International Options

8 min read

The minutes market is changing - the battle for mass-market voice is hotting up. By 2010, mobile and VoIP services will account for more than 60% of voice spend in Western Europe and up to a quarter of households will have abandoned plain old telephony services (POTS), according to a new report, Fixed–Mobile Substitution and VoIP: published by Analysys.

The mass market for voice services in Western Europe is being transformed by the substitution of mobile and new VoIP services for traditional fixed voice services. Katrina Bond, lead author of the report told Comms Business Magazine. “We expect that in five years 45% of voice minutes will be made from a mobile or VoIP connection, compared to 28% in 2004.”

The report reveals that there has already been substantial fixed-mobile substitution in Western Europe – mobile networks accounted for 51% of voice spend in 2004 – and predicts that mobile voice services will account for 35% of voice minutes and 57% of voice spend in 2010. Meanwhile, POTS will also face competition from VoIP services.

“The usage of broadband connections for VoIP is at a nascent stage in Western Europe currently, but the scene will change dramatically over the next five years,” says Bond. “In 2010, it is estimated that VoIP could account for 9.6% of voice minutes, but only around 3.6% of voice spend because of its low price compared with POTS services.”

The report points out that spend on voice services will decline as a percentage of disposable income because falling prices for all voice services will enable spend to be transferred to other services or uses of time.

This transitional phase of the voice market presents a number of challenges to the channel – not least from the carriers who have to migrate their offerings from a time based model to VoIP but also for resellers who need to be mindful of the fact that if they don't manage their own customer migrations then someone else will do it for them.

Meanwhile, resellers and carriers have a day job to do and here we examine the views of both BT and Colt who in the same month have made significant comment to the channel regarding the opportunity for developing international business.


We have seen a number of switchless resellers grow significantly over the past couple of years in many European markets. Companies ranging from big brand supermarkets, newspapers and energy providers to niche players are now adding voice telecoms to the products and services which they cross-sell to their customer base. It's an attractive proposition for resellers - they can offer a cost-competitive, quality telecoms service, with minimal financial risk, by outsourcing the actual running of the service to a traditional carrier. The introduction of Carrier Pre-Selection (CPS) has also been an important development: consumers can now easily switch from the incumbent as they no longer need to install a box or dial a pin before using the service.

Margins in the UK however are becoming increasingly slim. Many switchless resellers are looking to expand their services into Europe in search of higher margins, particularly Spain, France and Germany as well as less mature markets which are just opening up.

For switchless resellers who decide to exploit a new market, one of the most important decisions is the choice of carrier who can deliver a high quality service with aggressive pricing, whilst providing local support in-country. It is clearly preferable to deal with a single or small number of players across all markets, than piece together a service by negotiating with individual carriers for pricing on local, long distance and freephone numbers. There are very few carriers who have the breadth of network infrastructure, the tools, and the local presence across Europe to help resellers with their international expansion. What should resellers look for in their carrier partner?

Pete Hall, Sales Director, UK, Wholesale, COLT, believes these are the primary considerations:


Pete Hall of Colt - "Voice telephony is a high volume business and switchless resellers need to be able to connect to new customers efficiently


A fast, common provisioning process: Voice telephony is a high volume business and switchless resellers need to be able to connect new customers efficiently. Some carriers now offer an automated provisioning system which saves extensively on costs and internal resources compared to having to make each connection manually. At COLT we have introduced an automated provisioning-system called CoCom+ available in 10 countries which ensures new customers across Europe can be connected within a maximum of two hours. All country operations can be managed centrally via the reseller's existing platform and systems in the UK, and this ability will mean fewer incremental costs, since all that is required is the additional sales power in each new country.

Fast and accurate call data records: Carriers must be able to deliver accurate call data records (CDRs) quickly and in a consistent format to the resellers so that they are continuously able to access daily billing, revenue reporting and fraud control. If you choose a carrier with pan-European presence, you can then use the same format for CDRs across multiple countries of operation, making the whole process easier to manage

Ability to negotiate competitive pricing: Resellers also need to look for partners with sufficient pan-European scale and buying power to negotiate competitive call rates with local PTTs and alternative service providers.

Dedicated team and market expertise: As with any outsource relationship, a partnership approach is always best. Resellers need a carrier partner with a dedicated team who have a clear understanding of different European markets and can help spot opportunities and regulatory developments, as well as providing dedicated customer service and a fault helpline in support.

Consistency of approach/strategy: The ability to use existing systems and processes ensures a consistent approach throughout Europe. Resellers have to rely on carriers for their day-to-day operations and call quality: when dealing with a large number of customers, care must be taken in selecting a partner with high standards in these areas. Moreover the reselling business has to be an integral part of the carriers strategy. COLT is committed to exploit this market and will further develop CoCom+ with a Web GUI and XML interface.

Open to future services : Your chosen carrier should be able to provide new flavours of services, enabling the reseller to be more flexible in offering and implementing the basic voice service (eg. VoIP).

