Voice was once the only thing telecom did, but is now just one of many types of data communications connected over endpoints that are now more often mobile and wireless than not. The Voice over IP revolution started well over a decade ago, but it was really just the tip of an iceberg of communications over IP. With us today to offer his perspective on the world of VoIP, Hosted PBX, and Unified Communications is the founder and CEO of VoIP Logic, Micah Singer.
TR: What does VoIP Logic do, and how did you get started in this business?
MS: The plan both when I started the company in 2003 and still today is to offer voice over IP platform technology as a service to service providers. I recall someone telling me that a good time to start an outsourcing business is during an economic downturn, because a lot of folks are cutting costs and looking outside their organizations as an option. That was really the genesis of the idea; I thought in 2003 that outsourcing the management and operation of this exciting and new VoIP technology that was clearly around to stay would be compelling.
TR: How have you approached selling only to service providers (the ‘wholesale’ model)?
MS: First of all we try not to get in the way of what our service provider partners want to accomplish – they have the control and flexibility to do what they want if we are doing our job right. We provide the platform and let them run it. Our job is to ensure uptime performance and to make sure they know how to use the technology - it's a ‘teach a man to fish’ mentality versus something where we dictate the rules like a white label solution. If anything, some operators say we give them too much choice - that we aren't as hands-on with their services as we could or should be. Our perspective is that the service providers have their own emphasis or special sauce. Our job is to 1) keep an open platform so we don't limit what they can do or integrate; 2) allow the control to let them differentiate themselves fully; and 3) be invisible to their customers.
TR: How has the VoIP business changed for you since 2003?
MS: In 2003 it was really about the edge, with media gateways converting PSTN to VoIP. Slowly from 2004-2008, there was a move to class 4 tandem switching for exchange between carriers to VoIP. Since 2007-2008, however, there's been a constant drumbeat toward hosted PBX and unified communications. So we've seen three waves of technology focus but all consistent with the same trajectory of outsourcing management of VoIP technology. In each cycle the same basic rules have applied – the model is compelling to operators who understand the total cost of ownership argument and understand they will be valued based on customer base size not how well they manage technology. As cloud has emerged, we have found that where we once were popular with quite small operators, now even operators that are a bit larger are willing to look outside their organizations to improve cost basis and efficiency.
TR: What pieces do you provide, versus what your service provider partners (customers) bring to the table?
MS: We provide everything at the core. We don't provide anything at the customer premises. For the hosted PBX business/UC market at the core you have the application server (we work with BroadSoft technology), you have access control (Oracle Communications, formerly Acme Packet), you have peering (Genband), and the MPLS/internet data peering point (Cisco and Juniper). For the hardware, we have standardized on IBM's blade center technology. On top of these components we have built Operational Support Software that allows provisioning, management and reporting called Cortex OSS. Its focus is to allow service providers to more easily manage their end users. Service providers bring their own billing system and methodology, their own end-user portal, their own carrier origination and termination, their own MPLS, their own phone vendors, and a whole world of third party integrations.
TR: What type of customers do you target?
MS: We serve smaller US-based regional providers, and we’ve started to see interest and uptake from rural providers as well. Our sweet spot seems to be for service providers in the 1,000-10,000 business subscriber range. Historically, we tend to win business from a lot of small service providers who have been resellers in the past or have worked with another ‘wholesaler’ and now – in either case – want more control – essentially they want to be treated like full-fledged service providers. They like the control – and the idea that they don't have to have an in-house operations staff yet get the same control as if they do have one.
TR: Back when you started, VoIP had all the buzz and little revenue. Now it seems like the media has moved on just when the real money has started to be made. Do you wish the buzz would return?
MS: No, we're really low key and like it the way it is now. Buzz definitely has helped our service provider partners scale their business to a more educated business community ready to transition to hosted PBX or unified communication so maybe I should embrace buzz a bit more! The market is always talking about the next great thing -- WebRTC, 4G, 5G, so forth. They are generally a technology cycle ahead of what is paying the bills. When I started this company as a bootstrap startup, I really had to worry about revenue, growth and profitability. Vonage said the other day that for Hosted PBX, 85% of the market remains to be converted from IP PBX to Hosted PBX. And yet, people are already on to talking about the next thing. We've seen phenomenal growth rates for hosted PBX revenue. There's a big conversion cycle happening, and it's a great time to be in this business.
