Peter Radizeski is Founder and President of RAD-INFO INC. He is an accomplished blogalyst, speaker, author and consultant. He has helped many service providers with sales training, marketing, channel development and business strategy. He is a trusted source of knowledge about the telecom sector. His honest and direct approach make him a refreshing speaker.

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Sangoma Picks Up a Distributor

Sangoma Technologies Corporation is buying Buffalo-based VoIP Supply. VoIP Supply is a distributor of the hardware that goes with VoIP including phones, switches, headsets, et al. Apparently the privately help distributor “in fiscal 2018, will be accretive, will add over C$15m in revenue to Sangoma,” according to the press release.

Sangoma is paying $3M in cash plus about another million in stock and options for VoIP Supply. It borrowed the money. If VoIP Supply is adding C$15m ($11.3M US), then the $4M price tag is pretty decent.

SYNNEX is buying Westcon-Comstor’s $2.18 billion North American and Latin America
businesses for as much as $830M.

Ingram bought NETXUSA for $55M upfront and $10M in earn out for $125M in revenue, according to the 10Q filing in April 2016.

Slim margins in distribution. Slim margins in hardware. The slightly bigger margins are in services.

Sangoma also purchased FreePBX/Schmooze in 2015.

Maybe the parts business of VoIP isn’t enough. Maybe they need to be selling bundles, services, maintenance, etc. Maybe VoIP Supply is a good next progression after FreePBX.

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    POTS and PBX

    Recently on LinkedIn and twitter, home for the haters, there has been noise about the death of PBX. Toshiba and Avaya certainly give credence to that thought. However, analyst research demonstrates that PBX seats still outpace Cloud seat sales. That gets muddied by MITEL’s numbers for “cloud” seats (3 million) and Broadsoft’s numbers for both “cloud” and “UC”. A SIP trunk is not a seat or cloud in my book.

    I know we are facing TDM sunset but from the looks of advertising from the likes of Birch and Bullseye, POTS is still alive and well – and profitable! POTS is still the reliable choice when it comes to voice lines for alarms, elevators and faxes.

    For many scenarios, an on-premise PBX makes more sense than a haphazardly deployed Hosted VoIP scenario. Many a small business replaces POTS with SIP trunks to get mileage out of their aged key system. Switching to a new cloud PBX is not a viable option for some small offices because they don’t want to change behavior. Hosted VoIP does a poor job on key system emulation despite years of partners selling it and providers trying to deliver it. It is one big face palm.

    If PBX were indeed dead, wouldn’t one of the leading UC companies have 1 million seats by now? Instead they are struggling to get to 700K seats.

    The problem with UC is that it is mass market and it would be better off verticalized.

    It would be better for all if Broadsoft wasn’t competing directly with its own customers by selling direct to users at $15 per seat. That smells of desperation.

    Someone asked me what I meant by that. Broadsoft selling direct cuts out their 400+ clients – like Vonage, TPX & Nextiva. Now these providers have to face price compression from their vendor. It’s like ISPs and CLEcs who buy wholesale from ILECs and cablecos only to see retail rates are cheaper than their wholesale rates. Isn’t that a crock?

    BSFT can’t add any more clients because every carrier on the planet has already picked a softswitch – BSFT, Meta, Netsapiens, or home brew. The only way to maintain revenue is to sell direct. BSFT isn’t exactly raising the ocean or expanding the pie. They are just taking a big bite from the pie that their clients have been baking for 10+ years. Sure, everyone says that cloud comms is starting to take off; that it is hitting high adoption, but is it the UC we have seen or a bunch of variety?

    Office 365, Cisco Spark, Dialpad, One Talk, Fuze, Shoretel, 8×8, RingCentral, Grasshopper, Mitel, Avaya, Jive, Intelepeer <- that is a lot of variety under the UC umbrella. With 2000+ providers of some form of UC in the US, even with an accelerated pace of adoption by users, will there be a clear winner soon? Probably not.

    In fact, all these choices without a clear winner probably helps Microsoft more than anyone. When in doubt buy from the established.

    There are factors: it isn’t a replacement system so much as a change. Extra gear is required (POE switches, QoS Router). It isn’t as reliable as POTS – and can’t be used in all places POTS was. The call quality is often not clear (unless you put it up against cell phones). (It’s why they are touting SD-WAN for UC). It isn’t cheaper than POTS in many cases. The deployments are often messy. (Providers can barely turn up Internet Access without issues let alone something complicated like Hosted PBX.)

