North American VoIP Access and SIP Trunking Services Markets

Transcription

1 North American VoIP Access and SIP Trunking Services Markets UC Adoption and Increasing Customer Awareness Drive Demand for SIP Trunking Services September 2011

2 Table of Contents Executive Summary - Executive Summary 9-10 Market Overview - Market Scope and Definitions Key Growth Factors IP-based Communication Scenarios 27 Market Analysis and Forecasts - Market Forces in VoIP Access/SIP Trunking 29 - Key SIP Trunking Trends Industry Challenges Market Drivers Market Restraints Market Engineering Measurements 42 - Revenue Forecasts 43 - Installed User Base Forecasts 44 - User Forecasts by Type of Implementation Percent of Revenues by Business Size 47 - Demand and Revenue Analysis Pricing Analysis 50 Competitive Landscape - Competitive Landscape and Target Market Segments Competitive Structure 55 - Service Provider Analysis

3 Table of Contents (continued) Strategic Considerations - Strategic Considerations About Frost & Sullivan - Who is Frost & Sullivan 74 - What Makes Us Unique 75 - T.E.A.M Methodology 76 - Global Perspective 77 5

4 List of Figures VoIP Access and SIP Trunking Services Market: IP-based Communications Scenarios (North America), VoIP Access and SIP Trunking Services Market: Impact of Top Ten Industry Challenges (North America), VoIP Access and SIP Trunking Services Market: Market Drivers Ranked in Order of Impact (North America), VoIP Access and SIP Trunking Services Market: Market Restraints Ranked in Order of Impact (North America), VoIP Access and SIP Trunking Services Market: Competitive Structure (North America),

5 List of Charts VoIP Access and SIP Trunking Services Market: Market Segmentation (North America), VoIP Access and SIP Trunking Services Market: Diversifying Enterprise Communication Needs (North America), VoIP Access and SIP Trunking Services Market: Evolution of IP-based Communications in the Enterprise (North America), VoIP Access and SIP Trunking Services Market: Unified Communications Framework (North America), VoIP Access and SIP Trunking Services Market: Evolution of VoIP Access and SIP Trunking Services (North America), VoIP Access and SIP Trunking Services Market: Market Forces (North America), VoIP Access and SIP Trunking Services Market: Market Engineering Measurements (North America), VoIP Access and SIP Trunking Services Market: Revenue Forecasts (North America), VoIP Access and SIP Trunking Services Market: Installed User Base Forecasts (North America), VoIP Access and SIP Trunking Services Market: Percent of Users by Trunking and Line-side Implementations (North America), VoIP Access and SIP Trunking Services Market: Percent of Users with Native SIP Trunking and VoIP Access with Protocol Conversion (North America), VoIP Access and SIP Trunking Services Market: Percent of Revenues by Size of Business (North America), VoIP Access and SIP Trunking Services Market: Target Market Segments (North America),

6 Market Forces in VoIP Access/SIP Trunking VoIP Access and SIP Trunking Services Market: Market Forces (North America), 2010 Supplier Power Limited number and differentiation among softswitch and application server vendors Substitutes T1, ISDN PRIs/BRIs VoIP offered over the public Internet Hosted voice: business and consumer Types of Competitors Intense competition among service providers: - ILECs/CLECs/WAN* cos. - Cable companies (MSOs)* - VoIP providers - VARs/SIs* Market Concentration Highly fragmented market with several types of competitors Competitive Factors VoIP access and SIP trunking are considered commodities and are subject to intense price pressures Little room for service differentiation. Brand and network capabilities are key to success Barriers to Entry Investments in VoIP infrastructure and enterprisegrade services Extensive data center facilities Name recognition and installed base Buyer Power Strong buyer power due to availability of extensive choice in terms of technology and providers Key: ILECs: Incumbent Local Exchange Carriers; CLECs: Competitive Local Exchange Carriers MSOs: Multiple System Operators; VARs: Value-added Resellers; SIs: System Integrators Source: Frost & Sullivan analysis. 29

7 Key SIP Trunking Trends SIP Standardization Remains Limited, But Extensive Interoperability Testing Fosters Growth While overall adoption of SIP trunking has been a slow and steady movement forward in the last five years, the adoption rate has not met predictions. Issues around interoperability and limited standardization have restrained many service providers from gaining greater market penetration. Ongoing standardization efforts by major industry organizations such as the SIP Forum and SIP Connect are likely to eventually eliminate the need for multiple certifications on different platforms, which are time-consuming and costly. In the meantime, service providers are engaging in extensive interoperability testing with platform vendors, thus expanding their target customer audience. Equipment and Interconnect Dealers Acknowledge the Value Proposition of SIP Trunking As channel partners become more familiar with SIP trunking and its benefits, they begin to pitch it more frequently and more aggressively to their customers. By adding SIP trunking to their portfolios, VARs, dealers, and other channel partners are able to offer a more comprehensive package of services and solutions to their customers. This helps them develop stickier relationships and grow and diversify revenues. In addition, greater channel partner support fosters the market growth and helps penetrate a broader and more diverse customer audience. 30

