Today’s announcement of TelePacific’s Acquisition of Telekenex provides another boost to a strong consolidation wave that started some time back in 2009, but gained more power in 2010. This acquisition enhanced TelePacific’s CLEC portfolio, which includes next-gen trunking services, with a set of additional capabilities, such as:
- A robust hosted PBX platform with nationwide voice capabilities
- A nationwide PCI-compliant MPLS backbone
- A fiber network in the San Francisco-Oakland Bay Area
- Managed network services providing advanced configuration and support for complex network deployments and
- Managed security services through a cloud-based firewall
According to my estimates, Telekenex is adding between 15,000 and 20,000 hosted telephony seats (mostly multi-site SMBs) and about $30 million to $50 million in annual revenues to TelePacific’s portfolio.
As the market becomes increasingly competitive, it becomes compelling for LEC organizations with managed network services to merge with hosted/cloud applications providers so they can diversify their portfolios and offer customers a broader set of communications solutions and capabilities. Examples of similar developments over the past year include:
- Comcast acquired NGT
- Covad and MegaPath merged
- Cypress Communications acquired Reignmaker Communications and merged with Broadvox
- M5 Networks acquired Geckotech
- Paetec acquired Cavalier Telephone
- Vantage Communications acquired Digital Ingenuity
- West Corporation acquired Smoothstone
Further M&A activity is expected over the next couple of years. With over 60 providers in the North American hosted telephony market, there is plenty of room for providers to join their forces for healthier competition going forward. As businesses look for a trunking or hosted communications provider, they need to take the following factors into consideration in order to make a good choice:
- Network reach
- Service management and demark: does the provider manage the service all the way to the desktop
- SLAs on network reliability, availability, quality
- Failover, redundancy and disaster recovery capabilities
- Pricing
- Channel partnerships
- Knowledgeable sales force
- Customer service and tech support
- Depth & breadth of product portfolio (access network, UC, CEBP, hosted email & IM, contact center, managed data & security)
- Simple, transparent and efficient billing and service provisioning
