DFT: “Internet calling threatens KPN”

BATTLE ERUPTS FOR BUSINESS CUSTOMERS

by THEO BESTEMAN

AMSTERDAM – A shaken up KPN is busily meeting with bankers, in order to raise €3 billion in a rights issue and to keep major shareholder Carlos Slim away. Previously, the free-message service WhatsApp deprived them of billions in calling charges. Now, companies are switching over in droves to ’voip’, free internet-based calling for all their employees.

Market leader KPN seems to be losing even more income, but according to experts it is starting a revolution: the Netherlands’ oldest telephone company is hiring in specialist companies who can prevent another WhatsApp-drama with their secured Internet calling. ‘This kind of innovation is a first for KPN.’

Telephoning over the Internet has been a lurking danger for years. ‘But many companies held on to their old traditional switchboards, lines and telephones. Over time, this often became a tangle of lines and just as many service providers.’

‘With voip, you have one company doing the entire management for you, the physical switchboard disappears from the building to the big data centres and the costs can drop sharply’, says Michiel Steltman of the branch association DHPA, of which KPN is also a member. ‘In the meantime companies have acknowledged this savings.’

Rob Kurver’s company Voipro, which seven years ago was the first to see the potential in the Netherlands, is now in the display window at KPN Zakelijk’s Open Cloud Store, along with the providers of other telecom services. ‘We want to offer other services to non-KPN clients as well, especially in the SME segment’, says the spokeswoman from KPN Zakelijk.

Its competitor Vodafone bought telephony supplier TeleSpectrum in April of last year. The British low-cost provider Truphone is rolling out in the Netherlands thanks to a £118-million investment, and is hiring 500 employees. Facebook also announced it was offering free calling to its US users over the Internet, thereby joining Google Talk, Apple’s Facetime, Yahoo! Messenger, Skype and Microsoft’s Lync, which usually offer free live video calling plus chatting for smartphones.

The technology is also expanding: with companies themselves taking more and more landline phones off the desks, smartphones and tablets are now being used via this online calling network.

Although some voip companies are claiming to save customers up to 70%, telecom consultant John Lasschuit thinks that 30% is more realistic.

‘Working is more flexible now, since entrepreneurs can get so many additional services through the Internet, which they can pay for or cancel by the month. This has got everybody moving,’ says Rob Kurver of Voipro, which has seen steady growth in its customers among Internet distributors. ‘Companies are becoming much more flexible.’

Voipro is a leader in this technology. The fact that a similar provider, Voiceworks, was one of last year’s fastest-growing companies typifies the boom in the sector, according to consultancy firm Deloitte. Detron, run by George Banken, is switching nine Netherlands ministries and a hundred national agencies over to Internet telephony, good for over 100,000 ‘telephone gateways’.

‘We’re seeing voip penetrating to the cores of companies, because it can add so many software services’, states Ruud Alaerds of market research firm Keala. ‘It already goes so much farther beyond conventional telephony.’

Now that price wars are breaking out in this Internet calling market, Erik-Jan Dekker of provider Dekatel is warning companies that low prices may come at the expense of quality and service. ‘If the fine print in the contract allows your company an average of one afternoon a week down time, you’ll understand why some voip sellers are priced so low. Being offline so long can finish off your company.’

‘KPN has been watching this development for a while, but is out in front now; it’s offering not only the Internet switchboard, but also the relevant software services along with it. That’s where the profits are for KPN. They’re not going to repeat their mistake with WhatsApp in the business market’, says Steltman.‘KPN is showing that it’s not just a “carrier” providing the telecom network, but includes this as one of its many services.’

‘Telecom giant KPN must make operational improvements, now that it has squeezed all the earnings it can from traditional calling,’ says Erik Huizer, professor of Internet applications and the technical director of Surfnet, which provides Internet services to universities and research institutes. ‘KPN is realising that if they don’t grab somebody like Voipro, their competitors will.’