Cloud Data Center

Cloud Communications Infrastructure – the Right Business Model

by Alan Percy, CMO @TelcoBridges

The traditional model used to sell telecommunications infrastructure required a significant up-front capital expenditure (CAPEX) with life-long software and hardware maintenance expenses.  This is a real challenge for the emerging cloud communications service providers, many of which are starting from scratch.

Cloud Data CenterLooking back a number of years , I clearly remember the first business meetings with a prospective cloud communications provider, listening as they explained their business plan to offer free access to a basic application and building a subscriber community “pre-revenue”.  At some point thereafter, the business plan had them offering a paid premium version subscription, establishing a revenue stream to operate their network and grow the business.

It was clear that the aging CAPEX business model, that was the financial foundation of the telecom equipment makers, would not work for cloud communications service providers.  This one prospective cloud communications provider was just the first of many.  To meet their needs, the new cloud companies needed suppliers that could offer products that mirrored their cloud-centric business model.

Most telecommunication equipment makers have struggled with this transformation.   Their primary revenue stream is based on expensive hardware with good margins that produce very generous commission checks to the sales team and their channels.   Moving to subscription-based software would require a major reset of expectations for both the top-line revenue and the sales team.

In the good-old days, a salesperson at an equipment maker could sell a $500,000 switch and use the commission to buy a boat.   In the cloud economy, you can land a new account and the commission check at the end of the year allows you to rent a boat for the weekend.

You might be asking “what about open-source”?   In many cases open-source software can functionally fit the needs of cloud communications, but many times falls short on support and availability to professional services needed to operate a large network.   Customers tell us that when things go wrong in a service provider network, waiting for a volunteer or gig-worker to fix a bug is too unpredictable for a service requiring five nines. Spending the time to learn the software sufficiently to do self-support is time consuming.  Hiring a consultant to manage the open-source software is expensive and creates an availability business risk, a potential single point of failure.

These experiences had an enormous impact on defining the business model for TelcoBridges’ FreeSBC and ProSBC.   Our objective was to deliver a carrier-grade session border controller platform with features needed by cloud communication providers, offer it with a business model that mirrors theirs, and provides 24/7 support.   This model helps them get started with an affordable initial investment, then grows with their business as subscribers are converted to paid plans.

We at TelcoBridges must have done something right as we celebrate a three-year milestone and the number of successful cloud communication deployments for FreSBC and ProSBC climbs with more than 14,000,000 SBC sessions in production or trials in over 100 counties around the globe.   Our incredible customers continue to share their stories as the case study portfolio continues to grow with a range of fascinating use cases and successes published.

We’d love to help you launch your cloud communications application – your journey starts at