IP telephony: Demand picks up, how to sell

Hosted telephony has usually been the domain of large companies or high-volume, large-scale call centres looking to outsource management of complicated, multi-vendor solutions.

Recently new players arrived in Australia to target small businesses which want to pay as little as possible for a phone system.

US vendor Fonality launched its Connect service in May, which gives a business an IP handset, free calls and a web-based PBX interface for $39 a month.

Marc Englaro, vice president of international sales, says since the launch he has been "crazy busy" and selling connections twice as fast as expected. In seven weeks the vendor picked up 200 customers and was heading towards 1000 seats.

When CRN spoke to Englaro last month he had just recruited a new sales team and was considering hiring another to handle enquiries.

Englaro attributes his success to the vendor's unorthodox approach to selling telephony systems which he says is the "telecommunications version" of software-as-a-service programs such as Salesforce. "We're trying to remove this idea that you buy a phone system and it starts going out of date as soon as you buy it and you have to replace it in five years.

You pay only for the use of the [Fonality] system rather than buying an asset which you then have to depreciate. We will refresh hardware and handsets as required, you get two new feature releases included in your subscription fee, you're always up-to-date and you're future-proofed."

A business adds users and pays an extra subscription for the additional handset and a VoIP line.
Fonality has added a mid-market product called Fonality Professional Suite which includes an on-premise PBX controlled through the web using a similar interface to the cloud-only Connect service.

Englaro says the most common reason customers buy the professional suite over Connect is to retain phone lines. "You can put a switching box on premise but still get advantages of cloud. Software upgrades occur twice a year and are automatically available, and all support is through the cloud," he says.

Professional suite customers may want to keep ISDN lines or their internet connection might not be reliable enough to carry all their voice traffic. "If they make lots and lots of phone calls they're going to need a bigger internet connection or ISDN lines. Some people want to change one thing at a time," Englaro says.

The company is targeting up to "a couple of thousand" employees, although Fonality's largest customer in Australia has 150 staff. In Japan, it has customers with 1000 seats and more, including one with eight call centres.
Most sales have been direct but the vendor is expanding its channel operations (see case study) in line with the model used elsewhere in the Asia Pacific.

Englaro is looking for conventional IT resellers who provide internet connections, networks, applications, consulting, IT support and unified communications. "Generally not traditional telecommunications people but more IT and data and networking people," Englaro says.

Fonality's solution runs over the public internet rather than a dedicated line. In most cases customers don't need to upgrade their internet connection to handle the extra VoIP traffic, Englaro claims. Of 200 installations only five have upgraded their bandwidth.

Most small businesses have ADSL2+ and can sustain up to 10 concurrent calls, which is quite a lot of lines for a small business of even 20 employees, Englaro says.
"You would hardly notice the increased traffic. Voice takes up very little bandwidth but it is very sensitive. If 80 people were on the phone at once they might use 1 megabit per second," Englaro says.

Next: A different opinion