When a Consultant Says ‘No’

Doug Dawson, 2017

One of my competitors recently held a webinar where they told a group of municipalities that they should never accept ‘no’ from a consultant who is evaluating fiber business plans. This is about the worst advice I think I have ever heard for many reasons. I think perhaps this consultant meant that one shouldn’t be afraid to be creative and to look at alternative ideas if your first ideas don’t pan out. But that’s not what they said.

Building and operating a fiber network is like any other new business venture and sometimes a new business venture is just not a good idea. This is why anybody launching a new business of any type does their homework and kicks the tires on their ideas to quantify the opportunity. A feasibility study means going through the process of gathering as many facts as possible in order to make an informed decision about a new opportunity.

The advice in this webinar was given to municipalities. Somebody giving this same advice to for-profit ISPs would be laughed out of the room. Established commercial ISPs all understand that they have natural limitations. They are limited in the amount of money they can borrow. They understand that there are natural limits on how far they can stretch existing staff without harming their business. They understand that if they expand into a new market and fail that they might jeopardize their existing company. My experience in building business plans for existing ISPs is that they are as skeptical of a good answer as a bad one and they dig and dig until they understand the nuances of a business plan before ever giving it any real consideration.

But municipalities build fiber networks for different reasons than for-profit ISPs. Existing ISPs want to make money. They also undertake expansion to gain economy of scale, because in the ISP world being larger generally means better margins. But cities have a whole other list of motivations for building fiber. They might want to solve the digital divide. They might want to lower prices in their market and foster competition. They might want to promote economic development by opening their communities to the opportunities created by good broadband.

These are all great goals, but I have rarely talked with a municipality that also doesn’t want a broadband business to at least break even. I say rarely, because there are small communities with zero broadband that are willing to spend tax dollars to subsidize getting broadband. But most communities only want a fiber business if the revenues from the venture will cover the cost of operations.

Sometimes a strong ‘no’ is the best and only answer to give to a client. Clients often come to me determined to make one specific business plan idea work. For example, many communities don’t just want a fiber network, but they want a fiber network operating under a specific business model like open access. That’s a business model where multiple ISPs use the network to compete for customers. Open access is an extremely hard business plan to make work. I’ve often had to show municipalities that this specific idea won’t work for them.

Or a commercial ISP might want to enter a new market and want to make it work without having to hire new employees. My advice to them might be that such an expectation is unrealistic and that over time they will have to hire the extra people.

My advice to clients is that they should be just as leery of a ‘yes’ answer as a ‘no’ answer. For example, every one of the big open access networks has an original business plan on the shelf that shows that they were going to make a lot of money – and those business plans were obviously flawed. If they had challenged some of the flawed assumptions in those business plans they probably would not have entered the business in the way they did. It’s a shame their original consultant didn’t say ‘no’.

I’ve always said that ‘dollars speak’ and any new business has to make financial sense before you can think about meeting other goals. Every business plan contains hundreds of assumptions and it’s always possible to ‘cook’ the assumptions to find a scenario that looks positive. I have created business plans many times for commercial and municipal clients where an honest look at the numbers just doesn’t add up. I’ve had a few clients ask me to create a more rosy forecast and I’ve always refused to do this.

I personally would be leery of a consultant that doesn’t think that ‘no’ can be the right answer for doing something as expensive as launching a fiber venture. Sometimes ‘no’ is the right answer, and if somebody tells you ‘no’ you ought to listen hard to them. It makes sense to kick the tires on all of the assumptions when you hear ‘no’ and to get a second opinion, if needed. But it’s important to kick the tires just as hard when you get ‘yes for an answer.

Are You Texting Your Customers?

In the last year I’ve found all sorts of my outside interactions now involve texting. I get texts from the dentist affirming an appointment, texts from a furniture company making sure I was home during a delivery, and texts from AT&T wireless for my cellular billing. All these various businesses have found that texting saves them money. Yet I have only a few ISP clients that make wide use of texting. I find that a bit surprising because I can think of a number of ways that texting can be a big money saver for an ISP.

The most obvious one is that it can save from making unneeded truck rolls. Every ISP I know says that truck rolls are expensive, and there is nothing more wasteful than making a truck roll to a customer who is not at home. I’m sure that is why the furniture company made the text and they would not have tried to deliver if I wasn’t at home. Better yet, texting puts a technician into direct contact with the customer and allows them to work out a plan if a customer isn’t home.

