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Telecommunications is arguably the biggest technological commodity of our days. You get this notion when you look at operators’ tariff plans and also at their advertisings. You also start wondering how operators can be profitable when they’re battling each other over the lowest price and the cheapest flat rate. Operators have huge operating costs. Upholding and evolving a network is expensive. Plus, there is a high pace of technological innovation like the mobile internet, cloud computing and also LTE. At the same time, there is a rally, who can offer telecommunication services cheapest.

When you look at who’s earning the most money in the telecommunications industry, you realize it’s not the operators. It is mainly device manufacturers and network equipment vendors that earn money, whereas carriers are under massive pressure to keep their costs as low as possible.

Just have a look at Apple and Samsung or Ericsson. These companies are technological pacemakers and they are setting a technological agenda. Companies that don’t keep up with that development are facing hard times. Nokia is the most prominent example. Carriers are not pacemakers either. At the 2012 Mobile World Congress, they were marginalized. But I guess that’s what happens when you’re a bitpipe.

At the same time, operators are downsizing continuously and neglect what made them strong. On the one hand this has to do with the on-going price rally in the industry. On the other hand, the shift from circuit-switched TDM networks to all IP networks enables operators to offer services cheaper because they need less man-power to operate their network. The downside is poor quality of service when everything is pushed through just one big pipe.

So what can operators do to escape the downward spiral and regain their position as a technological vanguard? It’s what we at ECT keep preaching. Carriers need to offer added value and leverage their networks’ potential. This can be via ring back tones in the consumer sector but also corporate ring back for business customers as well as a range of state-of-the-art cloud services such as network-based contact centers or virtual PBX.

When these services run simultaneously in TDM and IMS networks on a scalable platform, carriers can offer high-margin services with an investment that’s not too high. It’s not rocket science. Customers are gaining flexibility and they save a lot of money. That’s why I say, carriers that keep focusing on their traditional strength and are driving technological innovation with state-of-the-art services from their network are likely to be spared the fate of the “dumb bit-pipe”, and will ultimately be ahead of their competitors.

Before we begin, Happy New Year to all of you. I would like to begin this blogging year with some cloudy thoughts:

Our industry has been clouded. I think the cloud is the biggest buzz since the late 1990s where you were considered an innovative company just because you had a website. The older among you may remember.

With the cloud customers use services that are hosted in huge data centers over the internet, including voice services like PBX or IVR using the SIP protocol.

Many say this reduces carriers to mere bitpipes because all that’s left for them is sending data back and forth. I say, however, carriers can offer business voice services far better than all of those cloud providers. In fact, carriers have the better cloud. Let me explain:

Better because all clouds are not created equal. Depending on the underlying technology various clouds are suited for various purposes. Carriers have the best cloud for voice services. Obviously, voice and speech technology are their core business.

The reason for that is the carriers’ networks. These are highly elaborated and evolve constantly. They have the know-how to run services smoothly and can offer their customers five nine availability. Cloud providers, who offer voice services over SIP usually cannot, with them Quality of Service (QoS) will always be an issue. This will always be followed by the discussion whether it’s the carrier’s fault because data gets lost or is it the provider’s fault.

What carriers can sell as cloud services are network-based solutions based on next-generation intelligent networks. They make a service like IVR almost a part of the core network. At the same time, critical functions like databases are not publically accessible because they’re on a different network layer. This is a great argument for those who are afraid of security leaks in cloud applications.

The next reason is the unparalleled infrastructure carriers have when it comes to billing. They have all address and billing details of their customers because subscribers usually trust their operator with billing issues. This is something a company renting contact center seats or an IVR based in a carrier’s network benefits from. The company can be pretty sure to pay only for what they’ve ordered.

Then there are services only carriers can offer with their networks, like multi-country services or billing in multiple currencies.

In other cloud areas carriers may not be the suppliers of choice but when it comes to voice value-added services there’s no cloud like the carrier cloud. Shouldn’t operators emphasize their advantages over other providers stronger?

At ECT, a substantial amount of our business is migration. Whether it’s a platform for ring back tones, a network-based contact center or a legacy IN, when a system reaches end-of-life it needs to be replaced. All the client data and features have to be migrated to the new platform and taking care of this is our everyday business. Sometimes, not all features on the old system are migrated and we very often add new features.

A successful migration requires a great deal of planning and a clear strategy. You have to determine when to do the installation, when to do the testing and when to migrate the data. In many cases, the carrier’s employees also need to be trained. At the same time, callers shouldn’t notice the migration.

For the actual migration, there are two approaches. The first is the big bang approach in which you build up a complete parallel system and on the date scheduled for the migration, you flick the switch and shift to the new system. The most important thing here is a fallback scenario which leaves you the option to return to the old system if something doesn’t work the way it should.

