At Alianza, we say: “Got Fiber? You need VoIP!” We say this because many new ISPs are entering the market without a background in voice services, and there’s great opportunity for them to grow revenue, accelerate ROI and deliver a better customer experience with a phone service portfolio. This includes rural electric cooperatives, municipal providers and new overbuilder ISPs that are building broadband networks for rural and underserved communities.
#1 Grow Revenue
Fixed voice remains a huge market. In the U.S. there are still 116 million wireline phones and most of those are VoIP; in fact, VoIP lines grew 38% 2013-2017 (read more in The State of Wireline Phone and VoIP in the U.S.). Fiber broadband providers can take advantage of this market transition, capturing residential and business customers as they make the move to VoIP.
Broadband providers typically see a 20%-40% take rate on voice on top of their broadband services, providing a margin-rich revenue boost. These new fiber connections have ample bandwidth for multi-play delivery and, without a voice bundle, money is being left on the table. Check out The Importance of Home Phone in Today’s Broadband World on why the landline lives on.
While VoIP has been around for two decades, small-medium businesses (SMBs) are still largely stuck on TDM, but are increasingly moving to hosted PBX and SIP trunking services. Nearly half the SMBs in the United States plan to evaluate a new business phone system in the next few years. Newly launched businesses will choose IP-based systems from the get-go.
Another key point: a Heavy Reading survey shows that service providers see value in offering voice as it broadly helps them with winning customers. Eighty-one percent said that having voice in their portfolios helps drive adoption and growth of other services.
#2 Boost Competitiveness and Win Rates
Phone service is still important to many demographics and families. And because of this, it is still important for providers—new and old—to compete, maximize revenue and satisfy select customer demand.
Service bundling is key to winning customers in competitive markets and fostering loyal subscribers that provide higher lifetime value. Leichtman Research Group has reported that 68% of broadband subscribers and 59% of all households get a bundle of services.
Bundling for SMBs is even more critical; many won’t switch ISPs without a VoIP solution. In many cases, bundles are required to win!
#3 Improve the Business Case
While there is demand for ultra-broadband powered by FTTH, this technology has a big price tag: the cost per home passed at $500 or much higher, especially in many rural communities. With an additional offer that boosts ARPU and competitiveness, VoIP can accelerate the ROI for that fiber build by adding margin dollars and contributing to the bottom line. With the right VoIP solution, fiber providers can expect 60-80% margins while having a competitively priced service offer.
Fifteen-plus years ago, cable MSOs and some Internet OTT players shook up the voice market by offering VoIP with useful new features and better prices for customers. New ISPs can too, especially if the only option in the community is POTS plus DSL.
Fiber + Cloud Voice = Awesome
Now admittedly some service providers are not properly equipped to capitalize on this opportunity. In some cases, the ISP may lack the expertise or capital to build a VoIP network. Or the white label solutions are not compelling in terms of the business case or operational model.
The cloud voice platform enables an easy-to-add and cost-effective VoIP complement to fiber broadband services. The cloud solution makes sense for providers facing these situations:
- You do not currently have a VoIP softswitch or white label hosted voice solution
- Your rate center coverage doesn’t align with the new fiber footprint
- Your current solution doesn’t provide you with the appropriate cost basis to compete against other broadband providers
- Your softswitch is end-of-life, obsolete or just a pain to manage
We belong to a number of key industry groups including Fiber Broadband Association, NRECA and Utilities Telecom Council and we showcase our solution at numerous events like Calix ConneXions, Fiber Connect, NISC Member Information Conference, and TechAdvantage every year to show why VoIP matters to new ISPs.
Want to dig deeper into the VoIP opportunity for fiber broadband providers? Learn more in our eBook Got Fiber? You Need VoIP!
Note: This article was originally published November 2017 and it’s been updated with new data.