But there is probably even a bigger savings in the way that AT&T uses texting. They send me a text each month when they bill me and invite me to view my bill online. This saves them from having to mail a paper bill – something that makes no sense to somebody like me that uses autopay to pay my cellular bill. I can’t imagine I would ever open an AT&T paper bill and they would be spending money and margin to send me one. Many of my clients tell me that today that over half of their customers pay by bank debit or credit card and there is a huge savings from not mailing paper bills to these customers.

I do have a few clients that use texting and they report some other significant savings. For example, they say that texting has greatly reduced their uncollectible billing. They say that it’s far more effective to prompt customers immediately if they are late in paying their bills, and that most customers promptly pay when reminded. That’s particularly effective if you give them an immediate opportunity to pay the bill by credit card.

But the savings that surprised me a bit is the fact that companies that allow interactive texting with customers report that they have significantly reduced the number of calls to customer service. There are a two primary issues that prompt the majority of calls to customer service – outages and billing inquiries.

I have a client who uses texts to inform customers about outages. Customers can get quickly frustrated if they don’t know what’s happening and when service will be restored. This client has tied texting into their OSS and network mapping system and can send texts to only those customers that have outages. And they can inform customers proactively of planned maintenance outages. They say this largely eliminates calls about outages and particularly works great after hours when they are not answering the phones.

Texting can also be a good way to answer a lot of billing inquiries. Texting can be a great tool for answering simple customer questions like their outstanding balance or the due date of their payment. It takes a lot less time for both the customer and the company to answer a simple question by text. This is a great way to communicate with customers (like me) who would always choose an option other than making a call and getting into a customer service queue.

There are a few issues with texting to be aware of. There are some archaic FCC rules that define requirements for when customers text you. This harkens back to the day when many people paid for each text message – something that barely exists any longer. But the rules are still in place and are something to be aware of. There are also rules about using texting as a form of marketing – again, something that can be done in a way that doesn’t violate the FCC rules.

There are a wide range of texting solutions. At one end of the spectrum your technicians can text customers from their cellphones. But in order to get all of the advantages listed above you will want a fully interactive texting platform that’s integrated into your OSS/BSS. Feel free to contact me and I can describe the best solutions on the market.

Developing Customer Broadband Profiles

Last week I was the moderator of an IoT panel at NTCA’s IP Vision 2017 conference. The panel discussion took an interesting turn when the conversation turned to how small ISPs can monetize the IoT.

Customer demand for connecting devices is contributing to the need for bigger broadband pipes. Today there are about 6.6 billion IoT devices connected in the world. This is expected to grow to 22.5 billion by 2021. Obviously not all of these devices will be going into homes since there is a big growth also with industrial and agricultural IoT. But households will be steadily adding more connected devices.

One of the panelists works at a western telco and his company recently started considering the idea of profiling data customers to help them right-size broadband. The company first profiled employees to see how the idea would work. When the panelist was profiled he guessed that his household had 15 connected devices. But then he went home and did an inventory and was surprised to find that he actually had 55 devices. His household is probably a little unusual in that he has five kids and he loves technology, but he said that every telco employee had the same experience in that they underestimated how many connected devices they had in their home. It turns out for most households that the Internet of Things is already here to some degree.

His company has gone on the monetize this idea. They offer customers the chance to sit with a technician and to create a profile of how they use broadband. The goal is to determine if the customer has enough broadband to do everything they want to do. They immediately found the same thing I hear everywhere – most customers have no idea of how much broadband they really need. It turns out that most customers almost reflexively buy the lowest cost and lowest bandwidth data product and are then unhappy with some aspect of its performance.

Telcos everywhere are telling me that customer complaints about poor performance of broadband are becoming commonplace. It’s been easy to assume that problems are mostly due to issues associated with WiFi. But the experience of this particular telco shows that the problem is often that a customer has not purchased enough broadband to satisfy their needs. After the consultation, if they need a faster connection this telco gives the customer the larger data pipe free for a month – and so far not one customer has reverted to their old slower connection.

The telco also offers a second related product that is getting good traction. They sell what they call managed WiFi. The product starts with making sure that customers have placed WiFi routers in the most effective places. But the real benefit to customers is that they can call the company when they are trying to connect a new IoT device to their network. This is something that often frustrates customers. When customers find out that the telco can easily connect new devices and can help them manage their devices a large percentage of customers are buying this new product.