TR: How much of your business today is Hosted PBX and what kind of growth rates are you seeing with it?
MS: For Q2 2015 it will be 82-84% of our business, and we saw just over 32% revenue growth in this business when comparing Q1 2014 and Q1 2015.
TR: What’s the next big thing in the VoIP/UC technology world?
MS: People use the term Unified Communications, and it means a lot of things to a lot of different people. But it really incorporates a lot of the technologies of and the promises originally made by voice over IP. A lot of the next big steps are already available with document sharing, desktop collaboration, and smartphone apps for communication. As they come online and gain ubiquity, they will finally allow UC to really take hold. I think the next big thing is really just uptake of these technologies. The business cycle that gets awesome innovation out to the world tends to take longer than creating the technology these days. These UC things that people like you and I talk about all the time will finally become mainstream.
TR: Why aren’t we there already? What pieces are still missing from the puzzle?
MS: I believe one important thing is the network, robustness of the network and perhaps prioritization of different types of communication. A big part of this robustness will occur when 4G is a reality (everywhere) so wireless broadband really works for all these applications. Of course expanding the last mile for fiber optics to reach more end locations around the country and the world is driving network capacity also. The other piece that is missing is what Apple has done so well: create better usability. Not everyone can be a programmer or an engineer so you need user interface engineers who can make these complex communication services work more easily. The broad swaths of the population that generate the revenue want to use it but won't if it is too difficult.
TR: Do you think UC platform providers like VoIP Logic might want or need to integrate broader cloud technologies into their portfolios?
MS: It's something we talk about a lot. We've considered whether we will need to develop a specialized telecom version of IaaS (cloud servers). We have found at times when we use Amazon Web Services or Rackspace or other IaaS options, they don't work technically or commercially for certain types of communications-related software because of IP addressing limitations or throughput requirements that drive costs up. Right now in order to have 100% interoperation, you need to have a little more control than generic clouds provide. But I'm a little wary of it because these are technological hurdles that I think the Amazons, Microsofts, and Googles will probably overcome eventually. It's a limitation now, but it probably won't be in a few years. I do think it makes sense asa way to provide one-stop shopping to our existing and future service provider partners to add in cloud IT services that fit nicely with communications services – some of which is happening naturally with unified communications incorporating desktop share, document storage and beyond.
TR: There’s been significant M&A activity in the UC/VoIP sector lately, do you see opportunities for VoIP Logic to grow organically?
MS: Based on the overwhelming number of acquisitions happening lately, I feel like there must lots of opportunity for inorganic growth but logically, we're actually in a unique space and we are small. Also, because we only work with service providers and not enterprises, unless a customer base happens to be exclusively composed of service providers, we aren’t a buyer. In 2012 we did acquire a company with a service provider cutomer base down in Tampa, Florida. I have been looking around for similar opportunities without luck so far. There aren't that many that are both small enough and for sale.
TR: Many of the vendors you work with also have or are developing platform as a service offerings of their own, how do you compete with your suppliers?
MS: We do it in a similar fashion to the way our service provider customers compete with Verizon and AT&T: providing personalized service, having an account manager who cares, taking customers seriously, in other words just good old fashioned customer service and responsiveness. It's really difficult for an operator like Microsoft, for example, to give attention to every 50-100 person deployment of their technology the way a smaller operator can. It's hard for someone like BroadSoft to do a great job serving 20- of 25 among the largest telcos in the world and simultaneously 25 of the smallest ones. In addition, many of our vendors are tied to their own technologies – we are in a position where we are neutral – technology agnostic. We can choose the components on our platform that make the most sense and/or are considered best-of-breed without considering the manufacturer of the system. Overall, I think we are making a difference in the lives and success of smaller operators. But we have to continually justify and be meaningful to the consumers of our platform. We have to see what the market is doing and be one step further along. We're not large enough to sell on the VoIP Logic brand, we're selling on diligence.
TR: Thank you for talking with Telecom Ramblings!