinational corporations should look at the extension of AT&T’s BusinessDirect management portal to 88 countries and compare that international network map to one of their own. But one nice feature by itself should not be a reason to make a networking purchase decision, although it could be the basis for an RFI comparing other carriers’ customer network management systems.

► Existing AT&T customers should be wary about being too quick to renew existing contracts online, unless the network is small and uncomplicated. For larger, more complex network services, customers should use contract renewal time as an opportunity to press the account rep for concessions, since any leverage will disappear the moment the contract is signed.

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