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.

Look for his innovative ideas and analysis of current technology on his blogs.

Meet him at one of the many conferences he attends and speaks at.

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Musings from ITEXPO

Just back from ITEXPO, the first tech show of the year. Here are some quick thoughts from the show.

Lesson 1: If a speaker uses a PR contact instead of themselves, they will always suck. After more than 15 years of moderating, this is a truism. They will be unprepared and will not really add anything to the discussion for the audience.

Lesson 2: Most AI stories are a remix of old analytics stories. For instance, telling the tale of mining call recording for keywords in order to send alerts to another machine is basically what sentiment analysis is and has been a thing for a little while. [But this reiterates my point that most providers have no idea what their competition has. Navel gazing.]

Lesson 3: The reason IoT isn’t sold by many channel partners boils down to one thing: the solutions are not pre-packaged. It isn’t a product to be pushed. IoT solutions require bringing together several pieces in order to solve pain for the Buyer. This isn’t really what channel partners do, unless that is going to be their specialty — and usually that is an SI (systems integrator). The channel is usually about pushing product, especially replacement product.

Lesson 4: Definitions matter. When discussing a topic and all 3 panelists have a different view of what a term means is confusing to the audience. My fault should have defined the term in the prep meeting.

Lesson 5: I appreciate panelists that show up prepared and with good stories. Thank you to Michael Skurla of Radix IoT and Mark Lindsay at ECG.

Lesson 6: Shoes. I walked over 7 miles yesterday. Shoes matter.

Two observations:

I don’t know what it means when the moderator is a no-show and no one knows. Like why didn’t the moderator tell anyone (such as either panelist) or why didn’t a coordinator know? Maybe a hint that was going to happen was not receiving ANY contact from that session moderator prior to the session.

When are they ever going to finish the Broward County Convention Center? And why is there only a handful of restaurants nearby?

 

 

Ridiculously Boring

Telecom has become quite boring. One of my partners, Larry, left telecom almost 10 years ago because he was bored. As I read this morning’s rash of press releases, I can honestly say that only the Intermedia news is different. Everything else leaves me bored, shaking my head or ignoring it.

One provider who has pivoted at least three times launched a no-code AI-agent. Whoopee! There are several hundred providers that offer that. There is more CX news from 8×8 and others. Big deal. There are hundreds of CX providers. Buyers are confused.

Zendesk is adding Voice. Freshworks adding voice, chatbots and contact center. So everyone is becoming a platform – voice, ticketing, chat, CRM, billing, and more – all being one software bundle for the business.

ServiceNow, SalesForce and others are also hoping to be the main software bundle for the business.

CPaaS providers are offering softswitch solutions, plus SMS, chatbots, SIP Trunks, contact center, IVR in the cloud and so much more.

So where does that leave your average Broadsoft/Metaswitch/Netsapiens/Alianza provider?

This reminds me of the early 2000’s when VoIP providers would literally do anything for revenue: Origination, termination, trunking, white-label, softswitch partition, wholesale, you name it.  Like AT&T, when you do it all, you do none of it well and you are known for that (doing nothing well). AT&T is a 149 year old brand. It is an ILEC and a top cellco. What have the rest of you got in terms of brand or history?

Why should a company throw away their current CX systems and jump on yours? Let me re-phrase that: Why should someone at Company B godfather an extensive migration project with you as the vendor that if it fails gets him fired? What assurances does he have that (a) the product will work; (b) the company will stand behind it; (c) it will solve his problem? Oh, and the company will be around by the time the contract expires?

This is the real world that sales people and partner face.

The other interesting news was Sangoma integrating with CallMyDoctor in what looks like a move to take on Weave. But then the quarterly numbers come out and Sangoma – like quite a few providers right now – missed its numbers, is exiting hardware, re-positioning. Blah, blah, blah. Truthfully, I don’t even know what platform integrates with CallMyDoc – was it Star2Star, VoIP Innovations, FreeSwitch, Schmooze, Digium, or Netfortis?  Who knows?  It is mornings like this that make me dislike telecom.

