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How Broadband Stimulus Could Bolster the VoIP Market: 8x8

TMCnews Featured Article

July 20, 2009

How Broadband Stimulus Could Bolster the VoIP Market: 8x8

By Michael Dinan, TMCnet Editor

With a nudge from federal officials as to Internet telephony’s usefulness as an application, the proliferation of broadband Internet – an effort now underway in earnest, with stimulus funds behind it – could help boost the VoIP market, officials with the Santa Clara, Calif.-based provider of Packet8 business, mobile and residential broadband communications services told TMCnet in an interview.

Huw Rees (News - Alert), the vice president of business development at 8x8 Inc., also told TMCnet that while his company applauds efforts to bring broadband Internet to the nation’s more remote areas, it’s still critical that the government focus on teaching people about applications they may want to use.
“We believe VoIP is one of many compelling applications and would love to see VoIP projects funded with some of the stimulus money,” Rees told TMC President Rich Tehrani in an interview, printed in full below. “We also believe that (President Barack Obama) should instruct the new chairman of the (Federal Communications Commission) to repurpose the Universal Service Fund to provide high speed Internet access to every American in place of old (‘plain old telephone’) service.”
Rees – whose company is a platinum sponsor of ITEXPO West 2009 and who is speaking during the September event during a session called “Addressing the Challenge of Hosted IP-PBX in the Large Enterprise” – also told Tehrani that the small- to medium-sized business segment – because Internet telephony calling penetration is still very small in it – represents the strongest growth market for VoIP services.
Their full exchange follows.
Rich Tehrani: What has the economic crisis taught you, and how has it changed your customers?
Huw Rees (pictured left): The key to surviving and even prospering during the economic crisis for companies like 8x8 (News - Alert) is to make sure, above all else, that we are providing true, quantifiable value to our customers. This may take the form of attractive pricing compared to traditional telephony solutions or innovative new features that really enhance the productivity of our customers or a combination of the two.
There is not much 8x8 can do about customers who go out of business due to their own specific issues associated with the economic crisis, but we can make sure that we give our customers some of the best, most cost effective business tools to enable them to survive and thrive. We can also encourage them to let their other small business colleagues know that the 8x8 solution is simple to set up and will give them a competitive advantage in the marketplace.
RT: How is this down economy affecting your decisions to reinvest in your company or market, if at all? Where will you invest?
HR: 8x8 continues to market its services aggressively, the good news being that the cost of advertising has fallen compared to previous years. As an example, the bid prices for search engine marketing has declined. We will continue to invest in R&D and in our service delivery for our flagship hosted PBX service, Virtual Office. Given 8x8’s very healthy balance sheet and strong cash position, 8x8 will also be interested in potential asset purchases at bargain basement pricing.
RT: What’s the strongest segment in the communications industry?
HR: 8x8 is focused on the SMB segment, which we believe to be the strongest and highest growth market for VoIP services. The penetration into this segment is still very small, so the opportunity for growth is significant.
RT: With the rise of smartphones and netbooks, many wireless technologies, such as WiFi (News - Alert), appear to be poised for rapid growth. For example, we’re seeing more and more airlines add in-flight WiFi. In general, how widespread should WiFi be, in your view?
HR: WiFi and WiMax should potentially become ubiquitous across the United States and the world. The penetration of these technologies and the advances in roaming from one hotspot to another could severely impact the need – or at least diminish the pricing – of 3G and 4G mobile networks. 8x8 is an IP-centric company, so we applaud any advances in delivering reliable high speed Internet to the consumer and SMB markets.
RT: Which nation or region of the world will present the largest opportunity for your company in 2009/10?
HR: The United States.
RT: In what ways is President Barack Obama helping or hindering the technology markets? What more can he do?
HR: 8x8 applauds the new stimulus package NTIA broadband initiative to expand the availability of high speed Internet access across the United States, but one thing we have learned from California’s similar initiative is that access to broadband must also be followed by compelling applications to encourage people to use it. We believe VoIP is one of many compelling applications and would love to see VoIP projects funded with some of the stimulus money. We also believe that the President should instruct the new chairman of the FCC to repurpose the Universal Service Fund to provide high speed Internet access to every American in place of old POTs service.
RT: What device or devices do you use, and what do you wish you used?
HR: I use a standard Dell Latitude notebook PC, an 8x8 6757i IP phone – manufactured by Aastra – and an Apple iPhone. I don’t have any desire for any additional devices, but I am looking forward to the more widespread adoption of G.722 or HD voice which 8x8 is planning for release later this year.
RT: What has the iPhone 3G taught us? I know it’s very new, but what about the Palm Pre? What are we learning from the smartphones based on the open source Google Android (News - Alert) platform?
HR: Theses phones have shown us that compelling applications packaged in a sexy way and marketed properly will win in the market and not simply because they are low cost. It goes back to the first answer in this series of questions – you must provide value to your customer. It also shows that platforms do not have to be completely open source to be successful. Apple’s app exchange allows for independent applications to be developed using high quality APIs rather than complete open source. This preserves the quality that is critical to Apple’s reputation and could be a model for other companies such as 8x8 to emulate.
RT: I understand you are speaking during ITEXPO West, to be held Sept. 1 to 3 in Los Angeles. Describe your talk and tell us what companies or people should attend.
HR: I will be talking about hosted PBX in the enterprise market. This is a significantly different market from the SMB and there are a whole host of issues that a service provider must address before tackling this market. Simply re-packaging an SMB solution won’t work, as the enterprise buyers are more sophisticated and their demands are much greater. For example, scalability, redundancy, quality of service, availability and security are all major issues that must be addressed in detail if a hosted PBX service is to be marketed to an enterprise. This talk is aimed at service providers and enterprise customers who are looking at this market or solution and who would like more detail on the issues I have described here.
RT: Why should customers choose your company’s solutions? How do they justify the expense to management?
HR: 8x8’s solution typically saves 90 percent in start up costs compared to more traditional solutions and 50 percent in monthly service fees. Usually these facts alone will demonstrate to a buyer that the expense is more than justified. In addition, the fact that we currently serve more than 17,000 SMBs, that we are a stable, profitable, publicly traded company should help them feel comfortable that we will be around to serve them for many years in the future. Once they become a customer, they will also find that we provide great value as opposed to just lower costs. Our feature set is long and the benefits our customers can derive by using these features creatively – with our help – will really provide them with increased productivity. Just call 1-866-TRY-VOIP.

8x8 Inc. is a platinum sponsor of ITEXPO West 2009 — the biggest and most comprehensive IP communications event of the year. ITEXPO (News - Alert) West will take place in Los Angeles, Sept. 1 to 3, 2009, featuring three valuable days of exhibits, conferences, and networking opportunities you can’t afford to miss. Visit 8x8 at booth #401 in the exhibit hall. Don’t wait. Register now.

Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan

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