Richard Martin Blog: What Do Service Providers Want?

Yesterday I spent a few hours at Polycom’s ITSP Summit, at the Polycom offices in Westminster, Colo. (and, via telepresence, at Polycom facilities in Santa Clara, Austin, New York City, and several other locations). It was a gathering of Polycom’s Internet-telephony service provider customers, specifically providers of hosted telephony to small and medium-sized businesses. The attendee list included a couple of dozen providers, many of whom we've reported on frequently. The event was not officially on the record, so I’m not going to quote anyone (or I.D. the companies), but it was a fascinating opportunity to look inside these operators’ businesses and to hear what they want from a vendor like Polycom.

What they want, of course, is to grow their businesses by attracting not only SMBs but also larger companies that are moving into hosted, IP-based telephony – which is the fastest-growing segment of the telecom market. Revenues from hosted telephony are forecast by Frost & Sullivan to grow at an annual rate of 33 percent between now and 2015.

More specifically, the hosted providers want:

• More favorable financing terms from their vendor partners. Several attendees mentioned some of the attractive interest rates that vendors of IP phones and other gear are now offering, and said they need more such offers.
• Clear, bundled solutions (equipment plus service) that they can offer their business customers – particularly margin-preserving offers that allow the small hosted providers to compete against the larger PBX vendors who are moving into the hosted IP space.
• Low-end “hook-in” IP phones they can offer at low prices (or free of charge) to get business customers at early stages of their growth. Those entry-level phones then serve as a springboard for offering higher-end equipment, such as multimedia IP phones, as their customers’ needs change.
• APIs and applications that run not only on the phones or desktop computers, but via a portal on the network, to make configuration and customization much easier and faster for their customers.

The provider executives were very vocal about where they sit in the value chain: They have loyal customers and their businesses are growing, but they’re seeing major providers – vendors and carriers – moving into the hosted space and they need the tools to fend them off. Polycom has initiated a dedicated ITSP program that classifies provider customers according to how many units of Polycom gear they ship per year, and plans to offer increased co-marketing dollars and new leasing options to assist those providers. The ball is in your court, the ITSPs said; now let’s see what you can do for us.