Most providers are not honest with themselves. They always approach it like they are AT&T or Comcast with 20M subscribers. Yet most providers never break 100K customers. 100K! A large percentage of those providers don’t break 25K customers. USLEC, PAETEC, Cbeyond? Under 100K. 8×8 has just 55K global customers and 3M+ seats.

They also want 1,000 partners!

If you approached your strategy that you only need to get 10K profitable customers, everything changes.

Did you know that of the approximately 60K MSPs in North America, 85% have less than 10 employees, serve less than 200 customers and have less than $5M in revenue??? Just for Perspective.

If you approach your channel strategy with only needing 25 aligned partners, your strategy gets simpler and clearer – and easier to execute.

If you approach the market like there are 7 segments, and pick 2 to win, your strategy is easier.

If you approach the market that you are going to win 2 verticals, your strategy is easier.

Instead, everyone wants to be Lay’s potato chips and thinks that everyone will buy them without even considering the Why You over Everyone else question.

The Me-too “innovation” is not very intuitive. Doing what your competitors do is fine if you are Unilever trying to keep up with P&G, but Pfizer doesn’t play me-too to AbbVie or Bristol-Myers Squibb.

What do your customers want/need? What would make their business better?

What can you deliver on?

What can you sell? What can your sales team and your partners sell?

What clear, concise and compelling story can you tell?

On two calls in the past two weeks with other partners and buyers and one thing was clear: Buying is on hold because there is too much noise. Buyers don’t believe the hype. (Probably because partners don’t believe the hype either. Many providers can’t deliver reliable service on what they have now, let alone vaporware they are hyping.)

When Buyers are confused, Status Quo wins. When status quo wins, sales don’t happen.

There are 3 sales happening at every opportunity: the Buyer has to believe in the product, the vendor and the salesperson/partner. They have to trust all 3. They have to trust that no one is fibbing and that the vendor will reliably deliver the product in a way that will benefit the business, as the partner says.

Yet instead of concrete use cases, we get statistics and number of contracts signed.

More providers should look at their customer base and find out how to provide more value to them – and plan around that.

Two Zig Ziglar quotes for you: “Lack of direction, not lack of time, is the problem.” and “A goal properly set is halfway reached.” Planning is the key.

There is a distinction between Enterprise Telecom and SMB telecom. Knowing that distinction is significant. Most hype is for Enterprise, yet 99% of the market consists of SMB. 99%! The Enterprise Buyer is very different from the SMB Buyer who is very different from the very small business owner.

In an Enterprise sale, Mitch or Mary can’t derail a project because they are used to doing it with the paging system or the admin side car, but that happens often in small business.

Knowing your Buyer, the businesses that you serve, their pain and how you solve it are the very foundation of success.

Omni this, AI that, Agents, chatbots – all that is great if you serve lots of customers and can afford to displease a subset of them, but most of us aren’t the cable company. Most of us have less than 10K customers and want to keep them all happy! So a CX strategy of less human is better makes sense in pennies but not in long-term dollars.

Today, yet another technician was at the house to fix another appliance. Again the technician has a mobile device and begins the appointment with a text and a link to track the driver arriving. Then photos of the appliance and everything on the mobile device – for appliance repair, air conditioning and others. How is your cloud comms system improving on that scenario?

It can’t because most of  the activity is all done on the service platform – the notification, tracking, photos, work order, appointment setting, invoicing and payment. So during those years that I was advocating for integration into SMB software, the software vendors  did what ServiceNow and Freshworks did: added the comms pieces itself.

We aren’t selling voice or phone systems, we are selling software.

Unfortunately, the softswitch vendors have all given up – Metaswitch, Broadsoft, et al. Other players that understood that they were software, built out a ton of capabilities that precisely benefit the business they were designed for.

You can sell POTS replacement, PBX replacement, digital voice, and SIP trunks, but I think a majority of the market will go to SMB software packages, some of that powered by a CPaaS player for the voice, SMS, email, and notifications. That is what Weave is: a software package that schedules, verifies insurance, accepts payment and notifies customers. Voice is just a small piece of that bundle. Those 4 parts are what businesses are buying: BPI – Business Process Improvement for small business.

