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Viatel Lures SMBs to VOIP

Light Reading
News Analysis
Light Reading
5/31/2005

European carrier Viatel Holding (Bermuda) Ltd. (OTC: VTLAF) is the latest to latch on to the VOIP craze with a new set of business services (see Viatel Offers Business VOIP).

The announcement emphasizes a pattern emerging among the larger operators: Offer VPN services, follow up with Ethernet, then roll out VOIP (see Viatel Rises Again).

In this case, is launching not one, but three VOIP services aimed at the small to mid-sized business (SMBs): a straightforward VOIP gateway service, a hosted IP Centrex service, and a VOIP VPN. It’s essentially taking the same approach as with its recently-launched Ethernet services -- covering all bases by offering different types of service for different types of customer.

“We’re trying to bridge the gap from the early adopters to the more technology-cautious out there,” says Steve Best, chief technical officer. “Those that are more cautious can keep their current PBX and use the gateway service for certain destinations.” For those brave souls that are “willing to leap to VOIP” there’s the hosted service, and for multi-site businesses there’s the IP VPN service that essentially turns voice into just another application on the network.

Aware that the majority of enterprises remain wary of VOIP, Viatel is being cautious in the way it markets the services. “We’re not trying to thrust VOIP on people; we’re presenting it as a voice service which happens to use IP,” says Alastair Buck, Viatel’s director of voice portfolio services. “We’re trying to go mainstream on this.”

In the mainstream market, that is, outside of the early adopters who were playing around with the beta version of Skype, the perception lingers that the quality of VOIP calls still isn’t up to scratch. “That’s why we’re focusing on the trust factors and reassurance,” says Buck. "You really can't tell the difference -- and if customers want, they can make [the quality] as good as they want it to be."

Best takes aim at some of the other carriers (naming no names) starting to launch business VOIP services: “It’s not good enough to just offer a hosted service -- there are not enough customers out there.” That’s certainly an issue that has emerged in the residential VOIP market, which has thus far been driven by early adopters (see Does VOIP Business Add Up?).

“We expect people to use gateway service at first, then move,” Best says. “The aim is that users within the gateway service have no idea that [the switch to VOIP] has happened.”

Viatel is luring its customers to take VOIP by offering to run it over their spare bandwidth -- in effect as a way of getting something for nothing. If customers are already using all the bandwidth they’ve signed up for, Viatel is encouraging them to expand it and add voice.

It’s using Nortel Networks Ltd.'s (NYSE/Toronto: NT) CS2K softswitch to provide the service and kitting out users with IP phones. The plan is that it will later add support for other brands so that enterprises that already get their VOIP service from another provider can switch to Viatel and bring their own IP phones.

Of course, the main attraction of switching to VOIP is the price, and Viatel is quick to emphasize that it has the cheapest way of offering voice. Customers can choose a metered service, or pay a flat rate fee of £6.50 (US$11.75) per user, per month. That will get them up to 750 minutes for local, national, and some international calls (including Western Europe, Canada, the U.S., and Australia). Calls to mobile phones and other destinations cost extra.

There are several challenges to Viatel's approach. Naturally, the voice space is crowded with incumbents and upstarts -- VOIP- and TDM-based -- that promise a high-quality call for pennies (or less) a minute. It also has a challenge in convincing businesses that a "voice service that happens to run on IP" is a reason to switch service providers. Most serious businesses would consider it too expensive a risk to change a high quality, status-quo service for a cheaper approach.

With VOIP heading towards the mainstream, Light Reading is attempting to catalog the plethora of business and residential services emerging, ranging from full-featured business services with fancy IP phones to instant messaging-type soft clients using the Internet, in a new directory. Along the same lines as the Ethernet Services Directory, this new database will enable users to filter providers and service features in detail, and generate tables to compare them.

To list your services in the VOIP Services Directory, download this form and follow the instructions for completion and submission. Questions about the directory are welcome at [email protected].

— Nicole Willing, Reporter, Light Reading

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