8 Key SIP Trunking Trends (continued) Service Providers Become Trusted Advisors Customer needs are evolving. On one hand, as VoIP access and SIP trunking services adoption spreads to the mass market, decision makers are less informed about the benefits of these services than the early adopters, which included some more savvy buyers. Therefore, many decision makers are relying on suppliers to educate them as well as assist in developing an overall communications strategy. However, communications solutions are becoming more complex and businesses are looking for trusted advisors to help them with their migration to next-generation, SIP-based architectures and services. Due to changing customer needs, equipment vendors and service providers are placing greater focus on customer education and informative marketing. In addition to preparing extensive marketing collateral including case studies and compelling ROI evidence, service providers are adopting a more consultative approach that often includes the development of a holistic migration plan, of which SIP trunking is just one of many elements. VoIP Technology and Service Capabilities Continue to Mature VoIP access and SIP trunking services are becoming more reliable and easy to deploy, which greatly enhances their value proposition. Service providers are continuously improving the quality of their VoIP services by implementing more sophisticated QoS technologies. Furthermore, more extensive IP telephony and video platform interoperability certifications help expand customer reach and expedite deployments. Service providers are also continuously simplifying and automating the provisioning process to alleviate the cost (including time investment costs) and hassle of SIP trunking implementations. Improvements in service management and billing capabilities are also helping to boost adoption. 31

9 Key SIP Trunking Trends (continued) VoIP Technology and Service Capabilities Continue to Evolve Improved bandwidth options are enabling providers to deploy VoIP services more cost-effectively and offer better SLAs. As customers increasingly migrate to Ethernet services from DSL, cable, and T1/E1 lines, it becomes more compelling to converge voice and data access lines and deliver high-quality, real-time applications over the converged line. MPLS VPN services bundled with trunking are helping service providers to deliver greater quality and reliability as well as to develop stickier relationships with their customers. For those, choosing to use a premises-based or a third-party VPN solution, providers offer managed router and SBC services that help offer better SLAs in terms of reliability and QoS. Furthermore, advanced business continuity and disaster recovery (BCDR) capabilities are adding significant value to VoIP access and trunking services. Customers are increasingly demanding BCDR options from their providers as they acknowledge the large potential costs of network downtime. PSTN failover, failover and call forwarding from site to site, and other BCDR features are helping to relieve customer concerns over limited VoIP reliability, to offer greater value to multi-site businesses, and to differentiate VoIP services from legacy connectivity solutions. Video enablement could potentially become the next frontier in VoIP service innovation. Support for video codecs is likely to be key as providers seek to engage with the increasing number of businesses that are expected to deploy videoconferencing and integrated UC environments that include video applications. 32

10 Key SIP Trunking Trends (continued) VoIP Access and SIP Trunking Services Increasingly Bundled with Hosted Applications VoIP access and SIP trunking services are almost always bundled with some additional capabilities such as a free on-net calling and company-wide four-digit dialing, as well as competitively priced buckets of local and long-distance minutes. Service providers are increasingly looking to differentiate their services, offer greater value to customers, and increase ARPU by packaging basic trunking services with an MPLS VPN and some hosted voice applications such as networkbased voic /unified messaging, fax to , auto attendant, IVR, ACD, call recording, mobility/fmc, conferencing (bridge and minutes), 800 and virtual phone numbers, and E911 capabilities. Others are looking to add value through nonvoice services such as managed security and firewall, Web hosting, and Web . The take rate of such advanced capabilities varies from provider to provider. Most have experienced limited penetration so far, yet others including XO Communications and Cbeyond have been quite successful. Cbeyond s business model has always focused heavily on applications and the company claims a penetration of about eight products per customer. XO claims about 50 percent penetration among its user base with services such as hosted auto attendant, contact-center functionality, mobility, and disaster recovery. Currently, one of the most compelling capabilities to be bundled with trunking services is mobility or fixed-mobile convergence (FMC). Businesses are pressured to deploy enterprise-grade mobility solutions to enhance the productivity of their increasingly mobile workforce, but premises-based mobility solutions require an upfront investment and involve a commitment to a certain type of architecture. However, network-based mobility solutions provide a quick, flexible, and relatively risk-free access to advanced capabilities. Customers can easily adjust capacity and functionality and even discontinue services or switch providers with no sunk costs or integration hassles. 33

11 Key SIP Trunking Trends (continued) VoIP Access and SIP Trunking Services Increasingly Bundled with Hosted Applications (continued) Hosted and managed videoconferencing services are likely to become another key differentiator going forward. The complexity and cost of deploying video on the premises will drive demand for outsourced solutions and will allow SIP trunking providers to offer video as a value-added option to their trunking services. Border Control Equipment Enhancements Help Deliver Services More Cost-effectively Advancements in media gateway and session border controller (SBC) equipment help deliver greater functionality on these devices and enable the more cost-effective deployment of next-generation services. Currently, many enterprise media gateways include some SBC functionality and are equally suited for both mixed TDM-IP environments and SIP-to-SIP integration. Vendors also increasingly add other capabilities to their gateway solutions, including SIP proxy and some basic PBX functionality, thus enabling cost-effective branch office integration and SIP trunking implementations. Additionally, more enterprises are beginning to deploy SBCs on their premises, which facilitates SIP trunking provisioning. Continued gateway and SBC testing and certifications are also helping boost SIP trunking adoption. Large Enterprise Solutions and Other Unique Features Help Expand Customer Reach Providers are developing SIP trunking solutions that address the specific needs of large, multi-site businesses. Level 3, Verizon and XO Communications have launched services that offer greater flexibilities and economies to such distributed organizations. Other providers are planning to launch similar capabilities in the near future. 34