Talking about AI to reduce the call center or AI to help write marketing material or improve CX is all pie in the sky stuff for Enterprises to buy. 99% of the market is looking for ways to do business more productively, without fumbling with tech or needing a team of geeks to keep it working.

Small business doesn’t have an IT team. Small business doesn’t have the time or money to do a POC on AI. They need out of the box solutions that work reliably. That seems to be forgotten in the Me-Too, AI hype cycle. But then if you are a public company or looking for investors, the hype cycle is required. That hype does NOT have to be the story that sales tells prospects though. That story should be about how your system will decrease no-show appointments by 10% or increase productivity on some part of their business.

Get back to basics. Solve pain/problems for small business.

Channel M&A in 2025

MSP M&A activity continued to be strong in December and in January. Private equity is powering some of those transactions, but it also has to do with (1) scale; (2) talent; and (3) customer acquisition. The largest expense at an MSP is labor. The business needs to have enough Managed IT customers to keep the technicians, engineers, and other techies busy and billing. Not all MSPs have a strong sales force that can efficiently add and retain customers. In some cases, it might be easier to buy customers via acquisition. The final piece is that talent is scarce, so acquiring a business for customers and talent is ideal!

This sector (MSP) will continue to experience M&A in 2025.

Vendors will have a heavy M&A year. Why? Many MSP vendors, cybersecurity providers and aggregators are PE owned. And like milk in the back of the bachelor’s fridge is expired.

CIVEN sold NITEL + 2 acquisitions to Comcast in just 3 years. All 6,600 business accounts buying DIA, NaaS and cybersec. No voice. Not very messy. A clean transaction in a tight window for the PE group.

Why do so many other providers not have any buyers? They aren’t clean.

BCM One bought a lot of Managed SIP trunking, Skyswitch & Coredial (white-label UCaaS), and Arena One (BSFT) – that is a lot of disparate VoIP. On top of that, BCM One has a small brokerage (TSB) and a Verizon reseller. That isn’t clean. It is not packaged to be re-sold.

Next you have TPX, a one time darling of the channel. Then Siris Capital Group, who has a bad track record in telecom (PGI), bought TPX in 2020. TPX was a once good reseller/aggregator, that shifted to focus on  UCaaS with its Broadsoft/Webex product and Cyber-Security from an MSP acquisition that gave them a SOC and NOC to go with a data center from TelePacific days.  The networking business was downplayed, so the channel looked elsewhere for transit and transport, the mainstay of channel partners. Not many buyers for Broadsoft-based UCaaS. I don’t know how outstanding they are as an MSP or MSSP, but the UCaaS turns off buyers. It would have to roll into another aggregator.

Morgan Stanley bought a stake in Fusion when they went bankrupt in 2020. I don’t know what Fusion is good at or proficient in. And if I don’t know, likely suitable buyers don’t either. Fusion would need to hire Q Advisors or another banker/broker to find a suitable buyer.

Grain Management owns many telecom investments. 123Net, 55H data center, Summit Broadband, Light River, a bunch of ILECs (Hunter, Ritter, and Great Plains), WANRack and Spectrotel. They have really straightened out Spectrotel.  Grain is a long-haul investor, VC not PE. For Spectrotel, with its portfolio of Internet connectivity, voice, cloud communications and managed services, I just don’t see what an  exit looks like. Who is the buyer? Cox? Spectrum? Lumen? I just don’t know.

The rumor mill has 8×8 being acquired. My question by who? The market cap today is $350M with $369M in debt. Can you see the problem?

There are a lot of vendors that are for sale, but the problem is: Who is the Buyer? Usually a PE firm can re-package an investment and sell it upstream, but in this case I don’t see that happening.

In the distro/TSD space:  In 2021, Platinum Equity paid $7.2B for Ingram Micro. In October of 2024, the IPO was valued at $5B. The 18M shares of stock were priced at $20, which it still sits at. The company has $1B in debt. This is a global distributor with a cloud marketplace and a TSB. What does that say to investors in other TSBs???

Telarus used to say that Deloitte or Accenture would acquire a TSB. I have always doubted that. Even with $500M in commissions taken in, that isn’t enough EBITDA to interest a company with $67B in annual income. That is 0.7% of the revenue — and they only keep like 10% of that!

