WHEN PEOPLE FIND OUT I AM the president of Babytel, an independent provider of high-speed Internet phone service, the first question I get is about our name, (most love it), followed closely by “how in the world can you compete against the big guys?”
How we compete is quite simple: we are finding unique opportunities, such as being the VOIP backbone for partners like independent cable companies and ISPs, and we are selling to niche markets like Asian and African communities in Canada.
(I will refer the genesis of our name to later.)
There is incredible opportunity. VOIP opens up the telephone market for providers large and small. The Canadian market for voice communication is $15 billion and the U.S. market is $200 billion per year. There are numerous opportunities in other countries, too, and we are currently active with partners in Mexico and Panama.
In Canada, even a 1% market share generates $150 million in annual revenue.
The numbers prove there is a lot of room to compete against Bell, Telus, Rogers, Videotron, Shaw and others. Let them take their share.
At Babytel we recognize that VOIP (voice over Internet protocol) technology is providing exciting new modalities for communications for consumers and business – and we’ve built a robust and stable VOIP network with proprietary technology that is flexible and adaptable.
Although Babytel markets directly, we are increasingly finding opportunity as a “provider of Providers”. In other words, we can speed up time to market, turning cable companies and ISPs into telephone service providers almost overnight. And for retailers, integrators and agents, Babytel creates new revenue streams hassle-free through reselling partnerships.
Canadians — whether consumers or business — are more willing than ever to move away from incumbents when the offer is right. A growing percentage of Canadians are down right fed up with the large company bureaucracies.
For example, in Canada there are hundreds of thousands of users who have opted to get their Internet services from independent ISPs. These people are demanding their Internet providers also offer VOIP.
We are a cost-effective way for these companies to offer that.
Beyond consumers, we see great potential in the business market. Today, almost 50% of Internet connectivity to business is through non-incumbents. And many businesses buy their telephone switching equipment through independent ‘Interconnects’.
This tells us that this $7 billion segment of the telecommunications market is open for services from non-incumbent providers, either directly from us or through our resale partners.
Earlier this month, we launched Babytel Enterprise, a suite of services that replace the conventional telephone lines with VoIP aimed at Canada’s vibrant small and medium-sized companies.
Research proves that the SME market is disenchanted with incumbents who talk a good game but fail to meet the unique communications needs of their businesses.
Of course, despite the fact the VOIP industry is growing at a 100% clip this year and is expected to stay on that rate every year until 2010, not every VOIP competitor will succeed, just as many competitive long-distance companies in the mid 1990s failed. There will be mergers and fallout, but there is serious money to be made by truly opening up the benefits of VOIP to the entire marketplace.
Although Bell, Telus, Rogers and others can bundle their voice offering, we combat this by having our partners bundle Babytel services with their other services. For those who buy directly from us, we bill by credit card so users don’t have a separate payment to deal with.
And let’s be clear: the reality is that the incumbents are offering a Bell telephone replacement that competes primarily on price.
We don’t limit ourselves, or our customers. We emphasize the benefits of VoIP such as virtual numbers, ringing multiple devices, soft phones, voice-mail to email integration, mobility and more. And, yes, our prices are better then the bundled prices of the incumbents, too.
Another question we get asked about is the battle over the so-called “packet wars”, where some packets of data are treated differently by different network owners which affects quality of service.
In Shaw’s case, customers are even charged extra to ensure quality of service when they sign up for a VoIP provider other than Shaw. First, Shaw is unusual. The major incumbents are unlikely to follow suit and ultimately attract the wrath of the CRTC that is encouraging competition.
Second, the Internet is getting more and more robust and blocking packets is a deliberate anti-competitive action that will become more difficult to justify going forward.
As for the question about our name, VOIP is a new and vibrant field and we searched for a non-techy and unique name that reflects the growth of this exciting new industry that is so full of opportunity.
Stephen Dorsey is president and CEO of babyTEL, a division of Voice & Data Systems (VDS) a leading-edge provider of unified communications solutions that was established in 1991 and provides high-quality solutions to carriers such as AT&T, France Telecom, and Singtel and services to Fortune 100 corporations.
