Are Google Apps a Source of Rural Gold?

KANSAS CITY -- IP Possibilities 2011 -- Google (Nasdaq: GOOG) may not be the obvious business services partner for rural telcos, but through a partnership with NeoNova Network Services Inc. its Google Apps are becoming a new source of revenue for companies eager for new things to sell.

"We need to be able to work with partners, VARs and telcos being some of the companies we look at, especially since the telcos are already delivering broadband," says Jack Weixel, head of service provider markets for Google Enterprise. "But we can't address that market one-to-one."

Enter NeoNova, one of three companies through which Google sells Google Apps to telcos, cable companies and enterprises. The other two are Ikano Communications Inc. and Integrated Broadband Services LLC (IBBS) , the latter focused on rural cable operators.

NeoNova was originally born within Nortel as a means of getting telcos into Internet access, but was spun out in the late 1990s and became a division of Digitel Corp. In 2008, the company was purchased by an investment consortium led by Azure Capital Partners and Bridgescale Partners.

The firm targets smaller telcos with its applications packages, which include not only Google-based email and business tools such as Google Docs and Postini, but also other business apps such as data backup and storage, subscriber account management, personal website building and management, and community portals.

"We sell an ad-free product that is a value-added service people will pay for," says NeoNova CEO Ray Carey. "And then we add things to Google Apps that those products weren't designed to have."

More than just Google
Those extras include features telcos need such as: NovaSubscriber, an account management and provisioning platform; NovaSupport for customer support and ticketing; and NovaDesk, a 24/7 helpdesk. In addition, the firm provides a range of network management products for analysis, reporting and security, and professional services.

"Conceptually, what NeoNova is doing makes a lot of sense," says Bernie Arnason, an analyst with Pivot Media and long-time observer of the rural telco scene. "NeoNova has been doing this for a long time -- the difference now is that it's Google Apps. That's obviously a blue-chip brand they can leverage."

The Google brand represents innovation to the business community but needs the benefit of customer service and direct contact from the local telco, say both Carey and Google's Weizel.

NeoNova provides its software and, for three-quarters of its small telco customers, is also the helpdesk for their businesses. The company also provides staff training, marketing programs, network design and implementation and project management, and bills on a per-subscriber basis.

"For some of our customers, it's not a matter of skill sets, it's capacity -- they just don't have enough people to get everything done," Carey says. "We can handle that for them, so it's like time-sharing an expert."

To continue expanding what it offers, NeoNova also looks at 100 new technologies a year -- two a week, seen on "Technology Tuesdays" -- and shares what it learns with a council of 20 telco customers that meets quarterly to provide feedback.

"Our job is to tell them what is available -- they know their local markets," Carey says. "We grow with them, and if what we offer doesn’t work, we decline with them. We have great incentive to make it work."

There is relatively little upfront investment. Carey says he believes this is a model that "tolerates failure" and so encourages telcos to try a lot of different things, knowing some of them won't stick. But that's tolerable because there's no huge upfront investment: With the NeoNova model the telcos get to add a wider range of new services with little upfront risk but often with lower expectations of market penetration.

It's all part of monetizing the IP pipe in rural areas, to replace revenue lost with the decline of access lines.

Rural throttle?
NeoNova's next move will be more strategic for smaller telcos, Carey promises. The company is developing what it calls Speed Control, a software product that will be integrated into telco billing and authentication systems and allow them to implement billing that can be tied to time-of-day, day-of-week, network congestion or other factors.

"For many rural telcos, the bandwidth bottleneck isn't in the local access network, it's in their connection to the Internet," Carey says. "Speed control will allow them to throttle traffic at the upstream, not to keep people from using the service but to get people to pay for what they want to use."

By developing things such as data plans that mimic the "nights and weekends" voice plans of the past, rural telcos can start to even out their Internet usage and get individuals who insist on heavy usage at peak times to pay more.

"If you absolutely insist on downloading your movie on a Friday night, it will cost you more," Carey says.

— Carol Wilson, Chief Editor, Events, Light Reading

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