Mitel Becomes a Mobile Carrier

by Dave Michels

Mitel now offers wireless voice and data services nationwide. This one caught me off-guard at first, but it is beginning to grow on me. The fact is, overall telecom spend is shifting from product to solution and from capital to expense. Not to mention Everyone Loves Mobile. So in that context, it makes today’s announcement logical. Aggressive, but logical.

This post has some additional thoughts. I posted some opinions on the announcement earlier at

Not long ago, it was reasonably common to find an AT&T; PBX connected to an AT&T; network. But today the carriers and equipment makers are different. It really wasn’t a big deal, it turned out that the two had very little synergy. A PBX easily connects to any carrier via tried and true T1s. Plus equipment was a one-time capital expense and network was a recurring operating expense meaning different budgets, different criteria, and sometimes different decision makers. But today, the assumptions regarding interoperability and capital are different. In fact, there is a general shift toward turning the whole enchilada into a service (expense).

The accounting rules are not changing, but attitudes and perceptions are. There are a few ways to recognize telecom equipment as expense instead of capital. The most common is via an operating lease (also known as renting) and an emerging/growing option is to use hosted services (cloud computing can go either way depending on how the implementation is done). Mitel tackled the rental strategy with Mitel TotalSolutions which combines equipment financing, software assurance, and services into monthly fee. Mitel’s hosting strategy is largely targeted toward service providers that can operate Mitel’s recently announced multi-instance call director (MICD).

Mitel Mobile is following the success of Mitel NetSolutions which is a virtual network operator (VNO). Mitel NetSolutions offers wired networking services such as voice/data T1s, MPLS, and SIP trunking to about 10,000 business customers. the division came from InterTel, and was rebranded Mitel NetSolutions after the 2007 merger. When the customer combines NetSolutions with TotalSolutions, Mitel captures a large portion a customer’s overall telecom expense. Except for one major and growing chunk of the puzzle – mobile devices.

Enter today’s announcement of Mitel Mobile. Now Mitel is also a mobile virtual network operator or MVNO. It means Mitel is purchasing wireless capacity at a wholesale level from an established mobile carrier. It allows Mitel to price and bundle wireless services (voice and data plans) with its other offerings. The pitch is customers can save money by using Mitel wired and wireless services – one vendor, one bill, with overall savings. It also strengthens Mitel’s Dynamic Extension capability on its Call Director platform that tightly integrates with mobile phones.

Mitel can now offer a comprehensive solution with equipment, wired networking services, and wireless services in a single monthly invoice – and presumably the combined spend will offer overall savings to the customer.

Mitel is taking a unique approach to differentiation. Microsoft, Cisco, and IBM are leveraging messaging and presence. Avaya is leveraging the Nortel base, and Mitel is running with mobile plans. The key challenge Mitel will encounter will be differentiation of its mobile offering from the status quo. Plus Mitel will be taking on a significant support challenge which is best contained by limiting approved endpoints. At a time when the market is frantic with smartphones, that might be difficult. The next logical piece for Mitel to address is hosted email as both mobile and unified messaging require integration with a messaging platform. Mitel currently supports a variety of messaging platforms, but a hosted offering would enable Mitel to capture up to 100% of a customer’s UC monthly expense.

There were few details about Mitel Mobile released today. Mitel did not release pricing information or reveal the underlying carrier providing the service. New mobile devices will be required, and the models/types supported were not available yet. Though it is fairly safe to assume BlackBerry’s will be covered since everyone at Mitel has one. Mitel will publish supported devices and prices shortly, and it’s promised to be “heavy” on smartphone/PDA type devices. The service is expected to be available in Q110.