** Cross posted from: http://www.greenfieldtech.net/blog/2014/03/building-your-asterisk-based-business-part-i **
Since the inception of GreenfieldTech, back in 2007, we’ve assisted over 20 different VoIP companies to bootstrap their activities and launch their products. During that period, some of these companies had become a great success and some had disappeared from the face of the planet. This series of posts will bring the story of some of them – and we’ll try to analyse what made each company into a success or a failure.
Making the case for Asterisk based business
Let’s be honest and truthful with ourselves, we’re all capitalists. Yes, we are first Open Source evangelists and promoters, but at the end of the day, we do need to pay our bills and make ends meet. Thus, we monetize open source (in our case Asterisk) to the best of our abilities – there is no shame in that, and honestly, we take high pride in our ability to assist companies in monetizing open source tools and project in a productive and lucrative manner.
When people talk about Asterisk based businesses, normally they will consider one of the following tracks:
1. Asterisk PBX Integrator – Integrating Asterisk based PBX systems for companies of various sizes. Normally, this will include infrastructure installation, cabling, server support, hardware sales, etc.
2. Hosted PBX Service Provider – Providing VoIP PBX services, without any in-door server equipment, relying on the Internet or leased lines only. Normally this will include similar activities as the Asterisk PBX integrator.
3. Hosted IVR Service Provider – Providing Hosted Interactive Voice Response services to content providers and enterprises that can’t sustain their own IVR infrastructure.
4. Hosted Premium Services Provider – Identical to “Hosted IVR” with a focus on premium services content and adult content.
5. Telecom Carrier – Whether you are a mobile carrier or a landline CLEC, Asterisk applications can benefit a carrier of any size.
6. Value added services provider – Providing complimentary services to Asterisk and its derivatives.
The above is a very short list, as each item on that list can be expanded to 6 more sub-categories – however, these represent the major business types (not including consultants and developers, who fall under category number 1). There are similarities between these and significant differences as well. What may be true for one, maybe completely wrong for another – it all depends on your business goals and product development life cycle and life span. We will limit ourselves to discuss options 2 through 6.
Case I: Long Distance Calling Cards Operator in the US
June 2007, a representative of a calling cards operator in the US approached. The operator was back then using a hosted service from a company called Solegy (long gone) and was fairly unhappy with the service. Their main complaints were: lack of support responsiveness, lack of feature set, inability to expand existing feature set – and most importantly, inability to sustain a proper business model (unlimited calls), due to high termination and hosting prices.
At that time, the calling card operator had put the following restrictions as to creating the service:
1. Bootstrap pricing should not exceed the $10,000 USD.
2. All existing customers should be migrated to the new system.
3. All existing access numbers should be migrated to the new system.
4. New system should be based upon ready-made software – not customized development.
5. New system should enable additional service development and scalability.
6. New system should allow hosting on hosted servers, without any need for proprietary hardware.
The solution that was chosen (after all, it was 2007) was a mixture of OpenSER, coupled with Asterisk 1.4 and A2Billing. Calls will hit the OpenSER SIP proxy, which will then load balance to the various Asterisk servers. The solution met the various constraints listed above – and later on included a monthly support/maintenance cost that was sustainable for the business. The company continued on to provide direct DID numbers, VoIP termination services, Roaming SIM cards solutions, Hospitality Mobile phones and additional services. In 2010, the company had sold its operations to another company – which was a disaster. During the recent changes in the roaming market in the US and other regulations, the company had seized its operations and is no longer operating.
Was this company a success story? – Complicated Answer
Between the years 2007 and 2010, the company had grown from 1000 customers to a whopping 15,000 customers, paying a monthly service fee ranging from $15 USD to $59 USD. Roughly calculated, that’s an average of $550K USD per month turn-over. In deed, termination costs and operational costs rose up to around $450K USD a month, but considering the fact that the company had only 4 employees and two additional outsourced support resources, a monthly Net revenue of $100K USD is not bad – we can surely mark this as a success. The company realized that in order to sustain its business, they would require proper customer care and support services and they made sure these resources were clearly managed and sourced.
Following the company’s purchase in 2010, the new owner had decided that customer care and support structure aren’t really required, as the sales staff can handle customer care and support can be rendered by an outside resource on a per-incident base, with no binding SLA service. Within less 12 months, the company customer base shrunk from 15,000 to around 3,000, bringing the entire operation to a stand-still. The new owner tried focusing on new business tracks, without preserving and maintaining the existing lucrative tracks.
So, what went wrong here?
The primary answer would be: failure of the new management to understand the business. Calling cards and VoIP services are customer oriented services. This applies to Mobile VoIP OTT services as well. Asterisk is a solid tool to use when building your business, it will take you a long way and make sure your ROI and TCO will remain as low as possible, while preserving your knowledge and experience in-house as much as possible. When a successful company is acquired by a financial outfit, that has no valid experience in the market sector, in many cases – it will fail. The lack of understanding of customer care structures, proper support, proper monitoring, proper NOC, ticketing handling, NOC liaising and proper technical escalation are the main attributes of a successful service and product in this industry.
In our next post
In our next post we’ll discuss the world of “ad-revenue financed calls” and the “call-back industry”, as it was in 2008, 2010 and what happened to it today.