    And finally it doesn’t pay much in commissions. At $15 per seat and even a 20 seat deal, the MRR is $300. That is a big headache for $300 in billing revenue. Easier, faster and better to sell network still. Or POTS. Or on-premise PBX with higher compensation. 3CX has been doing everything to make a partner’s business model sing.

    This isn’t me being a Pessimist. This is me being a Realist. This is just how it is in the street in many places.

    I don’t hear anyone hawking white glove service or money back guarantee or no headache install. I hear the talk of zero touch deployment. That’s the wrong way to go except for the CFO who wants to maximize profit per contract. Customer experience is someone else’s domain.

    I don’t hear anyone talking about their call quality, their customer experience, their hand holding on deployment, their world class PMO. These are better things to talk about than price and features.

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    Apex Technology Services
    Sponsored by Apex Technology Services, a leading IT Services company

    Waiting on the Channel

    Whether it is TPX CEO Richard Jalkut or other channel executives, providers are impatiently waiting on the channel to jump off selling network and start selling other things.

    The products that have been launched recently sit in big buckets titled IOT, Cyber-Security, Managed Services, SD-WAN and of course UC (UCaaS, UCC, WCC).

    Rich Tehrani has a nice read about AI and analytics transforming companies like Vodafone.

    COLOTRAQ has a new IT Risk/Cyber-security Assessment and Planning Service. They even brought in some talent to delivery it in Victor Zamora.

    MetTel launched a single SIM for IOT. One VAR I spoke with said that they are going to run with this to the end-user because it is a niche that is almost without competition.

    Level3 consistently emails me about selling cyber-security, especially their DDoS Mitigation service.

    EarthLink is still around? They launched a secure public Wi-Fi connections with Norton WiFi Privacy (basically VPN). Considering how often businesses use Starbucks, hotel, airport and other public wi-fi, this should be a no-brainer sale.

    Panterra rolled out Streams, an ode to Slack, but integrated into a secure, encrypted full unified comms platform.

    VZW has One Talk, one of the few mobile UC plays out there.

    When TelePacific re-branded as TPx, the highlighted products were managed IT, security, UCaaS and SD-WAN.

    Aryaka just rolled out a clientless SD-WAN: “SmartACCESS – the first-to-market SD-WAN for remote access, with built-in dynamic CDN.” In the US, Content Delivery Networks are how a majority of users get their Netflix chill on.

    Verizon announced that they are selling more MPLS due to SD-WAN. CenturyLink has said that SD-WAN is not a quick fix. So there is a lot of room for expertise and advising in these projects still.

    AT&T says that enterprise clients want a hybrid solution to managed services. (Nothing new here). Some of the services will be outsourced to the likes of AT&T and some will remain in-house. That is the way it is for cloud as well – HYBRID, according to an Evolve IP survey. Private for mission-critical, Public (AWS, Azure, SaaS) for mass market stuff and VPS for DevOps. Pulling that together requires some expert help. Is that you?

    All of these vendors are just waiting for Channel Partners to pickup the ball and run with it.

    It will take more than the Twitter approach to launch. Twitter put there platform out there and waited to see what people would do with it. Years later, Twitter still has no idea what the business case or financial model is. Don’t be Twitter!

    It isn’t about just throwing your toy into the yard so someone will stumble along to play with it.

    We want to be spoon fed who IS buying it; why are they buying it; etc. (As I have written about ad nauseum.) It is all about the Stories! Ignoring this means that we will leave that toy alone on the ground over there.

    I understand that channel partners have to innovate, change, transition, etc.


    With network revenues steadily declining and telecom being a broken mess, partners spend all day selling bandwidth at lower rates – and lower commissions – and then having to navigate the many layers of Dante’s Hell that is a carrier today to get it installed (and then fixed – yes I am talking to you ACC Business and GTT!)

    In the midst of this mess, on-going consolidation and the accompanying musical chairs is making a partner’s job harder, not easier.

    Much of these products require new knowledge and some training. That is not time that is always available to partners. I know, Go Make Some Time before you become Extinct.
    You see, we’ll have time when we are extinct.

    Besides compelling stories, buyer profiles and the WHY, we will also need new sales skills. Selling dial-tone or network is replacement. Selling Cyber-Security or AI requires a different sales approach.