Within the industry we all understand that customer demand for broadband continues to grow at the torrid rate of doubling every three or four years. This kind of exponential growth surprises almost everybody. Customers that have been happy with a 10 Mbps broadband product invariably are going to need to move to something faster within only a few years. But customers are slow to realize that degraded service is due to their own increased usage and they often blame the ISP for broadband issues.

The broadband profiling has shown this telco that the customer experience varies widely. For example, not everybody needs faster download. They have a number of seasonal homes that are starting to install remote cameras that exceed the upload capacity of the broadband products, and the company can make sure there is enough broadband to satisfy the upload needs. The telco says their customers really appreciate this custom approach.

What’s Your Brand?

advertiseherebillboardmedA recent blog I wrote reminded me of this basic question that I have always asked clients, “What’s your brand?” Every business has a brand whether it’s explicit or implicit. People living in your service areas either knew you by what others say about you or by what you tell them about yourself.

So what does it mean to have a brand? It means that when people think of your company that they think about you in a certain way. – it’s the images, emotions, and decisions they associate with you in their mind. If you don’t work to create your own brand then you might just be ‘that telephone company’ or ‘those wireless guys.’ I guess there is nothing wrong with that, but it might mean that a new person to the area has to make a bunch of phone calls to figure out who you are, or that existing customers are more easily swayed by competitors with a better brand.

Having a brand is a lot more important if you are competing for customers, which most small carriers do these days. It’s important to have a brand when you are trying to sell to people who don’t know you, or to keep customers you already have.

So what do I mean by a brand? A brand can be almost anything that you want to have customers remember about you. I’ve seen hundreds of different types of brands in telecom. Some are very simple, such as ‘your local telecommunications company’. Others tell more what it’s like working with a company such as ‘making broadband easy,’ or ‘total business broadband solutions.’

But I am still surprised about how many small carriers don’t have a brand. I can understand this for a carrier who is a monopoly telephone company where customers have no other options. But it mystifies me why somebody who is not a monopoly doesn’t want an easy way for customers to understand who you are.

Some kinds of branding are obvious. For example, cooperatives and municipal broadband companies often remind customers that the business belongs to them. That can be an effective brand if done well. But I see a surprising number of these entities that don’t do a very good job at reminding people of this.

Probably the most common branding I see is companies claiming to be the ‘local telecom provider’ or ‘your local ISP.’ But unless there is something more to the story behind that claim to tell people why this is a good thing, then it can be somewhat shallow. After all, any company that will send a technician to somebody’s door is also local.

The one thing I know about branding is that whatever you tell the public had better be true. You don’t want to tout yourself as the ‘broadband company’ if you are still delivering slow DSL to a lot of your customers. That kind of branding can work against you and will remind your customers every day about how bad their broadband is. And such customers will leap to another carrier with better broadband if they ever have the chance.

If you don’t have a brand, it can be surprisingly challenging to pick one. But if you put a bunch of your employees in a room they can probably come up with a few good ideas. Here are some of the more common ones I see that I think are effective: ‘bringing gigabit broadband to X’; ‘telecom solutions since 1915’; ‘making broadband easy’; ‘21st century solutions for rural America.’

The chances are that you already have a brand but that you haven’t thought about it for a long time. If that’s the case then ask yourself. “Does my brand still tell the public what I want them to know about me?” Also ask, “Is this brand really who we are?” You might be surprised by the answer to those two questions, and if so, it’s time to update your brand.

Economic Lives of Fiber Assets

outdoor-indoor-cable-161One thing that anybody who builds a fiber network needs to deal with at some point is depreciation expense. Fiber networks are expensive and depreciation expense is a key component for measuring profitability and success. This is even true for non-taxable entities if you still create financial reports that include depreciation.

Companies differ in their approach to depreciating their assets. If the owner is a taxable corporation or cooperative they may prefer higher depreciation expense in the early years to shield the business from income taxes. But other owners care a lot about what their financial reports say and I know some fiber network owners that like lower depreciation. Accountants all understand that depreciation is a non-cash expense, but this is a nuance that is often lost on the public or the non-sophisticated reader of financial statements.

