IP newcomer serves up convergence

A new network equipment supplier is proposing an old-fashioned delivery model to bring Canada’s small- and medium-sized businesses (SMBs) into the world of IP telephony. Industry analysts say the vendor just might be on to something.

Natural Convergence Inc., an Ottawa-based company that builds an IP-telephony platform dubbed the Virtual Key System (VKS), figures small firms do not want the hassle of managing telephone equipment. They would prefer to receive IP telephony as a service.

Telephone service is hardly a unique concept, but Natural Convergence, born in the spring of 2001, is putting an unusual spin on it. The firm advocates an IP-based program that at once frees SMBs from telecom management headaches but also offers control as if the customer had the equipment on premises.

“Customer self serve has come to the banking industry,” said David Cork, Natural Convergence’s CEO. “Why not the phone?”

IP telephony generally spells single-wire connectivity, whereby the data network serves not only Web and e-mail access, but also voice. With fewer wires to worry about, companies can cut down on connection costs.

So goes the argument for IP. But Natural Convergence is taking it one step further. In the firm’s service-minded scheme, SMBs would control telephone features, but forego the acquisition and management costs associated with IP equipment. Customers would have IP phones on premises, but the IP gateway and other network elements would reside with the carrier.

As a service, IP telephony would require no substantial outlay of cash on the part of users. Cork said Natural Convergence kept service providers’ needs in mind as well.

“Carriers like to own equipment and provide service themselves,” he said, pointing out that the VKS – at “less than $60,000” – gives companies like Bell Canada an opportunity to serve SMBs cost-effectively. The system plugs into the carrier’s current network and supports IP telephony across its broadband footprint.

The analysts at Fox Group Consulting in Markham, Ont. said the VKS might be the right way to bring SMBs and carriers together. Small businesses constitute a potentially lucrative space, but carriers “don’t know how to deal with it,” said Roberta Fox, the group’s president, explaining an economic dilemma. On one hand, SMBs want individualized service. Meanwhile, carriers have trouble providing bespoke offerings without breaking the bank.

The VKS could act as a bridge between SMBs and service providers, said Noel Coates, Fox Group’s senior associate, architecture and design. And although Natural Convergence is aiming for small firms, he figures larger businesses would consider the service.

After all, “they don’t have IT resources in all of their offices,” Coates said of mid-sized companies. “If you just have a service where you plug in and go, bonus.”

Red Deer (Alta.) Public Library last summer turned on Avaya Inc.’s IP Office, an IP telephony platform with on-premises equipment. Although the library is happy with the system, its spokesperson said the institution would not rule out service-based IP telephony.

If IP telephony service had been available last summer, when the library installed IP Office, “we would have looked at it very closely,” said Dean Frey. However, “I think one of the missing pieces there is we took advantage of [installing IP Office to upgrade] our internal network, bringing quality of service right to the desktop and the handset. I think that’s had a positive effect on the data side.”

Are carriers interested in the VKS? A Bell Canada’s spokesperson was cautious.

“Certainly we see a great opportunity in the [SMB] space, but we are focussing on the enterprise, rolling it out now, and on the consumer side, determining what the exact needs are of the demographic,” said Andrew Cole. He added that Bell follows “the rates of adoption for high-speed Internet.…They’re in the consumer space and the enterprise.”

Cork said he recognizes the challenge that Natural Convergence faces as it tries to sell carriers on the VKS, especially since service providers are trimming capital expenditure budgets. Still, he’s confident that the firm has the right product to bring carriers closer to SMBs – and to give SMBs the level of service they deserve.

For more information, see Natural Convergence’s Web site, www.naturalconvergence.com.