Published in the October 2011 edition of “Channel Partners,” Hyoun Park makes two very important points: That Hosted VoIP solutions are seeing more and more reliability in the marketplace, but more importantly that companies are now using hosted VoIP as a stepping stone to other cloud based technologies.

Park references the trend that more and more companies are flocking to a hosted solution. Many companies begin looking at a hosted PBX solution because they are trying to decrease their IT costs. That research is uncovering other valuable needs available through cloud based services.

For more information on Hosted VoIP and Cloud Communications, please read the
article below.

BUSINESSES BUY INTO THE VALUE OF CLOUD COMMUNICATIONS
BY HYOUN PARK

Hosted VoIP has provided strong business value for years, but traditionally the benefit has been associated purely with cost savings. But is this the full value proposition of cloud communications?

Companies that have placed high value on the uptime and reliability of communications systems traditionally have considered the on-premises PBX to be a safer bet because the equipment is locally available and can be accessed more easily in the case of a business continuity threat. However, Aberdeen Group’s most recent research for the July 2011 report, “Conquering the Fear, Uncertainty, and Doubt of Managing Integrated Communications” found this assumption is no longer accurate.

When Aberdeen polled more than 100 organizations in their use of telecom, it found that the top 20 percent of telecom end-users in terms of performance, which Aberdeen defines as “Best-in-Class” companies, had 5 percent of the downtime and one-fourth of the SLA-defined issues faced by typical respondents. These top-achieving companies were more than twice as likely to use a hosted communications solutions solution compared to all other organizations, demonstrating that the real-world usage of hosted VoIP is now strongly associated with improved uptime and reduced service impairment.

Given the cost savings associated with a hosted voice solution, the support advantages associated with managed voice and now the service benefits in this maturing market, the value proposition for hosted VoIP has become much easier to articulate.

However, to fully take advantage of these trends, channel partners must be aware of the markets that are most ready and willing to move towards the cloud. To better understand this market, the channel must answer:

• What kinds of companies currently identify cloud-based or hosted communications as a priority?
• How can the channel better support these customers to successfully transition from on-premise to hosted services?

To answer these questions, Aberdeen broke out its respondent base into three different categories for further profiling:

• small organizations of 50 employees or less
• medium organizations of between 51 and 2,500 employees
• large enterprises with more than 2,500 employees

Small organizations were most excited by hosted VoIP, with 32 percent of Aberdeen’s survey audience stating that they had already adopted this technology and another 35 percent planning to do so within the next 24 months. These companies were driven first and foremost by budget and were simply seeking the cheapest solution. However, secondary concerns that these companies faced included a lack of vendor support and the need to improve external communications with partners and customers. The ability to provide improved service while reducing the company’s need for IT overhead should be attractive because these firms tend to be disproportionately dependent on their communications system to support a partner and customer ecosystem because it is more cost effective than event-driven or travel-based face-to-face meetings. By moving to a hosted VoIP environment, these smaller organizations are more likely to achieve the “five 9s” (99.999 percent uptime) support that they may have assumed was only possible for enterprise-level accounts.

At the midsized level, companies are much less likely to have adopted hosted VoIP. Only 11 percent of our respondents between 51 and 2,500 employees actually had implemented this technology although another 30 percent planned to do so. Part of the problem here is that 61 percent of these companies already had invested in an on-premises PBX and felt obligated to continue using that equipment until it was fully depreciated. However, this frugal instinct and familiarity with existing equipment did not lead to improved uptime: the average organization in this category had 14.8 hours of communications outage to one or more locations in the course of a year and may simply be taking these outages for granted as the cost of business. At the same time, these midsized companies were more likely to focus on creating a more standardized communications environment, including compliance and security issues. These concerns must be met by channel partners seeking to support mid-market hosted VoIP solutions.

Large enterprises also had low levels of adoption for hosted VoIP, and none of the large organizations that Aberdeen spoke to were considering hosted VoIP in the next 12 months. Although they could realize significant cost savings from this technology, these organizations are more focused on improving the ease-of-use for existing communications deployments and developing a road map for implementing new communications technologies. As a result, these companies seek to continue using the PBX and maintain their current unified communications investments. However, 25 percent of these larger organizations wanted to implement virtualized PBXs in their organizations in the next 12 to 24 months, which provides an alternate mode of support that can be provided to these companies. As these companies seek to move the PBX into the data center and into a virtualized rack-mount or blade server environment, the channel may see increased opportunities to support larger organizations as well.

Based on Aberdeen’s current research, hosted VoIP currently is seen as most valuable for solving the needs of small and medium organizations. However, small organizations and medium organizations have different needs, concerns and goals associated with hosted VoIP, so the value proposition must be articulated appropriately. As the channel reaches out to end-user organizations, it is vital to keep these concerns in mind to make sure that end-users are appropriately educated on the full value that hosted VoIP can provide to their communications environment.

