How Cloud Computing Is Threatening Traditional Telco

How Cloud Computing Is Threatening Traditional Telco

The standard AT&T small business phone plan (unlimited local and long-distance calling) costs about $50 per month in most areas of the US. The plan comes with a basic set of features—e.g., call waiting, caller ID, and call forwarding—but does not include advanced features, such as voicemail transcription, voicemail and email mailbox integration. Neither does it include the ability to use your phone service anywhere there’s an Internet connection.

Unlimited calling for $50 per month certainly beats the era of $0.20 per minute long distance, but it’s nothing compared to what the cloud can offer. In fact, cloud computing is revolutionizing voice communications—and, in the process, mounting a direct challenge to the dominance of traditional telecommunications giants.

Consider VoIP companies such as RingCentral and Vonage. Vonage’s basic voice service costs $25.99 per month and includes all of the features of an AT&T service, plus free international landline calling to 60 countries—plus unlimited international mobile calling to 10 countries.

RingCentral’s cloud PBX service costs $40 per month for all the features of AT&T’s comparable plan, but it also includes unlimited extensions, a virtual receptionist, a dial-by-name directory, unlimited Internet fax, and the ability to access voice and messaging services from any VoIP-enabled phone with an Internet connection.

For the tech savvy and ambitious, the cloud offers even cheaper solutions. Using Skype, nearly anyone can purchase a US phone number (with unlimited incoming calls) for $6 per month with Skype Online Number, which includes the option of using a headset or a Skype-enabled standard phone. By combining Skype and Google Voice services, users can add free outgoing calls to all US and Canadian numbers with international calling rates as low as $0.02 per minute. Best of all, Skype (with Google Voice) allows users to make and receive calls, and access their voicemail on any Internet-connected computer or smartphone.

Beyond the SMB and consumer markets, telcos are also under assault on the enterprise front. Microsoft Lync, an enterprise-ready unified communications platform (and complete PBX replacement), is becoming increasingly popular in corporate America. In addition to handling traditional voice communications, Lync offers instant messaging, Web chat, video and audio conferencing, mobile app access, and integration with Microsoft Office. While Lync was originally an on-premises solution, companies such as snom technology AG and Chinook Communications have also recently begun offering services as a cloud-hosted solution for SMBs.

Given the competition that cloud-hosted voice services present, the only thing traditional telcos have going for them is inertia. They’re currently providing a substandard service at inflated prices—and relying on brand-recognition to keep them afloat. There’s a huge opportunity here for cloud service integrators who already provide IT services to sell their existing (and new) customers a cheaper, better service.

Unless AT&T, Verizon, Time Warner, and other telco providers learn to adapt, the day is fast approaching when IT departments, managed service providers, and SMB IT consultants will wrest control of voice communications from telecommunications companies and place it squarely in the hands of IT.

By Joseph Walker

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