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Written by Dan Hoffman


Telecom analysts have been in my face recently with an old challenge: “you can’t be a great service provider AND a great software company.”This Telecom industry belief will go the way of “Cigarette Smoking is Good for You .”


One of the reasons that the hosted IP phone system industry has not grown faster is that most players copy the old Telco mult-tier paradigm.One company builds the application, another delivers it, yet another resells it. Much gets lost in the translation, and it was all about the dial tone, not helping the customer get real impact from the applications.


But voice today is really a software application, and an important one.Every major software force – Microsoft, Google, Oracle, even the open source community – are in with both feet.A software business model will win.And the right model is Software-as-a-Service, or Cloud Computing. Some obvious benefits are clear – more sophisticated applications at lower cost, less time to get up and running, and scaling flexibility that matches a company’s growth.Let’s face it, the main reason companies owned their own PBX’s was because there was no other option.


But in the long run, the model’s core advantage is that there is “nothing between me and my customers.” Rapid feedback and painless software revisions produce superior technology.Staff that are truly expert in the application deliver superior service.Unnecessary multiple layers between the customer and developer don’t exist. Have you noticed that there is no great Software as a Service company that doesn’t own its own software? No sustainable competitive advantage exists without it. Why did Salesforce.com become the leader while others struggled to host and partition Siebel or other traditional CRM platforms? The new generation of voice companies must be innovators in both Software and Service in order to lead the market into the Cloud and away from premise-based PBXs. Some Telco’s may succeed in the hosted game – but only in delivering basic dial-tone.


So, after years of competing in the hosted market with other people’s software, Broadview Networks acquired their own yesterday.M5 did this four years ago, after five years of trying the glorified reseller Telco model. Broadview’s CEO Mike Robinson said in a press statement, “It allows us to react more rapidly to customer requirements, which results in better service and more true partnerships with our customers,” That’s the right idea!We welcome a strong competitor in hosted IP phone systems, and Voice as a Service.With more players getting it right, we should be well on our way to living up to analyst predictions that 50% of phones lines are VOIP by the end of 2010.