The second approach is the more popular one: you migrate everything bit by bit, i.e. customer by customer, service number by service number. The advantage is clear: there are fewer risks and you can test each customer and each data set that you have migrated separately. However, this kind of migration takes much longer.

But how is it done? Prior to moving the data from the old system to ours, we make it “ready for action”. We create admin users and their respective user profiles. That way we make sure that, for example, a certain prompt on the old system will be the same prompt on the ECT system even though the IDs on both systems are different.

For the actual migration, when moving the parameters from one system to the other, we start by extracting the parameters from the old system. We then convert the features used according to predefined rules and mapping files. Finally, we transfer the parameters to the new system. All this is tested until it works to our customer’s satisfaction. After the migration, comes an observation phase where we search for errors, monitor the performance and look for anything out of the ordinary.

The tricky part is always to crack and interpret the old database structure. Fields like “name” or “billing address” are easy to migrate but many others fields are not quite so consistent and cannot be migrated one to one. Another challenge that we face on a regular basis is the extraction and conversion of routing plans. These are extremely difficult to read and vary from service number to service number. Migrating these requires a great deal of time and know-how. We have this know-how here at ECT and in the past, have performed successful migrations from e.g. Siemens INs or Alcatel systems.

When we do a migration, the emphasis is on flawless execution. We want a seamless and flexible transition to our platform to make sure that everything works, no features are missing and involve customers in the migration process whenever necessary.

Do you want to know more about what it takes to do a successful migration? Contact me and I’m sure we can help with your next swap-out.

At ECT, we take a certain pride in our flexibility when it comes to fulfilling customer demands. This also applies to the commercial side of our business. We offer both CAPEX and OPEX models and also offer different licensing models to customers, depending what suits them best.

A popular model for software licensing which we can offer is pay-as-you-grow. The carrier buys a system that can handle a certain number of subscribers or Call Attempts Per Second (CAPS). Operators purchase licenses based upon their own projections and then see how the service evolves and how heavily it is used. If a service becomes more popular, depending on what type of service it is, the amount of subscribers or CAPS may no longer be sufficient. The carrier then purchases additional licenses to handle the increase in traffic.

Others prefer to buy unlimited licenses, so pay a one-time fee. I don’t really like the term but it is similar to a flat rate. You can have as much traffic on your system as you want as there is no upper limit defined by software. The hardware does, however, have a physical limit. When that is reached and there is the requirement for more capacity, our customers benefit from our scalable platform which runs on server farms and can easily be expanded by adding additional servers. Usually, operators who buy a very large system opt for this model.

This one-time-fee licensing model is less expensive for a large system than pay-as-you-grow, however, there is a sum of money that has to be paid although the full capacity may not be used. With pay-as-you-grow the cost for customers is more flexible and always proportionate to the actual revenue they generate with the service. You pay only for what you need and if your demand increases you get more.

So whatever licensing model suits best, whether our customers need a large-scaled system now or want it to grow with their subscriber base, we can offer a flexible licensing model to fit each business case. Should you need a completely different license model, please let me know. I’m sure we can make it possible.

There has been one recent trend in the telecommunications industry that’s hard to evade. I am talking about mobile broadband, ideally realized with LTE. During the 2010 spectrum auctions carriers spent billions of Euros for LTE frequencies; Deutsche Telekom alone spent about 1.3 billions in the auction, the entire spectrum auction in Germany amounted to 4.38 billion Euros. Sounds like carriers see a huge potential in mobile broadband and a glance at the smartphone market, which is geared towards high speed mobile internet proves this.

The whole idea behind LTE seems to be a substitution of fixed-line telephony and DSL. Of course the extreme high bandwidth helps to achieve high quality of everything that’s transmitted. There is however a downside: LTE does not support voice, which is bad news if you want to substitute fixed-line telephony.

Of all discussed ways to integrate voice with LTE, the general consensus is that the IP Multi Media Subsystem (IMS) is the most promising one. Many carriers, that’s the main point against LTE via IMS, haven’t upgraded their networks for IMS. I don’t think that’s a valid argument. They haven’t upgraded their network for LTE either, and in Europe carriers do have IP-based core networks.

Let’s assume carriers generally have an IMS core and use the SIP protocol. Apart from high-speed mobile data transmission, this would enable new kinds of value-added services:

With LTE we could enhance our Virtual PBX with video telephony and video conferencing. You would have your video phonecall on a smartphone over a fixed-line number. Depending on your phone, it would be possible to share files like presentations with the person you’re having a video phonecall with. A combination of Virtual PBX and LTE would revolutionize meetings. I know of course that video conferences where you can share files already exist. But you don’t have them on your mobile and not with the integration of internal and external numbers.

