Megatrends in Voice

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Instead of customary year-end future predictions, I thought I would write about voice megatrends I am seeing in telecom as 2009 comes to a close. I think it is important to do some kind of year-end reflection and these trends are more insightful than predictions as they are real; now and in 2010.

The Megatrends concept put forth by John Naisbitt in his 1982 book of the same title suggested the “most reliable way to anticipate the future is by understanding the present.” If the term “megatrends” was appropriate back then, perhaps this piece should be titled Gigatrends simply due to inflation. I am going to focus on three megatrends that are transforming the telecommunications and voice sector.

1) Mobility
Information anywhere anytime is increasing in both importance and availability. Broadband Internet is rapidly becoming ubiquitous in reality and expectation. But it is much bigger than a service offering – it is how and we work and play.

Gone are the days where communication stops after 5:00 PM or daresay for a two week vacation. We now expect, even demand, responses and updates as they occur. Couples updating their Facebook relationship status at the alter is just one pop indicator. Femtocell technology, still new for the enterprise, is making appearances at the Consumer Electronics Show in 2010. Teens are embracing SMS texts like never before – Twitter and Facebook are expanding from “social” to “news and information” classifications. Wi-Fi access is becoming a key consideration in a surprising number of decisions. Conference organizers are selecting venues based on it, but so are passengers regarding flights, even campers regarding campsites. Our online time, as a population, is doubling.

Well beyond the cell phone and cellular network, mobility drivers are related to nearly every recent telecom innovation. Presence is important, because catching someone in the office is increasingly unlikely. IP phones can be connected in remote locations, softphones for those on the go. Even deeper are the huge improvements in remote productivity. HD Audio, rapdily becoming a standard in IP phones, SIP trunks, and mobile devices improve clarity in conversations. Collaboration technologies enable new methods of group-think in ways in-person meetings could not. Web conferencing is rapidly becoming a preferred solution for seminars and training. Video conferencing is moving from the board room to the deskop with new phones from Cisco, Polycom, and many others.

Two other very important components of this mobility trend is our love affair with our cell phones and enterprise encroachment on that relationship. The smartphone is unlike any other technology gadget of the past. Those were just things – objects. The smartphone is much more personal. The device shares such a strong connection with our activities and thoughts that “connected at the hip” is an understatement. The device represents every form of electronic communication – voice, email, text, Facebook, Twitter, and countless other websites. We use it to share information and to get information. It is used for shopping (barcode scanners, Amazon), social interaction (Facebook, Foursquare), and assists with decision making (Yelp, Google). Text too limiting? use the camera for pictures or videos. The GPS can update others passively about where you are, were, or going. The smart phone links (quite literally) to every aspect of our growing online world.

CLEC Cbeyond understood this early and became a MVNO years ago. It offers combined minute plans with its mobile and T1 services; more than doubling revenue over its wired-only customers. Enterprise telecom equipment vendors also realize the human connection to the cell phone is greater than it ever will be with the desk phone. If you can’t beat them, join them – and the enterprise voice solution is rapidly embracing mobile phones as legitimate extensions. On one end there is simple call forwarding or simultaneous ring, but the other end represents a fully integrated solution. Mitel’s Dynamic Extension supports call center capabilities and internal transfer. Google Voice enables call recording and conferencing. SEN Group’s Openscape can set the cell phone as the primary voice device based on a tweet. Or perhaps the carriers (the MNOs) will offer virtual PBX services directly to their wireless customers. Will the carriers offer a virtual PBX or the equipment makers offer a virtual wireless network first? The fact is, this is still an early inning when it comes to mobile integration – but expect to see primary enterprise extensions sporting a belt clip in the not so distant future.

2) Hosted Voice 2.0
Hosted voice has been a viable option for close to 10 years now, the service hasn’t changed much, but has matured. The services heavily rely on SIP endpoints and at least appear to be dominated by Broadsoft and Asterisk based systems that cater to smaller locations usually delivered over T1 bandwidth. But the larger proprietary enterprise players have their sights on hosted voice and a number of factors are coming together to create a next generation offering.