My job allows me see the books of a lot of different kinds of telecom entities and I see that depreciation rates used for telecom assets vary widely. There was a time when the FCC and state commissions set depreciation rates for big companies, and the rest of industry usually followed. But today a fiber provider is free to set depreciation lives within a surprisingly wide range.

There is only one authoritative source for depreciation lives which is from a bulletin published by the IRS in 2015.  That bulletin establishes a baseline for depreciation for tax purposes for fiber networks that assumes a conservative and short life for fiber assets. For example, the IRS life for fiber cable is 24 years. At the other end of the scale, I have clients who are using a 40-year life on fiber. From an accounting perspective this wide range is like night and day.

In my experience the economic lives suggested by the IRS are ridiculously short. There was a time in the 1980s when a 20 to 25-year life for fiber was probably reasonable. The early generations of fiber cable had manufacturing flaws that allowed small cracks to develop over time that eventually cause the fiber to become opaque and lose usefulness. Most of the fiber built in those days has deteriorated over the years and has been retired or is of limited use today.

But the manufacturing process for fiber cables has improved drastically in each succeeding decade. I’ve talked to engineers at the fiber manufacturers who estimate that today’s fiber cables might easily last for 50 to 75 years as long as it’s installed properly and not unduly stressed. And there is speculation that fiber might last even longer – we’ll just have to wait and see.

The same thing is true for fiber electronics. Thirty years ago electronics in general were not as well made or as robust as today. There were large clunky circuit cards that expanded and shrunk in outside use and then eventually went bad. And these cards were full of individual components that could fail. But today a lot of the brains of electronics is embedded in chips that can last for a long time.

I can remember back in the 1990s when the engineering mantra was that you designed electronics to last from 7 to 10 years. Within that time frame the equipment would either start having operational issues or else the manufacturer would stop supporting it. But today’s electronics are much hardier and more reliable. I have several clients that still operate the first generation BPON fiber network networks. The electronics on these networks were made 12 – 15 years ago and are still going strong, and during that time they have had almost no failures. But most companies used depreciation lives for the BPON electronics of between 7 to 10 years. The same thing is true with the electronics used to power backbone networks. I have clients still operating networks built 15 years ago at twice the expected economic life.

So my advice to clients is that if they they are not stuck with whatever deprecation rates they are using. If they have reasons to might want shorter or longer depreciation lives there might be a justification for changing the depreciation rates. When I first got into the industry everybody used rates within a narrow range, but today there is a huge amount of flexibility in settling depreciation rates.

If your financial statements are audited then your auditor might want a professional opion of why it’s okay to change rates. But there is a huge amount of empirical data to support using longer lives for both fiber and electronics. And if you want to shorten lives it’s fairly easy to point to the IRS rules.

Accounting is not supposed to be this flexible and one would expect the industry to have a more consistent range of depreciation practices. But once the regulators stepped out of the business of regulating depreciation lives it’s been the wild west from an accounting perspective. So if you don’t like what depreciation expense is doing for you, contact me and I can help you find a better answer.

It’s Okay to Fire a Customer

angry-smilieAs a telecom consulting firm we’ve had a lot of clients over the years. The last time I counted we have worked with over 800 companies. I was just thinking the other day about something that happened after we had been in business for a few years.

I had a client who had always been a pain to work with personally. He was irascible and constantly argued with me over work product. But that never bothered me too much because sometimes in his grumpy way he made very good points – and he always paid his bills on time.

But one day I walked into the office and he was on the phone with my office manager and he was yelling at her over the phone in a very abusive way. She put the call on the speaker and I heard him cursing and ranting and screaming at her. I had the call transferred into my office and I told him he was fired. This stunned him and he asked what this meant for the work we were doing for him, and my response was that we wouldn’t bill him for anything we had done but we were also not going to finish what we were working on.

I think I leapt up four notches that day on the boss scale because nobody in the office liked working with this particular client and they were thrilled to find out that I had their backs. But that day taught me a valuable lesson – that sometimes it’s okay sometimes to fire a customer. Sometimes the money they pay you is just not worth the aggravation. Over the years I’ve fired a few more clients, but luckily most of my clients are a pleasure to work with.

I’ve carried that same message to my clients. When I ask, almost every one of my clients has a few customers that nobody at the company likes to work with. These customers may be abusive, or impossible to please, or are the ones that always want adjustments to their billing for some perceived wrong.

