Telecom Recipe For Tough Economic Times: Eat More Fiber
October 30, 2008
(2 votes, average: 5 out of 5)
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Small telecom companies are pushing ahead, while larger ones are having a tougher time finding traction. That’s what it seems like this week, as most telecom stocks rose on Wednesday in the face of an expected interest-rate reduction by the central bank but the best motion has been from the smaller guys. Level 3 and Time Warner Telecom rose 17% and 11% respectively on Wednesday, but AT&T and Verizon Communications sank over 1%, and Qwest went down 10%, saying it will cut 1,200 jobs to balance a declining demand for service.
The current economic climate only accelerates a market situation that has been ongoing for years. Large carriers have been losing customers to cable, VoIP and do-all wireless. While smaller telecom companies with fewer extraneous services can quickly package unified communication packages currently in demand, big carriers must first make cuts in order to regain financial flexibility.
While everyone is leaning out their diet, the big move is to a lot more fiber . Although AT&T TDM services continue to recede, they are seeing growth in wireless and data services. Qwest is significantly expanding their fiber network in 2009, justifying the cost with the expectation of reduced churn. When you’ve signed for phone, data and video, you are far more likely to stay on as a customer.
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Productivity is definitely the biggest benefit of VoIP for businesses. Our research shows that most small business (less than 50 users) do not save much, if any money by moving to Voice over IP, although cost savings is the primary reason why most companies decided to make the move.
It is only after making the move to VoIP that a company begins to understand the potential of their new systems. Managers see the flexibility, ease of administration and ability to incorporate phone system changes quickly and inexpensively, do companies actually begin to reap the productivity of VoIP.
I completely agree Dan. For smaller installations, VoIP isn’t necessarily cheaper. However, if you are looking for a new system, it is MUCH cheaper to go with most of the IP PBXs and VoIP than to go with TDM on a legacy system.
I remember buying a phone switch for my 100 person Call Center 10 years ago that cost us over $250,000 used! Today, you can get a system for $10,000 or less if you need to scrimp and don’t mind using soft phones.
Things have changed so rapidly that many smaller companies don’t even know what their options are. That will change very quickly as VARs and Agents begin selling the new services more aggressively.