The pace of business never seems to slow down, and the pressure to remain competitive in a global marketplace is constant. For any business to survive, you must always be on your toes, but with this mindset, it can be hard to see the forest from the trees.

This Focus Brief takes you one step back in the telecom food chain to share the perspective of a leading applications vendor who sees a lot of forest. This is a view that I think has a lot of relevance to businesses, especially in terms of how they invest in communications technologies.

Review

Last week, I was one of a small handful of industry analysts invited to attend the Metaswitch Forum. Now in its seventh year, this is my fourth Forum, and I’ve had an up-front view of how far this company has come along. If the company is new to you, I’ll briefly explain that they are one of the leading independent applications platform providers in North America, and being a private company, they keep a fairly low profile. They have achieved a very strong market position selling both Class 4 and Class 5 switching platforms to service providers of all types. Their core market, however, has been Tier 2/Tier 3 carriers, so their end customers are primarily SMBs, just like many followers of this portal.

Consider my earlier reference to stepping back in the food chain. Metaswitch’s customers are carriers, and their customers are businesses – as well as consumers. Carriers face similar competitive pressures to SMBs, and by putting yourself in their shoes, I want you to come away with a deeper sense as to why there’s a lot more to communications than phone systems. Until just a few years ago, the relationship between a business and a carrier was pretty simple. They sell you dial tone, and you connect that to your expensive PBX or less costly – but more limited – key system.

No carrier can survive like that in today’s market, nor can any business. Metaswitch knows this very well, and last week’s Forum presented a compelling look back as well as forward. Their business has evolved considerably and with their strong track record, Metaswitch knows what carriers need to remain competitive. In their view, the decade ahead will be all about innovation and new business models built around the latest IP technologies as well as emerging services that SMBs need to survive. Looking back, they reiterated what we all know – traditional telecom is in terminal decline, and growth will have to come from somewhere else.

That somewhere else is IP services, and more specifically, applications that address real business problems. Given the flexibility of IP and its ability to drive down the cost of providing service, businesses can now get their connectivity from a wide range of operators. As all modes of communications shift to IP networks, the end game for carriers becomes pretty simple – deliver more broadband at a lower price than your competitor.

Once that pipe is connected, the best way to differentiate is with innovative services and business models. This is where the forest separates from the trees. When bandwidth capacity reaches the point where most forms of voice, video and data can easily be supported, the possibilities for new services truly expand. This is the world Metaswitch is planning for, and their message is that applications will increasingly become cloud-based, and with that comes a clear break between services and end points.

This is important for Focus readers, because these two elements have been historically coupled. Future decisions about telecom need to be based around the idea that services and applications are actually more important than the end points themselves. In that regard, your next phone system is really a means to a bigger end, rather than just being for telephony. Metaswitch still believes in the primacy of voice – as do I – but standalone telephony will decline in value, as the price of the underlying service continues to fall.

Conclusion

Going forward, the real value for voice lies in its integration with data applications, and the more broadband you have, the more interesting these possibilities become. I’m not advocating you give up your phone system today, but I will suggest that you think about your phones as the trees, and the applications as the forest.

I get invited to a lot of industry events, and can tell you that Metaswitch understands where communications is going as well as anyone – especially for SMBs. While their customers are carriers, this perspective is still very relevant to SMBs. The more you understand how carriers are evolving, the more you can expect from them and ultimately get the best return on your IT spending.