It’s generally a novel concept to my clients when I tell them that it’s okay to fire such customers. A few of them have gone to their staffs after I put the idea in their head to ask how many customers they perceive to be hard to work with. It’s generally a small number, but universally every customer service rep and field technician will make the same short list of problem customers.

Some of my clients have then fired these customers. Others have taken the approach of calling these customers and warning them that their behavior will no longer be tolerated. In both cases I’ve been told that this has resulted in a huge morale booster at the company. Contrary to the popular maxim, the customer is not always right. Your employees should not have to take abuse as part of their job and they will greatly appreciate you making their life easier.

This is not an easy decision because small companies often emphasize the fact that they need every possible customer in order to thrive and survive. So it’s a question of weighing the revenue from a handful of problem customers against company harmony and a good workplace environment.

You also have to be careful not to take this to the opposite extreme. Your employees cannot feel empowered that you will fire anybody who disagrees with them, because that can foster bad behavior on behalf of your staff. But I don’t think it’s hard to identify the really bad apples, and if you do this the right way it’s another way to make your company a better place to work.

Delivering Fiber to Apartments

Bellevue_Apartment_BuildingOne of the biggest issues that’s not talked about much with fiber deployment is getting fiber to older apartment buildings. According to the US Census there are around 19 million housing units in buildings with 5 or more rental units. Statistics from several apartment industry sources estimate that over half of those units were built before 1980 and over 80% were built before 2000. This means that a large percentage of apartment buildings are not pre-wired for broadband. There are both network and business issues associated with serving apartments that makes this part of the fiber business a real challenge.

The network issues are of two types. First is the issue of access to buildings. Building owners have the right to allow or not allow access to service providers. Many business owners will already have some sort of contractual or financial arrangement with the incumbent cable company. A few years ago the FCC outlawed a lot of specific kinds of onerous contracts between the two parties. The cable companies had used deceptive tactics to lock cable owners to only allowing them into buildings. But there are still numerous ways for an apartment owner and cable company to agree to keep other providers out of apartments.

But even should an apartment owner allow a fiber builder in, the cost of wiring older apartment buildings can be prohibitive. When a fiber builder comes to a single family home they generally are free to use the existing coaxial and telephone wiring in the home if they want access to it. But unless an apartment owner is going to grant exclusive access to a fiber builder the existing wires are still going to be used by the incumbent cable and telephone company.

And that means a total rewiring of the building. That can be a nightmare for older buildings. It might mean dealing with asbestos in ceilings and walls. It often means trying to somehow snake fiber through concrete floors and walls or else having to somehow run wiring through open hallways. And it often means disturbing tenants, and coordinating gaining entrance to multiple apartments or condos can be a challenge.

There are also business issues to deal with in apartments. Probably the number one issue is dealing with tenant churn. Almost by definition apartments have a much higher percentage of turnover than single family homes and it can be a real challenge to get and keep a decent penetration rate in apartments. Companies have tried different ideas, such as getting referrals from apartment owners, but the turnover generally is seen as a problem by most overbuilders.

One way to deal with the churn is to make a financial arrangement with the building owner rather than with each tenant. That generally involves paying some sort of commission. That is not a big problem with selling broadband, but the commissions expected on cable TV could easily push under the cost of providing the service. There was a time when seeking wholesale cable arrangements was a good business plan, but the rising cost of programming has made it far less attractive.

There are companies that are concentrating on serving apartment units in metropolitan areas. They bring a fiber to a complex and then serve data and cable to every tenant, often built into the rent. One would have to think that most of these deals are being done with newer apartments that have been built with telecom expansion in mind – lots of empty conduit throughout the building or even fiber already in the walls.

But for the normal fiber overbuilder who mostly serves single family homes and small businesses, apartments are mostly seen as an obstacle more than an opportunity. I have numerous clients who have built whole towns except for the apartments and they have yet to find an affordable and profitable business case for doing so. There are some new and interesting ways to more easily wire older buildings, such as running fiber along the ceilings in hallways – but a lot of my clients are not yet convinced there is a long-term profitable option for serving apartments.