I think Telarus and Avant will merge by the end of the year. Or Telarus and Bluewave since Columbia is an investor in both.

On the Trusted Advisor/Agency front, there will be some M&A, but really we will see a bunch of exits/retirees return to the Advisor world. Why? The deals made to sell their agency did not pan out – and we would know this but due to non-disparagement clauses in these contracts, we never hear it. Many who sold early expecting a lotto payout have become dismayed. The super exit has not happened — and is looking less likely every day. TNCI, Part Deux.

If you are selling your business, hire an attorney or a banker or an advisor. Only a fool sells his business without advice.

So Many Predictions for 2025

Many predictions have been published in the last 3 weeks. One channel media outlet interviewed a handful of Agents for predictions for 2025. I address some of those here. (I wrote about my thoughts on 2025 here, but here are some more thoughts.)

TSBs.

When it comes to the PE M&A, that is something we have been discussing since 2021 on our weekly Thursday calls. In 2024, one super agency was up for sale, but no takers, probably due to the fact that the initial investment was sold as “building a software platform” but quickly pivoted to just rolling up TA agencies.

One of the super-agencies and one of the TSBs had their debt extended from 2025 to 2026, but at 11% variable interest rate on at least $14.9M, it begs the question, how long can they pay the interest? This is a senior secured debt. They get first dibs at the 2 revenue streams: MDF and commissions.

Adam at Telarus has made comments in the last 15 months about consolidation of the TSB’s. Since Columbia Capital invested in both Telarus and Bluewave, it makes sense they might merge.  It also makes sense that Columbia might want to buy another TSB (Avant perhaps) and merge it with Telarus.

Why Avant? I don’t see AppDirect giving up its model with the long term investors they have. Sandler isn’t for sale.  I don’t see E78, Amplix or Upstack moving in 2025.

But Bridgepointe has over $20M in debt due in 2027, so look for a move by them in 2026.

I see a management shake-up coming at Upstack in 2025.

If Avant doesn’t change hands or merge, there will be a C-Suite shake up there as well.

This is the thing with Private Equity, they are there to extract every penny out of the business, even if that means killing the host.

AGENTS.

While my friend, Nick at ATC, predicts the end of life of Agents, I don’t. Telecom is just way too complicated. Companies don’t usually have anyone that understands it. In 2024, direct customers of mine re-engaged me more often then ever before, because of copper retirement, TDM costs, Microsoft Teams projects and network design changes.

IT staff already have a full plate. Handling telecom is too ugly a project for them to tackle if they have a Trusted Advisor to lean on.

In 2024, getting vendors to respond was more difficult than in 2023. I don’t know if that is due to less employees or a shift in priorities or what, but it was difficult to get the attention of vendors.

I have noticed that products have more requirements from vendors like minimum spend and require more pre-sale investigation. That’s another reason why I think Agents are still alive. Telecom is broken. “Solutions” are complicated. Quite a few moving parts. Batteries not included. Complex means buyers need a translator. That is the Trusted Advisor. I don’t see this changing any time soon.

As Partners age, will they retire? When I look around, I tend to think no. The payout to sell your receivables is lower than riding it out. Selling your commissions (because truthfully that is the only business asset) is like a reverse mortgage or selling your $300K life insurance policy for $30K. (Saw that commercial 9x on Sportscenter this week.)

We are seeing quite a few “retired” partners coming back. This is due to partners not using a competent lawyer during the M&A deal. If you are selling for $2M or more, $10K in lawyer fees to insure you have a solid contract is a no-brainer. Signing the boiler-plate contract that the acquiring company sends you is stupid! Yet partners did sign and then did not get what they thought and now they have to get back on the hamster wheel.

MSPs

Recent numbers suggest that MSPs in North America shrank from 61K to 42K according to studies in 2024. The 3 factors could be: M&A, retirement and business closing. Running an MSP is more complex than it was pre-COVID. Remote workers, mobile devices, SaaS, UCaaS, security, insurance, compliance and end users is an exhausting amount to tackle.