Ring Back Tones are another service that would invite you to take advantage of LTE. And again we’re talking about video phonecalls. With our ECT Multi Media Ring Back you can show people who call you a videoclip while they wait for you to pick up the phone. That’s no new solution and we’ve already sold multi media ring back solutions that work in IMS networks. However with LTE you could enhance the quality of the ring back video and tone because you can transmit large amounts of data at very high speed.

What other value-added services could you offer with LTE? Please share your ideas with me.

“The reports of my death are greatly exaggerated,” Mark Twain exclaimed after hearing his obituary had been published in the newspaper.

How many obituaries for voice services have you seen recently? I strongly believe that reports on the demise of voice services are greatly exaggerated, even if many executives working for carriers would disagree.

At almost every large operator I visit, voice is viewed as a dead or dying service. Most board directors would be happy to put it out if its misery if they could. Today, everything revolves around data.

I suppose it’s not surprising: many of the major network equipment vendors have reduced their portfolios and concentrate solely on infrastructure to provide more bandwidth and a better Quality of Service – for data. They no longer invest in voice and add to the hype by telling their customers to forget about voice and focus on data services.

The funny thing is, voice is still a cash cow for carriers, not data. And yet the norm is to lay off almost everybody who is in voice and invest as little money as possible.

Two to three years ago, carriers looking for a number portability solution or an IVR self-care for pre-paid would have issued a huge tender. There would have been a detailed specification, procurement would have been involved and dozens of vendors would have participated. Today, they just don’t have the personnel to even bother with a tender. They want get it over and done with quickly and get the service up and running. On the vendor side, there is hardly anyone left to create value voice services. An executive at one of our oldest and biggest customers said we at ECT are “the last of the Mohicans”.

Actually, this is good for ECT as that is what we’re really good at. Our order books are full but we can’t help asking ourselves: is their view incorrect? Are voice services going to disappear and will it all be Skype and iPhone apps? Or are we right and voice services will retain their importance and companies will continue to ask for value-added features? Who’s fooling who?

Data services aren’t helping anyone to earn a lot of money. Skype doesn’t earn any money, they were sold to Microsoft. I wonder who’s actually making money on data.

Data communication has very little to do with intelligence, it’s just infrastructure. The only way to differentiate with data is via a bigger and less leaky pipe, i.e. more bandwidth and higher Quality of Service. However there is no margin.

The question is when data will reach saturation? Isn’t it unrealistic to assume that people will keep demanding more and more bandwidth? Can this development go on forever?

Voice is a cash cow today and an integral part of our lives. It is also essential to most businesses. Value-added services such as network-based contact centers, virtual PBX and even directory assistance services are high-margin services generating a lot of cash. When will we be able to say that about data?

Hi, my name is Milan Tomic and I’m Director of Product Management and Presales here at ECT. I’d like to tell you about one of the main differences between ECT and our competitors. It’s about implementation.

If you’ve ever tried, I’m sure you know; implementing a value-added service can be a hassle. There are a lot of big companies out there who offer modular network-based contact center or IVR solutions. However, when you buy from them you end up buying from three parties and dealing mostly with an integrator. He does the programming, customization, configuration and adaptation of the solution. Typically, there is the software vendor, the integrator and the party that sells you the NGIN equipment. The software includes only the basic functionalities. It usually comes without hardware, without user interfaces and without network integration.

The integrator would then be your prime contractor. He resells the software, adds his margin on hard and software and charges per man-day for the integration. However, his main business is the maintenance as well as the professional services and programming for the implementation of the solution. That’s why integrators typically work with partners that leave them a large portion of the work with every customer. No wonder he doesn’t have much interest in closing the project too soon. Plus for any further change or update you’ll need the integrator’s help, so you’ll remain stuck with him. Integrators may have a conflict of interest with their customers.

At ECT we have a better solution. We provide a complete end-to-end solution, normally including the telco equipment and the technology which can easily be customized.

As a one-stop shop, our complete solutions include professional services, usually at a fixed price. That way we have the same interest as you do in sticking to the agreed project plan and milestones. When the project takes longer, we lose money and so do you. We want a win-win relationship for us and the carrier we’re working for. We give you the application, put it on standard carrier-grade servers and do all the network integration and testing. That is, by the way, another difference between our technology and what most large vendors sell you: ECT technology is designed to run on standard servers.

We actually tried to procure a major integrator as a partner. It didn’t work. The integrator said he wouldn’t partner with us because we wouldn’t leave him any business, our solutions are just too complete! He asked us if we could take some functionalities out so that he could program them. Of course we said no. That way we found out that we simply don’t need third-party integrators. This is very good news for our customers because it saves them a lot of money because they don’t have to pay three parties for one project. Why don’t you deploy your new value-added services quicker, easier and more cost-efficiently?