How’s Your Competition Doing?

comcast-truck-cmcsa-cmcsk_largeA large percentage of my broadband clients compete against some of the biggest ISPs in the nation – either the big telcos, the big cable companies, or both. And so it’s worth taking a look from time to time to see how those big companies rate in terms of comparative customer service. The 2016 ASCI (American Customer Satisfaction Index) was recently released and reveals some of the following things about the biggest players in the telecom space:

The ASCI survey each year talks to 70,000 customers about more than 300 large businesses in 43 industries and 10 economic sectors. The survey gives each company a grade on a scale of 100.

As a sector both ISPs (overall rating 64) and Cable TV companies (overall rating 65) are still the two lowest rated sectors within the overall survey. To put those ratings into perspective there are a number of industry segments at or above a rating of 80 such as full-service restaurants, credit unions, household appliance makers and shipping companies.

ISPs as a whole are up slightly from an overall rating last year of 63 to a rating now of 64. There was a lot of change in positions of the big companies. Verizon FiOS is the highest rated company and went from a 68 rating in 2015 to a rating of 73 this year. At the bottom of the scale is Frontier Communications that fell from 61 last year down to a 56 rating for 2016. The other big gainers were Time Warner Cable (58 to 66), Bright House Networks, (63 to 67) and Charter Communications (57 to 63). The other big loser for the year is AT&T U-verse which dropped from the highest rated in 2015 of 69 to 64 this year.

Cable companies overall improved slightly last year from 63 to 65. But most companies stayed about the same except for moves upward by Comcast (54 to 62), Time Warner Cable (51 to 59) and Suddenlink (57 to 62). Verizon FiOS continues to top the list with a 70 rating with AT&T U-verse just behind at a 69. It will be interesting to see how the Charter / Time Warner Cable / Bright House merger will change these ratings for next year. I’ve read several industry analysts that predict that customer service at those companies will suffer during the transition. As might be imagined, cable customers are pretty happy overall with things like picture quality but the survey showed that they are very unhappy with the call center experience.

Perhaps the most surprising change this year among big companies was the noted improvement of satisfaction for Comcast. Last year they were dead last among cable providers and 2015 saw a rash of negative news articles about customer service fiascos. Comcast says every year that they are taking steps to improve customer service, but perhaps they are finally starting to make some changes that are noticeable to customers.

In the telephone world Vonage leaped to the top of the list moving from 73 to 78. What I find interesting is that everybody else rated between 64 and 72 – not a lot better than the cable companies. I wonder if that rating reflects general dissatisfaction with the telephone product or with these large companies in general.

One thing this survey does every year is to remind us how poorly the general public views the big telcos and cable companies. The industries consistently rate at the bottom for all major industries – far below banks, insurance companies and hospitals.

But these ratings also remind us that it’s possible for these larger companies to get their act together to provide better customer service. I know one of the most dreaded events in our household is having to make a call to Comcast. But the last few times my wife called she said it ‘wasn’t so bad’, and perhaps that explains their improved satisfaction score.

There are certainly new tools and technologies coming to customer service that ought to make customers happier. Companies that provide alternate ways for customers to communicate without having to talk to people are finding that this makes a significant segment of their customers happier. And it looks like we are on the verge of getting some fairly intelligent AI agents to handle routine customer inquiries, and that, sadly, will end the very entertaining news articles about the outrageous things said by Comcast service reps. But it might improve the customer service experience.

Business VoIP

Business phonesetI’ve been thinking about getting a VoIP phone in my home office. I’ve been using only a cellphone to conduct business for fifteen years, but there are times when it would be very handy to have a good speaker phone and to also enjoy some of the other features that come with business phones these days. So I’ve been shopping around and I quickly noticed that VoIP vendors have introduced some interesting innovations to their VoIP platforms in just the last few years and they are trying hard to be a better alternative to local phone service.

Since most of my clients offer business landlines I thought it would be interesting to describe what I found in the marketplace. I think it’s important to keep up with what your competition is doing, and VoIP business service is definitely becoming a serious competitor to anybody selling phone lines to businesses. Here is what I found about today’s VoIP market:

Price. Business VoIP keeps getting less expensive. Just a few years ago the VoIP prices were universally around $40 per line. Both Fonality and RingCentral now have lines starting at $19.99 including unlimited long distance and basic business features. Packages climb in price to $40 to include such things as video conferencing. Every online vendor has a different set of features at various price levels making it difficult to do a side-by-side comparison. But the bottom line is that basic VoIP business lines have come down in price.

