Comptel: VoIP market shifting

LAS VEGAS--The voice-over-IP market isn’t generating the individual sales for non-cable VoIP providers, which is prompting many of them to pursue wholesale opportunities and business services such as hosted PBX offerings.

That insight comes from a company that has been providing on-site installation and technology support to VoIP providers as well as CLECs, integrators and value-added resellers. Justin McLain, executive vice president of Endeavor, said his company still counts many VoIP providers among its good customers, but he sees them struggling.

Endeavor was created from the professional telecom services organization of SSI that was divested in 2002, and has built up its company through acquisition ever since. Ninety percent of the company’s business comes from wholesale services such as truck rolls, inside wiring, installation and maintenance service. Endeavor has 350 direct techs and 9000 subcontractors, McLain said. “Any place you can throw a dart at in the U.S. and Canada, we can probably get a truck there,” he said.

Most of those services are provided on a white-label basis--service provider customers would prefer their customers not to know they’ve outsourced installation, McLain said--which makes it harder for the company to build on its reputation. Vonage is an exception to that rule.

“They actually want us to go in as Endeavor,” he said. “That’s been a great leap for us, and it was part of our evaluation for taking the business.”

Endeavor has been installing VoIP lines for Vonage in North America and will announce at next month’s VON show in San Jose that it will also install VoIP lines for Vonage in Canada. Consumers pay $100 to get their Vonage lines professionally installed.

In general, however, VoIP installations haven’t lived up to their hype, McLain said. Endeavor signed on to install multiple VoIP provider lines and has “seen a very slow ramp rate.”

“A lot of our customers are getting out of residential VoIP,” he said.
“They’ve spent up to $2 million on a softswitch expecting to install 20,000 customers a month, and now they are trying to figure out how to leverage that investment,” he said. Many of these companies were CLECs that turned to VoIP after their access to local lines through UNE-P requirements went away, McLain said.

When cable companies moved heavily into residential VoIP, he added, the standalone VoIP providers were somewhat shoved aside.

Many are turning to wholesale services, McLain said, hoping to sell to smaller cable providers or others that want to offer VoIP as part of a bundle. He’s expected VoIP wholesale prices to go down as a result.

The one bright spot is hosted PBX services for small businesses, where Endeavor expects to see major growth, he said.

“Hosted PBX services are really taking off,” McLain said “It’s a cleaner way to deliver end-users the services they want without having to deploy a lot of equipment and get into a lot of finger-pointing when things go wrong. The majority of the business we are doing today is commercial, and this is a good fit for small to mid-sized businesses.”