The ICT sector has had a particularly tough time over the past 18 months; customers have continued to cut budgets, put investments on ice and have been critically observing cash flows. Therefore sales and marketing activities have to be well thought through if they’re going to have any effect on the sales pipeline.

Unfortunately, there are many examples of companies who focus on features, features and more features and forget the nuts and bolts of what the technology was actually developed to do: to provide a solution to a customer. Everybody needs an overview of the specs at some point, but the heart of the matter is to find a suitable remedy for the challenge your customer is currently facing.

For me, this is what our value-selling is all about: customer diagnosis and providing the tailor-made cure to heal the customer’s ‘pain points’. I would always ask the customer first what they want to achieve by introducing a new solution or service, rather than go straight out and offer a specific product. Your doctor doesn’t prescribe the medication until he has an idea of what’s wrong with you, does he? I’m sure it’s no secret to any of you who have been in this business for a while, that customers do actually like to talk about how they work and if I understand that, I can better understand what their needs are. That’s why I always ask customers, what’s on their wish list.

Cross-selling works in pretty much the same way. Contact center technology, for example, offers a wide range of cross-selling opportunities – if the people in front of the customer ask the right questions and listen to what they have to say. I don’t intend this to sound arrogant, but there are way too many people in sales who forget that the core of the matter is a customer, looking for a solution to help them do better business. Asking a question or two never hurt anybody and even if the answer is not the one you wanted, you’ve still learned something about the business whose coffee you’re drinking.

After some interesting ‘adjustments’ in our industry, here is a brief summary of the rules of the venture capital game:

1. You create a lot of hype about a future business that is not available today.
2. You are very convincing and manage to raise a lot of venture capital.
3. You invest that money in a) a large salary for yourself and b) a bigger and better workforce than you can commercially justify. You then employ the best possible marketing tactics to create the impression of success.
4. You give away your product for free to leading customers to get what on the surface appears to be an impressive installed base along with the corresponding testimonials.
5. You raise even more money due to your image and your customer base.
6. When no one else is willing to give you money to fund your deficit spending, your business collapses like a card house.
7. On the basis of your ability to put together a seemingly convincing business idea and business case and with your track record for raising venture capital money, you are now highly employable and available for your “next big thing”.

I often wonder about start-up companies: do they actually need to have a good product, or is it the convincing story and the right person behind the start-up which increases demand and raises the company’s value, whether it has any real assets or not? This is how bubbles are created.

One of the first famous bubbles was with tulip bulbs in the 17th century in the Netherlands (also called “tulip mania”). People who, in real life, probably couldn’t tell a daisy from a daffodil, traded with contracts for tulip bulbs that hadn’t even been planted at ever increasing prices. Many lost an absolute fortune. Sometimes it’s just the same with venture capital…

It sounds like a philosophical question: why are we here? But I’m not talking about human existence in general but why is ECT around even though we’re facing very stiff competition from vendors that are so much bigger than we are?

In Germany, we’re not alone. The German economy is famous for small and mid-sized companies which are highly specialized, internationally successful and still run by their founders. German mid-sized companies are considered the backbone of the economy here. These companies stay true to themselves and they live and breathe the work ethics that made them successful. This boils down to reliability, honesty, strict discipline and of course pure hard work. Work ethics in combination with innovation and the ability to question yourself and your actions every day are crucial factors for a company to survive.

There is another key factor – the ability to change. This recognition became clear to me after having read an article in the German weekly newspaper “Die Zeit” and I think it’s applicable to our company. Companies with the ability and the willingness to change but which stay true to their core values, survive. It may sound paradox but there’s more than a grain of truth in the motto: be conservative and progressive at the same time.

Our way to do business is very conservative. We focus on organic growth and always emphasize our positive cash-flow. We take pride in our independence.

In terms of products, we are a very progressive company. When ECT first started business, we were selling pre-paid solutions. Once we saw the first signs that the demand was diminishing, we had to evolve our technology. Over the years, we have become an industry-leading vendor of voice and multimedia value-added services. Our platform is the best on the market and we have become a forerunner in cloud-based voice services, such as network-based contact centers.

We have even evolved further and developed our own programming language ECTXML® in which all our applications are written. With a partner program for ECTXML® and licensing models we will add a slice to our portfolio and become a software vendor in addition to being a provider of value-added services and NGIN solutions.

All these things evolved over time. Ideas matured, economic necessity fostered certain strategic decisions. But at the bottom line, it is our ability to change and to focus on what made us strong without ever neglecting our virtues that explains why we’re still here and doing well.