Integration with Apps. Probably the coolest new feature with some VoIP services is full integration with common business software. For example, you can get full integration with helpdesk software like Salesforce’s Desk or with Zendesk. Or you can tie into collaboration software like Google Drive or Dropbox for business. A number of phone vendors are integrated into Salesforce, the industry-leading sales tool. And some platforms claim to integrate easily with most android apps.

These are powerful tools that are not bundled with switch-based telephone systems. Buying a phone line that is already fully integrated with Salesforce or Google Drive can be a big enticement to users who want to solve multiple issues with one purchase.

Advanced Business Services. VoIP business vendors have made big strides with their suite of advanced business features, Earlier generations of VoIP business lines were mostly a replacement for single line business phones, but they now offer features that rival the best functions of IP Centrex and other switch-based solutions.

And many VoIP platforms now integrate video conferencing for up to 50 simultaneous users, something that is not part of most Centrex or PBX feature sets.

Mobility. It doesn’t look like the VoIP providers have yet solved the mobility issue, but it’s obvious that they are working on it. Most of them still use call-forwarding to allow calls to be sent to cell phones, but I couldn’t find anybody that is yet offering an integrated cellphone / landline product where all features work seamlessly across both platforms.

Unified Communications. A few VoIP providers are now offering applications that will support phone calls, voice mail, email, chat applications, conference calls and other forms of communications and give users the ability to easily switch how they are communicating. But most don’t yet have this fully developed.

There seems to a lot more functionality with VoIP business lines than what I was able to find just a few years ago. I think carriers need to be putting pressure on their switch vendors to keep up with the innovations going on with VoIP. Many businesses are going to like the integration with common business software and with video calling and if you are selling landline solutions you need to keep pace with what customers want.

Politics and Municipal Partnerships

ppp_logoOne of the hot topics around the industry today is the creation of Public Private Partnerships (PPPs) with municipalities to provide fiber-based broadband. Today I want to talk a bit about the difference in partnering with a municipality compared to other commercial carriers.

Commercial carriers are often very used to partnering with each other. They will build fiber routes together and routinely share facilities. And many ISPs will outsource functions to another carrier when it makes economic sense. I see ISPs everywhere engaging in some very creative partnerships with other carriers.

But partnering with a municipality is different, mainly due to the very nature of how municipalities work. Any carrier that does not understand the differences and that doesn’t account for those differences in their plans is likely to get very frustrated over time with a municipal partner. Today I look at some political issues that arise in PPPs and I will look at financial and legal issues in subsequent blogs.

Municipalities are (by definition) political entities. The people at the top of the political pyramid are elected officials and that has to be considered when partnering with a municipality. The city you partner with today might not be the same city you find yourself working with in five years after a few elections. Change can happen with a commercial partner as well, but it’s rarely as abrupt or as expected.

I know one company that partnered with a city to build fiber and the city was an enthusiastic partner. But the next administration of the city came in with a bias against the city working to ‘enrich’ private businesses, and that partnership then became a lot more difficult to maintain. So the one thing that a good PPP needs is to be insulated from politics as much as possible. You don’t want to have the PPP structured in such a way that future decisions like raising rates or building new facilities must be approved by a city council.

It’s also important for a business to understand how slow municipalities are in making decisions. The whole municipal deliberative process is slow on purpose to give the public a chance to weigh in on things a city does. But it can drive a commercial entity crazy waiting for a municipal partner to make a decision when you are running a commercial business venture.

Another shock that those involved in PPPs are often surprised about is how everything they decide or do as part of the PPP is suddenly in the press. Local ISPs can often go for decades without making the paper for anything bigger than making a donation to a local charity. It’s very disturbing to see your business decisions discussed in the press, and often incorrectly.

Engaging in a PPP also can subject an ISP to an unusual kind of attack from the larger incumbent providers. They will make the argument that anything that a municipality provides as part of partnering with an ISP ought to be extended to all carriers. These arguments are labeled as ‘level playing field’ issues and incumbents can sound incredibly persuasive when talking about the unfair advantages given to one of their competitors (while ignoring the monopoly power they probably held over the city for decades before).

All of these issues can be managed as long as a carrier walks into a PPP arrangement fully aware of each of them and with a strategy for dealing with each one. Once a carrier has joined with a municipal partner they can never be free of these sorts of political issues – but they can structure the business arrangement in such a way as to minimalize the practical impact of them.