Market share for RMM is now Kaseya, ConnectWise, NinjaOne and HaloPSA, according to an analyst.

If MSP numbers are declining and I would imagine VAR numbers are as well, wouldn’t that mean the number of partners is declining at a time when the TSBs are saying everything is growing?

CONFERENCES

In 2025, two things I will be watching: conference attendance and CompTIA.  CompTIA got bought by private equity. The revenue generating certificate/training side goes with the name to PE. The non-profit trade association gets the name GTIA and has to figure how it survives.

Informa merged with TechTarget to go public in 2024. That means no more fudging the attendance numbers. And so far the Expo Only pass for CPExpo in Vegas is not free! So what happens to attendance? We shall see.

Last year, conferences grew in number. There are 1 to 3 shows every single week in IT & Telecom. They can’t all survive. We are in Peak ROI times. Buyers want to know what the return will be on every purchase. With hotel room rates and air fare much higher, can the show ROI a $1800 trip (3 nights hotel at $400 plus $600 airfare)? It could when it was $900 (3 nights hotel at $200 plus $300 airfare).

 

In 2024, most pundits blamed the election on the slow down in sales, yet December did not see the bump in sales that was suggested. If it was the election, then Q1 2025 should be pretty active for IT & Telecom sales. If it wasn’t the election and it was other reasons, then Q1 will be shaky. Either way everyone will be watching sales numbers and estimates in Q1 to set the tone for the year.

A lot of tech hype has hit the market from AI to SASE to SD-WAN to UC+CC. Most tech is NOT adopted right away. The curve suggests that it will be a few years before that happens.

There was a contraction from buyers who moved to the cloud but won Buyer’s Remorse when the bills came due.

There is a lack of concrete outcomes and benefits from newer tech that is being pushed.

Companies last did a hardware refresh during COVID. 2025 will see the next wave of hardware being refreshed in the form of PCs/laptops, firewalls, and more.

AI!

I was involved with one AI project in 2024 and the company scrapped it for internal reasons.

Except for cost saving reasons, I don’t see what companies would use AI for.  In fact, most of the hype around AI is about getting rid of humans. Just so you know, when you get rid of humans on one side, you get rid of humans on the other. In other words, when you take humans out of the equation, you lose customers. Period.

I see AI for cybersecurity. That is for performance. But other than for cost savings, I don’t know where AI goes next. Not to get go off too much but we already see GPT being used for homework, emails, blogs, ad nauseum. We see it in art. I didn’t know we wanted AI to do the creative and humans to stop being creative!

SIDE THOUGHT:

In what year do you think we get Rocket Money for Business? While consumers pay for too many apps that they don’t use or know about, businesses do that at an alarming rate. Apps have tackled the licensing piece, where the software can tell you how many licenses you pay for. I think if SMB gets an easy app to see how much SaaS they pay for, the SMB SaaS market starts a decline.

That’s all the thoughts for the day.

 

TSB Investments

  • Telarus – Columbia Capital – 2020
  • Upstack – Berkshire Partners – 2021
  • Avant – Pamlico Capital – 2021
  • E78 Partners – Further Global Mgmt – 2021
  • Bridgepointe – Charlesbank Capital – 2022,
  • Bluewave – Columbia Capital – 2022,
  • Amplix – Gemspring Capital – 2022

Driven by Hope

A lot of telecom planning is driven by Enterprise telecom in the US. The financials are based on landing 6 huge deals per year. Some of that is government and some of that is one of the 30,000 actual enterprises. People forget that the channel originated out of a need for the small business to be serviced efficiently and cost effectively. Hence, the channel was born.

Microsoft, IBM, and Cisco realized independent, well-trained, certified small businesses could sell and service their products to 99% of the market better than an internal team. Microsoft sales wanted to sell to federal government, very large businesses and universities, not Main Street, where 99% of the businesses operate.

The problem is that product development, road mapping and executive decisions are based on Enterprise Telecom thinking, which is why sales take so long. And strategies don’t work out (especially in the two year window allotted).

Most small businesses are not looking to buy Change, which is what Cloud, AI, UC+CC and more is. CHANGE. They don’t have the people or the time to bring in new technology to change how they do business. They just want the new tech to replace the old tech without disrupting business processes – and be a little cheaper. This is the reality of selling today. Status Quo wins much of the time.

