Covad chases SME VoIP market, eyes profitability
3rd February 2006
By Rhonda Ascierto
Broadband DSL company Covad Communications Group Inc, which has posted a loss for the past two quarters, would return to profitability this year, said its chief executive Charles Hoffman at last week's Internet Telephony Conference in Florida.
Advertisement"Our company is on the cusp of profitability," he told the audience of VoIP vendors. "We will be profitable this year ... our idea is to fill in holes in our network this year first, then go to new markets where there is demand."
Part of Hoffman's confidence is the San Jose, California-based company's strategy in the business VoIP market.
Enterprises are adopting VoIP in large numbers and most seek premises-based systems from major vendors such as Nortel and others, Hoffman said. "Enterprises are looking for stability and cost savings."
But, Covad's focus is on the small business VoIP market, he said. "Until recently, the small businesses have been underserved."
Return-on-investment arguments "don't really work" when selling VoIP to SMEs, Hoffman said. "They're more concerned with initial cost, they would like to have one provider for all their needs and, as we discovered the hard way, they cannot afford any down time," he said.
Service providers that can guarantee network uptime and call quality will have the edge in the market, Hoffman said.
"No down time is acceptable," he said. "If small businesses are not confident [in the continuity of the service], they will defer to the phone company."
Covad, which has been selling VoIP to the SME market for more than a year, prioritizes voice packets on its networks, Hoffman added.
Also, SMEs are using VoIP networks as a vehicle for other communication applications over IP, he said.
"Companies are changing the way they do business because of this technology. VoIP is becoming a complete communications platform," he said.
Looking ahead, Hoffman reckons it will be applications and innovative features that will draw more small businesses to IP communications.
He cited virtual VoIP call centers as an example. The travel industry has been an early adopter of virtual call-center applications, he said.
And voice-to-text and text-to-voice VoIP applications will be a driver, in industries ranging from restaurants to health care.
For Covad, WiMax is a big part of its future in VoIP. About 3,000 of its customers already use WiMax for broadband, voice and data, he said. WiMax standards, however, have not yet been set. "At the end of 2006 we will see a lot more development in [WiMax] because standardized equipment will be available and costs will come down," Hoffman said.
Wimax combined with VoIP also would be used to create robust emergency services, Hoffman predicted. |
