“Perfect Storm” for Traditional Telecoms Providers Predicted by Inclarity

Inclarity, the UK hosted telephony provider, has today released its annual predictions for 2008. This will be the year for three major new trends in UK business telephony, ultimately resulting in ‘perfect storm’ conditions for traditional telecoms providers to overcome, including:

UK businesses to begin taking telephony offsite in the hundreds

Hosted telephony, which enables UK businesses to take their telephony systems offsite and utilise a managed service over IP, will move from being a ‘new’ market to a mature technology built on a strong business case, causing increased demand across the UK’s private and public business sectors. A survey of small to medium-sized businesses across UK, France and Germany by industry analysts, Gartner, indicated SMBs will increasingly go with hosted solutions. “Currently, only 4 per cent have hosted or service-based solutions in place. However, 14 per cent of the SMBs that are now considering making the transition to IP expect to go with hosted solutions in the future,” said Steve Blood, Research VP at Gartner.

Increased availability of web access on–the-go (via free WiFi, WiMAX and broadband) will rapidly accelerate demand for fixed-mobile convergence solutions

As more and more business users have access to softphones or use mobile phones to make calls over the internet from free WiFi stations, demand for desktop phones will decrease dramatically. More users will make calls through their WiFi’d or broadband-connected laptops, leaving their fixed line phones unused. Various estimates have indicated that by 2010, in the UK around £750 million will be lost in revenues from mobile phone operators to fixed-mobile convergence. In Inclarity’s own research this year, it found that 65 per cent of UK workers use their mobile phone in the office, within feet of a fixed line office phone, more than a couple of times per day.

Acceleration of IP technology and market forces will create a “perfect storm” for traditional telecoms providers and manufacturers to weather

Traditional providers will need to respond to increased pressure from fixed-mobile convergence and reduced demand for conventional hardware. This complex challenge will result in more partnerships being formed across mobile and fixed line telephony markets, such as the 3 and Skype deal.

Dave Millett, Operations Director for Inclarity, commented: “When a giant like Microsoft gets into the hosted telephony market, as it did in 2007, it is clear that we’ll experience a shake up of some sort in the next year. Businesses are no longer asking, ‘what is FMC or what is hosted?’ Instead, they are coming to us to define a detailed business case using the numerous reference sites that are flooding in.”

Millett continued: “2008 is set to be the year of hosted telephony and the first year that FMC has made a big impact. The pressure that traditional telephony providers are under will become a ‘perfect storm’ by 2008 – with competition coming in from all angles. These traditional players will need to do something dramatically different to survive the turbulent climate of 2008, while IP-based providers will enjoy rising demand, and if they deliver a quality, business-grade solution, they should be in a position to capitalise on these trends.”

Steve Blood, Research VP at Gartner said: “Nearly half of SMBs (45 per cent) expect to implement IP within the next year, while another 18 per cent of those surveyed expect to invest in IP the following year. In the UK, 33 per cent of businesses we surveyed plan to use a hosted service for IP Telephony.”

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