Sorell Slaymaker
Sorell Slaymaker has 20 years of experience designing, building, and operating networks and the communication services that run across them....
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Sorell Slaymaker | July 07, 2013 |


Are You Paying Too Much For Conferencing?

Are You Paying Too Much For Conferencing? Zoom is disrupting the conferencing market with their technology and their business model. This is one start-up to watch.

Zoom is disrupting the conferencing market with their technology and their business model. This is one start-up to watch.

Moving conferencing to Internet/VoIP/SIP along with cloud computing will reduce the cost of conferencing by 75%. The move to VoIP and SIP trunking has significantly reduced Telecom expenses, and the same opportunity exists with conferencing as enterprises begin to advantage of Cloud services such as Zoom. Zoom charges a flat rate of $10 per month per host for unlimited voice, video, and web conferencing for business users and is free for consumers.

Phil Edholm posted here recently about Zoom's appeal during the recent BART strike talks, but this post will delve deeper into the business case for using Zoom and other cloud-based video offers.

Most organizations pay 4 to 5 cents a minute per user for hosted audio conferencing, so a one-hour conference call with 10 people at 5 cents a minute per user would cost $30. While the actual audio hosting conference cost may only be 2 cents a minute, the toll free dial in is another 2 cents a minute, and the local T1/PRI access and associated PBX, support, taxes, and fees can add up to an additional 1 cent/minute.

Those Enterprises who have moved to SIP trunking pay an average of 1 cent/minute less, and those who have insourced their conference bridge reduce their costs another 1-2 cents/minute. That's a significant savings, but Zoom's effective rate for a large Enterprise of knowledge workers is even better--about half a cent per minute including the cost of Internet access.

Enterprises that have traditional TDM hosted conferencing solutions have the option of immediately saving money by taking advantage of some of the new VoIP hosted conferencing solutions. Zoom is an example of a hosted VoIP conferencing provider that offers a flat rate of $10 per month per host solution for unlimited voice, video, and web conferencing. Zoom's solution offers the standard functionality including International local access lines to the PSTN for those who do not have high speed Internet access, with conferences up to 25 users.

Zoom is able to offer conferencing at such a low rate while providing a high quality user experience because:

Internet & VoIP--Zoom is built to leverage Internet-based connections and runs IP voice, web, and video conferencing. Zoom utilizes an adaptive, wideband codec that offers a High Definition voice/video experience when 1-1.5 Mbps of Internet bandwidth is available, and can ratchet the voice and video connection down if bandwidth is scarce, such as with a 3G mobile connection. Since the solution bypasses the carrier telecommunications infrastructure, they avoid the per-minute long distance usage charges and associated taxes and fees. They offer a standard DID number (non toll-free) with the assumption that on your mobile device or other connection, LD is virtually free, for those without high-speed Internet access.

Cloud Based--Zoom's solution is all software. They utilize the Amazon infrastructure to run their solution, thus avoiding the costs to build, maintain, and support their own data centers. Zoom offers an on-premise option, at no additional cost, for those Enterprises looking to optimize their solution.

Fixed Rate Billing--The old adage is that 40% of the phone bill is the phone bill. By offering a fixed rate solution, Zoom saves money by not having to manage call detail records and complex billing systems and associated staff.

Voice/Video/Web--Adding video and web conferencing to audio conferencing has no additional costs. For conference room video conferencing, Zoom relies on commodity hardware for the server/MCU and screens. They take advantage of the video capabilities on mobile devices, tablets, and new laptops/desktops. As mentioned before, their "secret sauce" is the fact that they're all-software that can be run on virtually any device. Their integration with existing room based solutions is straightforward, allowing organizations to harvest their existing investments in video conferencing systems.

Zoom offers a solid technical solution and they are disrupting the conferencing market with a new business model. With a management team from Cisco and WebEx, and the financial backing of some heavy hitters, Zoom has big plans. UC managers should offer this type of conferencing solution as part of a tiered strategy. Zoom offers a free service for consumers and small businesses that limits conferences to 40 minutes. Having both a Consumer and Enterprise strategy is key for UC vendors to thrive in a Bring Your Own Device and Applications market.

For those organizations that are building their business cases for SIP trunking and/or insourcing conferencing with Microsoft Lync or other solutions, the new business case benchmark should be $10/month per host for audio/video/web conferencing. While getting users to adopt web and video conferencing on top of a standard audio conference to have a better collaborative experience is a challenge, Zoom provides a simple user interface across all devices, and offers a great experience. And for those business units that want a "good enough" video conferencing solution, they have the option of spending ~$5K for a large dual-screen solution that just requires Internet access.

Zoom is disrupting the conferencing market with their technology and their business model. This is one start-up to watch.


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