Proven network quality: Resellers need to look for carriers with a robust and fully redundant voice network to ensure customers receive the best service. They should also look for proactive reporting on the network status, so that resellers are aware of any network glitches before the end-customer experiences problems.

To summarise, Switchless Resellers should look out for the following attributes when selecting a carrier:

•  Hassle-free provisioning

•  Accurate and speedy information

•  Multiple market buying power

•  Dedicated partnership

•  Consistent Long term strategy

•  Forward thinking

•  Quality network

By taking into account all these crucial aspects in choosing a carrier, Switchless Resellers will be well-positioned to ensure the smooth-running of their business, and to exploit new European markets in future.


Foreign Affairs:

On the same subject Jon Lane at BT Indirect Channels says the advent of the Euro and the blurring of geographic boundaries across Europe have created a vast array of opportunities for UK companies looking to extend their reach into new markets and to new audiences.

“This evolution has also brought new opportunities to UK communications providers as their products and services become more and more attractive these growing companies. Now, while businesses of all sizes are able to have a physical presence in other countries, thanks to new communications services, they can even give the illusion of having a presence in another region without investing valuable resources in expansion or relocation.

As wider markets and new products become available, the opportunity for UK resellers to expand their portfolio and attract new customers has never been greater. But how do you go about identifying the customers most likely to want to take up these new products and services, and how do you capitalise on these to drive as much value out of them as possible?”

There are three core markets for international inbound call services:

•  Companies that have a need for employees or customers to call them from overseas. These include businesses    with large mobile workforces or satellite offices across Europe as well as retailers and services organisations    with a customer base across a variety of locations.

•  Organisations looking to extend their presence or audience into new locations or to ‘test' a new market before    investing large amounts of resource.

•  Businesses that wish to give the illusion of an office in another country, or countries, but are unable to have an    actual physical presence there for resource or cost reasons. For example, a small company based in Oxford may    find that they do not have the resources, in terms of budget and people to open a physical office in Germany, but    want to give people the impression they are local and will be easy to buy from.

In order to identify the customers that are most appropriate for you to work with in this area, there are some key questions that you should be asking:

•  What are their international communications needs now and how will these change over time?

•  Will there therefore be an opportunity for up-sell and cross-sell over the next 9-18 months as the organisation's     requirements alter?

•  Does the company have a requirement for 24/7 communications availability?

•  Do they have a large, mobile workforce spread across a number of regions?

•  Would they want to develop a presence in another country, or test a market, without having an actual office    there?

•  Are they working with any other major communications providers to solve their international call issues?

•  Do they lose business because customers perceive them to be too far away?

•  Does the company want to advertise one number for people to contact, reducing marketing costs?

Getting the answers to these questions can help the reseller to establish the extent of the relationship and what solutions would be most suitable.

BTIC's Jon Lane, “Traditionally, the way to communicate with a local audience (or mobile workforce) was to set up a call centre in each geographic location where you have a presence. This however, was expensive and time consuming. With the arrival of affordable non-location based inbound numbers (for example, 0800 or 0870 numbers in the UK) any business, no matter how small, can now afford to set up a single point of contact, which can be called from any locations specified. This can also be used to give the illusion of an international presence, because it is completely transparent to the caller that they are being answered in another country.”

Resellers can also add value by enabling companies to ‘Follow the Sun', ensuring that their calls are answered 24/7 by routing them round the world in line with the working day. For example, an 0800 number can be provided, which is hosted in the UK from 9.00am to 5.00pm Monday to Friday, and is then routed via the US once the American workforce goes to business. Once the US working day end, the calls are then sent via Japan and then back to the UK. This provides complete continuity of communications for businesses, and gives the perception of a global presence, which can be extremely valuable for SMES working out of a single office if they want to compete in the global digital networked economy.

Deregulation has brought a glut of new voice and data providers in many countries, and any reseller looking to capitalise on this market needs to take this into consideration when selecting a vendor partner. Where it was previously possible to enter the German market, for example, by negotiating one contract with the main communications provider, vendors now need to be able to enter into agreements with all the providers in that country in order to provide a fully optimised solution for the customer. This is a crowded marketplace, and resellers should therefore look to partner only with those providers who have extensive, favourable contracts within the desired locations in order to be able to offer customers the best deals and to maximise the margins.

Deregulation has also brought with it a substantial drop in international calling rates, which is good news for the end-users and the business community and creates more opportunities to sell. However, this in turn brings down margins for resellers and it is therefore important to look to bolt-on and bundle value added services where possible. The market for data-services is rising exponentially, and this is one area in which the channel can capitalise on existing and new contracts. If you're selling international data networking, the end customers could well require international voice services too, and vice versa.



The key for any channel player looking to increase reach and revenue in the international arena, is to look for companies that are trying to do that too, or those that are wanting to test new markets and audiences. By delivering a combination of trusted and preferential relationships with local providers, and a range of value-added services, the channel can certainly reap the rewards of this emerging market.


Analysys - www.analysys.com
BT - www.bt.com
Colt - www.colt.net