Hyoun Park is lead analyst in collaboration and integrated communications for Aberdeen Group. Over the past four years, Park has surveyed the best practices of more than 2,500 organizations seeking to optimize their collaborative environments. Prior to Aberdeen, Park managed telecom environments at Bose Corp. and Teradyne and was responsible for billing and training operations at multiple CLEC organizations.

Our Philosophy from the very beginning was to develop valuable long term relationships that would benefit both our customers as well as the Diverse Networks offering. Through years of trial and error we have created a truly diverse network of partnerships second to none in the industry. We are always looking to expand that network in order to increase our value to our clients. When we established these partnerships we kept our main goals for our customers in mind. We hope this newsletter will encourage our clients to take advantage of these relationships to help their businesses in and outside of the telecommunications spectrum. Our hope through our “Partner of the Month” is that our customers and partners work together to better serve all of their clients, and not those just common to Diverse Networks.

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As large customers flee PSNH, what can the utility do?

By Bob Sanders

Friday, July 1, 2011

Nearly all of Public Service of New Hampshire’s largest customers have gone, ever since they were allowed to buy their power elsewhere at a cheaper price. That raises the questions: Will these customers come back soon, or at all? In the meantime, what can be done about it?

These are serious questions. Nearly a third of the entire load that PSNH used to sell is now being sold by suppliers — PSNH’s competitors — leaving residential customers and small businesses behind to maintain a system that is much larger than is needed right now. Doing so is driving up customers’ electric bills by 8 percent. These higher costs are causing more customers to flee and could result in a “death spiral,” claim PSNH critics.

That’s why PSNH wants those dropping its service — but still staying in its service area — to pay a special “non-bypassable” charge, which would cover the fixed costs of generation assets, even though they aren’t using them.

“We see this as a matter of fairness to all customers,” said PSNH spokesman Martin Murray. “We incur costs as a result of being prepared to serve all PSNH delivery customers, whether they are currently purchasing energy from PSNH or not, but not all customers are paying those costs.”

Competitors say that it is unfair to force large customers to pay to maintain a system that they don’t need.

“We shouldn’t have to pay for PSNH’s security blanket,” said Cleve Kapala, director of the government affairs office of TransCanada, which ownsNew Hampshire’s major hydroelectric plants, among other generation assets. “It’s sort of a dinosaur, utility-owned generation. For a while, they (PSNH’s power plants) were competitive, but they have become old, dirty, and above market.”

In reality, it’s more complicated than that. That’s the reason humongous .pdf files are flying across the Public Utilities Commission website at Docket 10-160.

Whatever the PUC decides – and it may make its ruling before you read this – the loser is going to take its case to the Legislature, in a debate that may go on for years.

Falling electricity prices

You could say all this is the natural outcome of efforts to restructure electric utilities in New Hampshire, but that law passed a decade ago, and the major migration of PSNH’s larger customers really started three years back.

Under restructuring, utilities were supposed to sell off their generation assets and hold on to their wires, buying energy on the open market. Under this system, customers were also free to do the same.

There would be two charges for electricity customers: the generation charge and the line, or distribution, charge. Everybody would pay the utility line charge, because all customers used the utilities’ poles and wires. But the energy charge would be paid by those customers being supplied with it.

The New Hampshire Legislature put restructuring on hold in light of the scandal at Enron, a massive energy broker that went broke, leaving utilities in the lurch, customers in the dark, and executives in prison.

PSNH did get rid of the Seabrook nuclear power plant, but kept the coal-burning plant in Bow, as well as several plants in Newington. PSNH also purchases energy through long-term contracts. This hybrid system worked well when PSNH assets were producing power cheaper than that available on the open market.

But in 2008, electricity prices went south. This was partly because the economy crashed, but it was also due to plummeting natural gas prices. Meanwhile, environmental regulations drove PSNH’s costs up, and PSNH secured some long-term energy contracts at the height of the market.

Suddenly, PSNH’s competitors were attractive, especially to larger customers.

“I can tell you it’s saving us $500,000 to $1.2 million a year,” said Thomas Benzel, director of supply chain management at Freudenberg-NOK’s facility in Manchester, which uses 44,000 megawatt-hours annually. Freudenberg, which left PSNH in 2006, sends bids out for energy at short intervals, and only once – during a two-month period – did PSNH rates prevail. “It’s not like we are going back and forth. We’re gone.”

‘Incurred for all customers’

Freudenberg was one of the first large customers to drop PSNH, but it is far from the last. The statistics are staggering.

According to testimony before the PUC, at the end of May 2011, PSNH total sales were 34.8 percent lower than they would have been if no customers had migrated. At the end of 2009, the figure was 24 percent.