We still sell side-cars and handsets because businesses do not like Change. Karen or whoever manages the business or is a significant person at the business doesn’t want to learn how to do everything anew. She wants to keep her processes as they are. That’s why adoption of technology takes so long.

This isn’t a DVD player or a smart phone.

The reason AI is hyping is that Enterprise is playing with it. They can afford to. Small business can’t. They would need an immediate ROI from adopting AI; at least, a concrete business outcome in 90 days.

We hear about POTS replacement constantly. AT&T is turning off their copper network soon. Lumen (CenturyLink) is looking to sell its consumer division (that’s mainly copper). There are approximately 800 ILECs in the US. We only hear about the largest of them (8) – AT&T, VZ, FTR, Lumen, Consolidated, FTR, TDS, WIND. Windstream and Lumen are a mess. Consolidated went private. Frontier went bankrupt, then private and now Verizon is buying them back. AT&T is shutting down copper every where. The other 793 ILECs depend on copper since much of their network has not been replaced with fiber. A percentage of these ILECs have sold to private equity, who will replace copper with fiber where the ROI exists. Another percentage have gotten USDA or other loans/grants to replace the copper with fiber, but for 20-40 million households copper and dial-up are still a thing!

They can’t just rip and replace the Metaswitch because the cloud switch probably can’t do GR303. So what will those 600+ ILECs do for a switch? Ribbon most likely. Or homebrew.

Short rant: realized that with the death of copper so goes switched long distance and RESPORGS! Have a client with switched International toll-free numbers and nowhere to port them to as Lumen shuts off the Global Crossing network. You read that right.

In addition, County ordinances have not caught up to non-copper lines for elevators or fire alarms everywhere.

Small businesses are not ready to give up the key system they have running on 3 POTS lines.

This is a disconnect when you look at the stunted growth of UCaaS. Some of this is due to status quo, but a lot of it is due to the fact that most UCaaS systems are built for 1-10,000 and are as generic as store brand potato chips. Vertically integrated platforms can easily demonstrate an ROI and a reason to make a change. Weave does a great job with small offices like eye doctors, veterinary clinics, dentists and other medical offices that are small.

One thing about the market: there are 26M businesses in the US with payroll. 99% of them are under 500 employees. The average employee size is 13 across all 26M. That means the average UCaaS sale will be about 13. The aim is to get really efficient at not only selling 13 seats but provisioning and on-boarding those 13 seats.

Everyone will reply: it is just as easy to sell and provision 100 seats. Sure but the numbers don’t work that way. The average is 13. There are many more businesses with 20 or less employees than there are with more than 20 employees. If you had a sales and marketing strategy to attract and chase businesses of 75-150 employees, that would be remarkable. And go for it! But most of the 2000+ UCaaS sellers in the US, are chasing the small business, sub-20 market. That’s the stats talking. Not every UCaaS provider is RingCentral or Zoom reporting enterprise deals as they happen.

Which brings me back to the Enterprise Telecom is the tail that wags the telecom dog, but it isn’t the way most providers make money. In fact, other 800+ ILECs and 700+ cablecos, most serve very small business. That leads to the disconnect in hardware and road map and everything. You cannot strategize around 30,000 accounts.

As much as Spectrum likes to tout out the title Spectrum Enterprise, I guarantee that enterprise just means more than 20 employees.

One last note:

APIs and AIs work when most of the data is sitting in a cloud service. However, for many small businesses, they don’t have a CRM system in the cloud or much “data”. They have a cash register and QuickBooks on CD. They don’t want to pay Intuit an ever-increasing amount of money every month just to send out 30 invoices. The reality looks a lot different from the Enterprise Telecom pundits. Many small businesses are still getting by on Win 7 and an shared Office 2016 disc. And that reality makes for data that analysts can’t account for when they discuss Enterprise Telecom like it was Main Street telecom.

At least Verizon understand that and has products for different markets: OneTalk for very small business; VCE and now RNG for SMB; and Cisco offerings for the E in SME (Enterprise or large business).