Technically, it has always been possible to purchase and implement an enterprise VoIP system and provide services to remote locations, but the practice hasn’t been particularly attractive. Several factors are contributing to changing this. First and foremost is the owned voice system has always been installed near the users – not any more. Microsoft OCS users in particular embrace centralized voice for decentralized users. But now that Avaya, SEN Group, and Mitel are embracing virtualization, the practice of cloud or co-lo based implementations will gain momentum.

T1 circuits have been the primary building block for networking, but over the past year MPLS and fiber nets have made mounted a huge challenge to the lowly T1. MPLS port speeds are readily available up to 2.4 GBps complete with QoS capabilities. Then comes the SIP trunks, that can create the illusion of local calling (inbound and outbound callerID) regardless of location. Factor in some economic drivers that are favoring centralization and enterprise voice in a single location emerges as a strong viable option. But this will be hosted voice 2.0, with robust features to the end user that are far greater than current offerings. These enhanced features include tighter mobile integration, advanced call (distributed) call center capabilities, and a long list of simple features such as boss/admin, paging, and key system like features all of which are rare in the SIP device world of hosted 1.0.

3) DeMaterialization
Dematerialization is affecting nearly every industry and our economy as a whole. The concept is material items, say a music CD or an airline ticket, dematerializes into virtual items, and when this happens the impact is significant. It is impacting telecommunications too.

Not long ago, a physical phone, connected over dedicated physical wires, connected through dedicated physical patch panels, to a dedicated port on a switch, then via a physical MDF connected to a physical circuit which resulted with a monthly physical bill. All of these items are quickly disappearing (actually mostly gone). Dial-tone initially was a signal that a physical switch was ready for dialing instructions; dial-tone today is generated within the IP phone – a virtual vestige of a different time. Cell phones don’t even bother with dial-tone.

The PBX connections are rapidly becoming virtual as SIP and other IP protocols replace dedicated “ports”. Currently the physical PBX is in play to become virtual itself via appropriately named virtualization software or hosted services. The telephone itself is being threatened by soft phones, USB phone-like devices, and mobile phones (these last two are physical items, but represent a virtual extension). Even faxes are migrating to PDF edocs.

The “phone system” identity is becoming hazy too. “Unified Communications” was meant to describe the next generation phone system, but no one knows what it (or the term) means. Is presence a feature of the phone system or is voice a feature of the presence system? Even voice mail, which recently moved from separate servers into embedded systems, is being pulled back-out into comprehensive “messaging” servers.

The impact of dematerialization is not clear, but its impact to other industries could be described as “disruptive” or sometimes “devastating”. What is defined as “value” rapidly changes and the stakeholders don’t necessarily agree. The music industry is going back to its roots in live music as control and distribution of content is no longer the route to riches. The surviving travel agents now charge customers for their services. Even the US Postal Service is working to re-invent itself as its revenue and cost models are blown to bits by a reduction in material goods. Enterprise voice is rapidly shifting from hardware to software, new expectations. roles, and channels are emerging. This is an industry that just a few years ago had no concept of “software assurance” or “license agreements”. There are two drivers for dematerialization; economic and green/environmental.

The above are the Megatrends, but so many other trends and patterns are emerging; open source telecom, open APIs, cloud computing, VaaS (voice as a Service), and speech recognition, are just a few worth noting. Many of which I have and will continue to write about about. Enterprise voice is more fluid now than ever before – there is no assumption that isn’t being tested.

For the majority of the past 20-30 years, the differences in voice equipment brands were similar to Fords vs. Chevy’s. The laggards typically caught-up to the innovators within a year or two. What makes this time so unique, is the majority of the “influential” vendors have very different, even incompatible, visions of the future. Historically, the PBX was a notch below the CIO’s radar – now the likes of IBM, Microsoft, and Cisco are working to simultaneously elevate the discussion and radically impact customer requirements.

Additional Related Posts:
Changes on Deck for the Channel
Mobile Phones Kill

Dave Michels