In the fall of 2010, according to PSNH’s quarterly report provided to the PUC:

Of the 117 largest customers in PSNH’s service area – commercial and industrial users with a peak demand of more than 1,000 kilowatts – 78 percent had left, taking with them 92 percent of the large customer load.

• Of the 1,400 mid-size commercial and industrial users in the service area – those with a peak demand between 100-1,000 megawatts – 51 percent had left, depriving PSNH of 61 percent of that load.

• Some 10 percent of the 73,500 small businesses (using less than 100 megawatts) have ditched PSNH, taking with them over a fifth (21 percent) of the load in that category.

• Meanwhile, almost all of the 422,300 PSNH households have stayed behind. Only a third of a percent have migrated.

The loss of large customers was getting too big to ignore, so on June 11, 2010, the PUC opened a docket on what has become a yearlong regulatory battle.

PSNH, as the “supplier of last report,” is obliged to provide cost-effective and reliable energy 24-7, and it maintains a portfolio of supply both in generation assets and in contracts to provide it, said Robert A. Baumann, director of revenue regulation and load resources for Northeast Utilities, parent of PSNH.

“We believe that fixed costs that have been incurred for all customers should be supported by all customers in their rates.” Those fixed costs – depreciation, property taxes and debt costs – add up to about $43 million a year, said Baumann.

And, Baumann added, those large customers will return someday, because the “unprecedented” drop in gas prices is a result of worldwide economic decline that “may very well be short-lived.”

Migration is clearly a problem for PSNH, but the Office of Consumer Advocate reminded the PUC that “competitive electric choice is the goal of state policy; migration therefore is not ‘the problem’ in and of itself. In fact, some would view high migration as success.”

The problem, it said, is that the small user has not been migrating, which creates a “cost-shifting” problem that needs to be solved, because it is driving up residential rates.

However, Unitil and National Grid contract with other companies to provide the reserve energy that PSNH is supplying with its assets and long-term contracts.

“As a result, the migration risks are assumed by competitive suppliers,” the Consumer Advocate wrote.

Bow scrubber costs

So what is PSNH to do? The Consumer Advocate outlined four possibilities:

• Divest assets and bid for energy on the open market, leading a third party to take the risk.

• Give two different rates for residential (and perhaps small commercial) and larger commercial users when it comes to figuring out the cost of maintaining infrastructure for those who may return.

• Allow PSNH to impose a surcharge.

• Put limitations on when migrating customers can come back at will.

PSNH’s competitors are arguing for divestiture, or at least putting out requests for proposal for power. That will not only save the utility money, but is more transparent, they maintain.

But if PSNH were to sell off its assets, “you’re then losing the value of the backup service that we believe is very significant,” said Baumann.

The cost of those assets will be going up significantly in the future, due to the installation of a $450 million mercury scrubber at PSNH’s coal-burning plant in Bow.

Still, PSNH isn’t asking that debt charges incurred for the scrubber be passed on to its fleeing larger users – at least not yet.

“I think, generally, the scrubber is a project that benefits all customers. And, probably, in my opinion, would be closer to a non-bypassable charge than a bypassable charge,” Baumann said.

Under state law, the cost of the scrubber must be recovered through the energy service rate.

“I think you’d have to have some change in the legislation to enact that,” said Baumann.

As the two-day PUC hearing dragged on, it seemed that PSNH – rather than being on the offensive, arguing for a non-bypassable charge – was simply struggling to hold on to its assets. As commissioners pressed PSNH about the advantages of divestiture, Stephen Hall, PSNH’s rate and regulatory service manager, fired back, “The thing to remember is, once you divest, there’s no going back. Once plants are sold, they are gone forever.”

“Is there a point at which the hedge benefit of your own generation may flip and become a liability … a greater pressure on rates than just working with the market?” asked PUC Commissioner Amy Ignatius.

“I think there’s always going to be a hedge benefit to generation,” replied Hall, though he admitted that there comes a point when the costs outweigh the benefits.

The commission still has to make a decision. The Office of Consumer Advocate and the PUC staff firmly rejected the non-bypassable charge and favor looking into restructuring.

The Business and Industry Association of New Hampshire filed as an intervener, but has yet to intervene.

“This is pretty tricky for us,” said BIA Vice President Michael Licata, noting that the BIA represented both large business that benefit by migration and small businesses that are hurt by it.

In addition, Gary Long, president of PSNH, chairs the BIA board.

“We are acutely aware of the appearance of that,” said Licata, but he said that Long leaves board meetings when any conflict of interest comes up – and besides, this hasn’t risen to the level of a board meeting. Though sooner or later, an issue of “this magnitude” will get there, as well as to the Legislature.

How will lawmakers sort this out?

Suppliers look like they have a friend in Rep. James Garrity, R-Atkinson, chair of the House Science, Technology and Energy Committee. Garrity called the non-bypassable charge a “ridiculous” idea.

