Successful small business VoIP

Some good Internet phone news

Sad headlines abound in the VoIP world lately: SunRocket sinks, Vonage stock sinks, joy and optimism sink. Wait, not every company in this market sings the blues. To see how the happier half lives, I contacted the folks at Bandwidth.com to see how they're doing lately.

CEO Henry Kaestner said, "Our premise is simple: we provide accountability and transparency. I'm proud of our customer retention rate, because we only lose .8% of our customers per month, meaning we keep 99.2%." For the record, that "churn rate" of .8% is so low cable and cell phone company executives will never see anywhere close to that rate for their own businesses.

One recent step from Bandwidth.com is the addition of some optional add-ons into its standard package price. Their Monitoring & Alert service is now bundled free with the Dedicated Internet Access packages. More than just an alert service that says "the network is down" when you check it to see why the network is down, the Monitoring & Alert service shows link utilization details, so you know if you're Internet connection should be upgraded or if you're handling your traffic load comfortably. And you can configure alerts to warn you when your connection gets busy, such as 80% utilization, rather than beep after the data line crashes.

Why give up revenue on popular services? Kaestner said, "We pioneered the Install Tracker service that let customers check the installation process, rather than leaving them in the dark like other vendors. Now that others offer a similar service, we want to do a better job."

Founded in 1999, Bandwidth.com came about because Kaestner and co-founder David Morken both ran small businesses previously and knew the aggravation of blindly waiting for data connections to be installed. "We waited and waited, and one day the telephone guy came, hooked up a couple of wires, and said we had a T-1. But our vendor wasn't there and we didn't have our router ready." Vowing never to do that to their customers, Kaestner and Morken made news with their Install Tracker service when they hit the market.

Another industry practice that aggravated Kaestner was the difficulty in discovering prices for data communications services. He would call, but no one could give him a price quote quickly. That's why the Bandwidth.com Web site includes more pricing information than most, and they guarantee that price across 10 different regional telephone companies that will install the physical part of the data connection.

In real estate, a good location makes a good business. On the Web, the same rules apply. Kaestner freely admits having the name "Bandwidth.com" already reserved by his co-founder Morken gave a great boost to their growth. "We get about 3,000 visitors per day at our Web site," said Kaestner, "We have 120 employees, and all but 28 are in operations and engineering. So many customers come to us we really don't have a marketing department."

The majority of their new customers come looking for T-1 lines, not Internet telephones. Kaestner worked hard to become the recommended service provider for Mitel and 3Com equipment resellers, and offers both Hosted VoIP and SIP Trunks.

Hosted VoIP means the customer has telephones but no switching hardware at their site, so they use Bandwidth.com as their telephone switch. This reduces upfront costs while providing a standard set of Internet Telephony services. SIP Trunks connect a company's telephone switching hardware on their site to Bandwidth.com for Internet-routed calls. The hardware also can connect to the local phone company to maintain traditional 911 service and act as a backup in the rare case of an Internet access line failure.

Many early broadband adopters used Bandwidth.com's Speed Test to verify their line speed matched what they ordered from their provider. Now Bandwidth.com offers a VoIP Test option as well, to show companies if their Internet connection will do a good job supporting telephone services. While this could be a ploy to upsell prospects to more expensive data lines, it also lets companies know immediately, without obligation, where they stand. More information always beats less information and guessing about your data needs.

I've noticed most of the successful vendors in the SMB market are SMBs themselves, and Bandwidth.com fits that profile with 120 employees and about $15 million in yearly revenue. If good vendors "take rocks out of my backpack" as my friend Kim says, then companies that struggled to get rocks out of their own backpacks understand and connect with customers on a fundamental level that a Fortune 1000 company can't grok. And Bandwidth.com seems to do a pretty good job connecting with their customers, and connecting those customers to the modern world.

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James E. Gaskin

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