    MSPs understand how to sell managed IT but some VARs do not. (Hence why they are still VARs!)

    While many of these products allow a Partner to enter a green field with little competition, maybe the business model for the partner has to be demonstrated as well.

    And maybe instead of launching more services, you figure out how to deliver on the ones you have. If you can’t deliver the easy stuff (Network), I will never give you a shot at the complex!

    Just some food for thought while you wait on the Channel.

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    Telecom Tidbits (Part 2459)

    Some stats from 451 Research

    Enterprises buy a variety of computing services from public to private along with VPS, hosting and everything in between. “It’s easier for enterprises to develop, test, operate and migrate workloads across hybrid architectures when the CSP’s public and private cloud code base is the same, or at least virtualized and functioning identically.” However, they cannot procure this variety from Amazon or Google. They would to go to the likes of IBM, Microsoft and Oracle.

    “Consumer tablet demand continues to shrink. Apple is the only manufacturer seeing an improvement in buying.” Not good news for the cellcos.

    “Future data centers will include technologies such as advanced data center management software, distributed resiliency, prefabricated modular (PFM) components and dexterous robots.” Meanwhile Telcos are exiting the data center business (WIND, C-Link, VZ).

    PE firms own many of the data center companies, including Peak 10 which acquired Via West from Shaw today for $1.7 Billion. In addition, Dupont Fabros merged with Digital Realty. That is along of transactions and consolidation in the space.

    Upgrade those pipes!

    Cisco’s report on Internet traffic growth is out with many pretty graphs. “Globally, Internet traffic will grow 3.2-fold from 2016 to 2021, a compound annual growth rate of 26%. Globally, Internet traffic will reach 235.7 Exabytes per month in 2021, up from 73.1 Exabytes per month in 2016. Global Internet traffic will be 7.7 Exabytes per day in 2021, up from 2.4 Exabytes per day in 2016.”

    What is an Exabyte? “Global Internet traffic in 2021 will be equivalent to 707 billion DVDs per year, 59 billion DVDs per month, or 81 million DVDs per hour. In 2021, the gigabyte equivalent of all movies ever made will cross the Internet every 1 minutes.”

    According to Akamai, “Slow IPv6 adoption is a conundrum in light of IPv4 address exhaustion.” Global Average Internet Connection Speed = 7.2 Mbps. Yet “U.S. speeds averaged 18.7 megabits per second compared with 28.6 Mbps for global leader South Korea.” Most of that is cable modem download speeds since MSOs have the lion’s share of broadband customers in the US. DSL is dragging us down.

    The Duopoly is looking to strip Net Neutrality rules, claiming they stifled growth. OOPS! “Broadband speeds have soared under net neutrality rules, cable lobby says.”

    “Fiber is basically the nervous system of the networks of the future,” Malady said and Verizon is making big investments in it.” Good insight.

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    Is It Easy to Switch From CM to Agent?

    I hear Channel Managers (CM) mention how easy it is to be a partner. Recently, one CM told me that he was going to start being an Agent part-time.

    Someone I met in Vegas was a laid off CM who was discussing how exciting it was to launch her partner business. I hadn’t heard from her and just checked on LinkedIn. She is back in the W-2 world of being a carrier channel manager.

    Over the years I have met a handful of CMs who had been doing Agent business on the side to build up enough MRC (monthly recurring commissions) to make an easy slide over to the independent side.

    There are a couple of executives to made the leap into master agencies by bring a deal in their back pocket big enough to start them off.

    It takes a while to find a prospect, ink the deal, get it installed and then get paid. Number porting for anything voice and fiber installation for anything network can push out delivery dates. The other problem is that if you sell a 100MB pipe $995, after waiting 120 days for install and turn up, you get that commission check of $150. That isn’t going to go far. You need to be selling deals every week. Not dabbling in it looking for a whale.

    So while I understand the side hustle on being a partner, I don’t know how anyone can look at it and call it easy.

    An Agent is often described as a lifestyle business, too. Sure there is flexibility and monthly recurring commissions help, but you only get to eat what you kill. Time off comes with an opportunity cost.

    That lack of a guaranteed check accompanied by those luxurious benefits are usually the deterrent to a switch from CM to partner.

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    Apex Technology Services
    Sponsored by Apex Technology Services, a leading IT Services company