“What’s the use of having customer choice if the default provider can recover money from them? I think it is crazy,” said Garrity.

Garrity said he looked forward to “reopening the debate on finishing restructuring.”

But Sen. Jeb Bradley, R-Wolfeboro, the Senate majority leader who was the go-to person on restructuring as a member of the New Hampshire House a decade ago, wasn’t so sure about that. Energy prices couldn’t continue at such a “historically low level,” said Bradley, and he agreed with PSNH with the value of maintaining a system that will be available when prices go back up.

“It’s a complicated issue,” said Bradley.

Published in the September 2011 edition of “Channel Partners,” Kelly Teal talks about utilizingan MPLS network to secure your business’ site to site voice traffic. Teal compares running SIP over a standard internet connection to setting up SIP Trunks over a secure MPLS network. Frame Relay was the technology of choice for years, but MPLS has clearly pushed Frame aside. When is it appropriate to go MPLS?

That is a question facing a great many SMB’s across the country. MPLS can be very costly and knowing when to implement MPLS can greatly affect a company’s bottom line. The agent’s responsibility is to bring together all of the vendors so that this decision positively impacts, not only the network, but the company’s financial growth.

For more information on SIP Trunking and MPLS, please read the article below.

MAKING SIP SECURE WITH MPLS

September 14^th, 2011 by Kelly Teal

If you are evangelizing the cost savings and convergence capabilities of SIP, but have customers that need more security and reliability, SIP over MPLS may be the answer.

SIP over MPLS provides an alternative to SIP over dedicated Internet access or SIP trunking — the more typical deployment approaches. The benefits of running SIP over MPLS, experts say, include improved call quality with low latency, less jitter, better capacity control and end-to-end quality of service. And, when it comes to security, MPLS avoids exposure to the public Internet, making SIP over MPLS more secure than over other transport options.

“You can choose how big your line’s going to be and then you can control what goes across those lines,” said Jim Schmidt, director of sales engineering for US Signal, in a recent webinar hosted by the Technology Channel Association. “So in contrast to an Internet circuit where you may get a denial-of-service attack that could adversely impact your voice traffic, on an MPLS network, that’s not going to happen.”

Source: XO Communications Inc.

Within an IP network, SIP, or session initiation protocol, is used for establishing sessions, which could be as simple as a phone call or as complex as a collaborative multimedia conference.

MPLS, or multiprotocol label switching, transports any protocol, including SIP, through a wide area network by using tags or labels that define not only its destination but the class of service it should receive. It also creates a virtual private network for a customer’s traffic — in this case converged voice and data services — within the carrier cloud.

Circumventing the public Internet is key. Chris Connor, director of product management for Level 3 Communications Inc., said in the TCA webinar, that not only is security improved but so is traffic management and performance with the ability to prioritize voice or video traffic, for example. In addition, Connor says many carriers run classes of service across their networks, creating voice or video queues in their networks. “Typically the SLAs and performance characteristics of those voice/video queues within carrier MPLS networks are a lot better, so you are going to get much better performance for voice services than you would over a best-efforts public Internet service,” he said.

In certain multilocation environments running SIP over MPLS also can result in additional cost savings from centralizing SIP trunking. Centralized SIP trunking routes all VoIP traffic, including branch office traffic, through a central site over WAN links (in this case MPLS). In contrast, distributed SIP trunking requires a local SIP trunk at the branch site over which VoIP traffic is routed directly to the service provider.

In addition to eliminating local voice trunks, centralizing SIP trunking has the added benefit of eliminating local phone systems and the costs of long-distance calling between networked sites. In addition, voice calling capacity can be shared across the entire enterprise.

Nena Dodson, principal network services engineer for XO Communications Inc., said in the TCA webinar that SIP trunking centralization over MPLS works best for organizations with 15 or more locations; any fewer and she said it becomes difficult to justify the cost of the equipment required to secure and centralize the network.

In addition to a large number of locations, customers that might benefit from SIP over MPLS include those with:

• footprints that cross-ILEC territories and would appreciate centralized administration
• a need for a secure and private WAN due to the nature of their traffic
• a need for high-availability services
• a need to use high-bandwidth video conferencing or telepresence services

Khali Henderson contributed to this article.

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Published in the July 2011 edition of “Channel Partners,” this piece dives into the growing number of companies that have already made the switch to hosted services and who they are buying those services from.

According to John Macario “the indirect sales channel should prepare for a downburst of activity around IP communications and cloud services”.

Based on a study by Inzenka, a growth-focused consulting firm, “60 percent of those companies who already made the switch to IP & Cloud Services purchased them from a channel partner”.

Channel partners like Diverse Networks, LLC, are in a great position to help their customers sift through the various options for cloud services and settle on one which will suite their specific business model.

For more information on developing a mobile strategy for your business, please click the link below.

SMBs Ready for IP and Cloud Services