Smaller providers rush in

By Caron Carlson  |  Posted 2004-12-13 Print this article Print

"The [Regional Bell Operating Companies] have been moving the slowest because they have the most to lose," said Raul Martynek, CEO of Eureka Networks Inc., a small provider serving New York City. "They have the benefit of being able to take a slower approach. Theyre going to turn up their engines when they need to."

New entrants and other competitors to the incumbent carriers are moving quickly to lure business users with VOIP offerings and exemplary customer service. With five points of presence in and around New York City and no plans to expand into other regions in the immediate future, Eureka this year decided to add voice service via VOIP to its data delivery network.

In a similar vein, Covad Communications Group Inc., a San Jose, Calif., CLEC specializing in DSL services, added a managed VOIP offering tailored to businesses in August. Covad plans to offer by the end of this month VOIP in more than 900 cities throughout the United States.

These startup providers, unlike their more traditional rivals and equipment vendors, champion the savings that business users can achieve through VOIP. When Micro Office outgrew its Vonage service, it switched to Eurekas VOIP service. So far, it fits the bill.

"We just plug in analog lines to the jacks," said Chao. "People use whatever phone they want to bring in. If they want to use a $15 phone from Radio Shack [Corp.], they can do that."

Micro Offices business plan is compatible with Eurekas in that both provide a flexible, simple, low-risk service. The office space provider uses about 45 VOIP lines today but plans to add 200 more at a second location next year, Chao said.

Hosting concerns

While a hosted or managed VOIP offering presents none of the capital risks that investing in ones own converged networking gear does, it comes with pitfalls.

Most hosted VOIP providers rely on the local telephone loop to connect to the customer, and if the loop goes down, service goes down with it. However, Eureka subscribers will be directed to voice mail if the local connection is lost, rather than hear a busy signal as they would over a traditional PBX system.

"One of the drawbacks of the hosted system is that if you lose the local loop, youre out of business," Martynek said. "With a hosted solution, if the T-1 goes down, the incoming call goes into voice mail. Unless switches go down, you dont get a fast busy [signal]."

Next Page: Entrepreneurs flock in.


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