The enterprise telecommunications marketplace has undergone significant transformations over the last 25 years, influenced by technological advancements, regulatory changes, and evolving business demands. During that time, the market has transitioned from analog to digital technologies. The expansion of broadband internet access made high-speed internet a utility as essential as water or electricity. Data services have exploded and telecom providers have shifted to data-centric business models.
The transformations have also reshaped the provider landscape. Massive industry consolidation has blurred the lines between traditional telecommunications service providers, software, and cloud providers – and these changes are still playing out today. In fact, the maturity and convergence of technology stacks have poised 2024 to be one of the most competitive years in the history of telecommunications.
Understanding the Impact of Telecom Industry Changes on Enterprise Businesses
To understand where the market is heading, it’s important to understand a short history of four primary applications for enterprise telecom services:
- Large Corporate and Regional Offices: In the late 1990s and into the early 2000s, most large corporate and regional offices were still using digital Private Branch Exchanges (PBXs) dominated by Siemens, Nortel, NEC, and others. Since the mid-2000s, most of these systems migrated to VoIP technology. This market was led and dominated by Cisco Call Manager. The application of voice services has shifted again to cloud-based services.
- Branch Offices and Field Offices: From the late 1990s and well beyond 2015, most branch and field offices were supported by smaller PBXs, Key Systems, or just Plain Old Telephone Service (POTS). Over the past decade, these services have been replaced first by hosted voice providers such as 8×8, Five9 and Vonage. More recently, many of these services have migrated once again, typically to Microsoft Teams, Cisco, or others.
- Omni-Channel Contact Centers: Twenty years ago, most enterprise contact centers (they were “call centers” at the time) were supported by specialized hardware from suppliers such as Avaya, Nice and Verint. After 2015, call centers became contact centers and added online chat, text messaging, and social media to create a very flexible customer experience across multiple communication mediums. The systems supporting this application included a mixture of the same suppliers plus some new ones, such as Twilio.
- Collaboration Services: The only collaboration that existed in the 1990s (even though Webex was founded in 1995) was for audio conferencing. Audio Conferencing remained the primary tool for collaboration through to the early 2010s. The dominate supplier was Cisco Webex. Over the last decade, additional suppliers such as Zoom, BlueJeans, Teams, and many more entered the marketplace – with others also exiting (e.g. BlueJeans following Verizon acquisition).
A New Era of Telecom Services and Providers
Today, the telecom provider landscape looks vastly different than it did even a decade ago. We’re now in the era of Unified Communication. The technologies described in the previous sections have converged and nearly every supplier now has an all-encompassing cloud solution that delivers all four communication applications. In addition to services offered by traditional telecom suppliers, many features are also available from AWS, Azure, and Google Cloud.
According to DataHorizon Research, the UC market value is expected to reach $584 billion by 2032 with a CAGR of 17.7%. As growth explodes, we can expect significant competition and consolidation in 2024 and the decade ahead.
Tips for Preparing for a More Competitive Telecom Marketplace
NPI recommends enterprises take a few steps to prepare for market changes to ensure they’re managing telecom spend wisely:
Identify opportunities for provider consolidation. Enterprises should review their portfolio of communication suppliers and develop strategies for consolidating. In some cases, a single supplier approach may make sense to maximize discounts and deal size leverage.
Benchmark rates and pricing. As the competitive landscape evolves, anticipate shifts in pricing. Performing price benchmark analysis on all telecom purchases will ensure you’re paying a best-in-class price that’s either at or below fair market value.
Don’t forget routine service and carrier (provider) contract optimization. There are dozens of cost-related business terms in your carrier/provider contract – and each should be fully optimized according to your current and future-state usage requirements. Likewise, the optimal selection of plans and services (and the grooming of unused services) will ensure you’re only paying for what you need.
If you have questions about how your business can rein in telecom spend, NPI can help. Contact us to learn more.
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