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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: Stephen B. Temple who wrote (1851)	11/13/1998 6:19:00 AM
From: Stephen B. Temple	Respond to of 3178

Open Port Targets Canadian IP Telephony Market with New Regional Office Appoints Former 3Com Exec to Tap $185 Million Canadian Internet Fax Market November 13, 1998 CHICAGO, Nov. 12 /PRNewswire Open Port(R) Technology Inc., a leading provider of Internet telephony solutions, announced today the opening of regional sales operations in Canada to tap the Canadian market for Internet fax, which industry analysts estimate will grow to $185 million by the year 2002. The company appointed W. Allan White, former 3Com Corp. and Informix Corp. executive, as national account manager for Open Port's Canadian operations, which are located in Toronto. According to Cheryl Mayberry, senior vice president/general manager of worldwide sales and marketing for Open Port, the move is strategic for the company since Canada is the sixth largest market for international outbound fax, behind the United States, Japan, the United Kingdom, Germany and France. In addition to outbound faxing opportunities, nearly 20 percent of all U.S. fax traffic terminates in Canada. "The Canadian market represents a significant opportunity for us," Mayberry said. "Not only is it a major termination point, it is one of the top markets for outbound traffic. We're looking to help Canadian ISPs tap into that source of new revenue by providing solutions that will allow them to offer services to carry both origination and termination fax traffic over the Internet. It makes a lot of sense for us to have a direct, local presence there." White has over 20 years of experience collectively in the computer, information services, networking and telephony industries. As head of 3Com's Canada Enterprise Access Group, he established a Canadian presence for then U.S. Robotics (acquired by 3Com in mid 1997), and within three years captured 50 per cent of the Canadian remote access market. Prior to 3Com, he was with Bell Canada, Informix, EDA Instruments, Teleglobe/Memotec and TIL Systems. He holds a bachelor's degree from McMaster University, Hamilton, Ontario, Canada. "The opportunities for our IP messaging solutions in Canada are very promising," White said. "Carriers and ISPs are looking for value-added applications to drive more revenue for their services. We can offer them a new revenue stream by giving them the opportunity to broaden their services with IP fax and other IP messaging services." According to White, the Canadian operations will target carriers and ISPs with Open Port's comprehensive suite of IP faxing technology. Open Port has already established a global, IP fax presence as result of the deployment of its solutions by UUNET Technologies Inc. and GRIC(TM) Communications Inc. In addition, working with partners such as Microsoft(R) Corp. and Optus Software Inc., Open Port expects to address enterprise customers who are looking to deploy IP faxing within the corporate setting. "We're the only IP fax solutions provider who can lay claim to having a global, IP fax solution in deployment today," said Mayberry. "Quite simply, we've done it, and our solutions work. We're hoping service providers in Canada will recognize the value of working with a company with a successful track record that has the experience to get the job done." Open Port has the most comprehensive suite of technology and developer's services for businesses to leverage the benefits of IP telephony in the network infrastructure, service provider and corporate markets. Open Port's Harmony(R) NSP messaging solution allows Internet backbone carriers to build and support large-scale, high-performance IP messaging network infrastructures. Harmony CPE is a highly successful suite of client and server products for enterprise messaging applications with an Internet Gateway Module added for connection to the Harmony NSP product line. Third-party developers can link their messaging products and applications into Internet backbone services with Open Port's Application Programming Interfaces and Internet Gateway Software Developers Kit. Open Port's Canadian operations are located at 17 Edenvale Crescent, Toronto, Ontario M9A485. White can be reached at 416-249-9748 or 416-249-5674 (fax), or by e-mail at awhite@openport.com Open Port Technology Inc.

To: Stephen B. Temple who wrote (1851)	11/13/1998 7:04:00 AM
From: Stephen B. Temple	Respond to of 3178

IP Telephony Pricing Advantage's? > November 13, 1998 In the traditional model for international telephony pricing, PTOs use the accounting rate system for terminating each other's calls. The sending operator pays the delivery operator for the completion of a call. When the volume of traffic is the same in both directions, the net flow of accounting rate payments is zero. Increased competition in the international calls market has already led to a downward pressure on tariffs charged. Price reductions have been experienced in all deregulated markets initially with the presence of callback operators and subsequently with resellers. Internet Telephony now introduces yet another price pressure. IP telephone pricing advantage Internet Telephony can arbitrage international prices offered by the incumbent operator yet still achieve operating profit margins. The highest margins emanate from routes to regulated countries in regions such as Africa, Asia and Latin America. Despite diminishing PSTN infrastructure costs and increasingly favourable accounting rates, consumers have yet to experience equivalent reductions in prices. Currently, the price margin is higher for international calls than for national calls. The economics of pricing indicate that services for which demand is inelastic should have a higher price margin than services with elastic demand. Econometric studies have shown that the demand for international calls is more elastic than for national calls, suggesting that international calls should have a lower price margin. However, this is clearly not the case. IP pricing pressure Deregulation and the increase in telecom service providers has already put significant pressure on incumbent retail rates. BT in the UK has been forced to constantly review and adjust its rates in order to protect and maintain customer loyalty. Since the beginning of this calendar year, BT has introduced five pricing changes for the consumer and business markets. Despite these price reductions, BT still remains the most expensive provider in the UK. With the advent of Internet Telephony, price differentials may lead to even greater pressures on the incumbent's rates. International resellers have to lease international lines to connect two countries. ISRs are under the direct influence of incumbent operators who may augment pressure by increasing the prices for international leased lines. This is not the case however for ITSPs, who deal mostly with Internet backbone operators. ITSPs lease local lines for connection to the Internet. Internet Telephony may potentially pose an even greater threat to resellers who now face additional pressure from lower ITSP rates. Internet Telephony has the added advantage of penetrating the markets where ISR is not allowed, if not through the provision of a Phone-to-Phone service then via PC- to-Phone. Due to small price differentials, there is very tight competition between callback operators and ITSPs. In order for an ITSP to gain a competitive advantage over a callback operator, it would have to offer its service at a price lower than that charged by the country with the cheapest international PSTN tariff, which happens to be the US. Predictions for the direction of traffic and future trends of Internet Telephony can be based on the valid and logical assumption that they will follow similar past trends of the ISR and callback market. ISR and callback are most commonly used on routes where prices charged to customers are much higher than the costs incurred to provide IMTS. The largest preponderance of these services therefore terminates predominantly in Latin America, parts of Asia Pacific and the Middle East, where in most countries, telecommunications providers still enjoy monopoly status. Future pricing mechanisms for the Internet will prove to have a great impact on the pricing of Internet Telephony services. Until then, Internet Telephony will exploit its cost advantage and gain significant ground in the market of international calls. IP price comparisons There are claims that Internet Telephony can offer a customer up to 60% (or even more) cost savings on international calls. It is indeed true that Internet Telephony offers significant price reductions but in some cases, prices offered by ITSPs are actually higher than those offered by an ISR. Such an example is illustrated in Table 17. The US to UK route is one of the largest and most commonly used telecommunications routes in the world and it may seem surprising that Delta Three, an Internet Telephony Service Provider, offers one of the most expensive rates for a one-minute call. The above example applies to most traffic between deregulated countries such as inter-European routes. Competition has brought down the prices to such a low level, that the profit margins have been reduced to almost nothing. Conversely, Internet Telephony rates are significantly lower than those offered by resellers for countries with heavy regulation. These regions not only offer callers cheaper rates through Internet Telephony but also offer attractive profit margins for the service providers themselves.