Predictions for 2010, Part 1

* Look for businesses to positively influence hosted services opportunities

For our next several editions, we'll make some predictions about what we think might happen in the world of VoIP and convergence in 2010, beginning with some insights others have shared with us including industry veterans from IntelePeer, Siemens and a venture capital firm, MC Venture Partners.

For our next several editions, we'll make some predictions about what we think might happen in the world of VoIP and convergence in 2010, beginning with some insights others have shared with us including industry veterans from IntelePeer,  Siemens and a venture capital firm, MC Venture Partners.

As we recapped and reviewed the 2009 predictions we made a year ago, we noted we had have seen increased focus and some success during the year on hosted services offered to the small/midsize business (SMB) -- especially by competitive carriers including the cable companies. We expect more of the same evolution in the SMB market in 2010, but we'd like to add another twist following some conversations we recently had with executives at IntelePeer including Charles Studt, vice president of product management and marketing, and Margaret Norton, general manager of the AppworX Business Unit.

These execs have seen a shift in how businesses buy hosted services over the past year, with business unit owners choosing to spend dollars on IT infrastructure as a way to generate revenues. Integrators are also frequently involved to help business unit execs quantify the benefit. For example, an integrator might find a way that uses dollars typically spent on advertising to more directly benefit customer sales with targeted marketing leads.

We think that especially in tough economic times that are likely to continue in 2010, business owners will continue to be creative on the cost-reduction side, positively influencing hosted services opportunities, Those responsible for revenue will also allocate budgets to improve revenue -- creating a way to make what was an IT infrastructure expense turn into a revenue-generation tool.

The second insights come from Paul McMillan, director of UC technical vision and strategy, Office of the CTO at Siemens Enterprise Communications. McMillan has created his own 2010 predictions list that he shared including thoughts on how UC will be affected by social networking, mobility applications and video to the desktop. He suggested (and we agree) that video will begin to make a "real move to the desktop after many fits and starts."

Movement on video as a UC tool is a matter of several factors, including better compression technology that reduces the cost yet improves the video quality. In addition, up-market telepresence has shown the mid-tier enterprise the value of video. As MC Venture Partners points out consumer use of Internet-delivered video is rapidly expanding; we believe that as consumers increasingly find video a useful information and entertainment source, businesses will also find that video as a communications tool is worth the trouble, much like they have found social networking tools are also effective in business.

Finally, according to MC Venture Partners, "DOCSIS 3.0 combined with dense metro network footprints among MSOs will change the nature of competition for enterprise broadband services. [DOCSIS 3.0] delivers a new level of high bandwidth asymmetrical broadband service to the enterprise and will put pressure on other carriers to innovate their business models."

We think that one way for the telcos and competitive carriers need to compete with DOCSIS 3.0 is to add value onto the broadband with value-added hosted services like Session Initiation Protocol-based UC applications. The traditional ILECS have all but milked the ISDN and T-1 cash cows dry -- and they will need to step up to the plate with more to offer than slow and expensive legacy bandwidth as cable operators deploy DOCSIS 3.0 services offering 50M to 101Mbps downstream for less than $150 a month. And one postscript to the DOCSIS 3.0 deployments: these speeds offer superb downstream video conferencing connections; however, upstream links can be a problem for symmetrical traffic needs.

We'll continue our 2010 predictions and discussion next week.

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