Nevada’s telecommunications industry has made it a priority to keep up with rapidly changing technologies, from the latest tablet to cloud computing and mergers and acquisitions. Telecommunication professionals have embraced these changes in their industry, while recognizing not all changes are perfect. Recently, executives representing this industry met at the law offices of Holland & Hart in Las Vegas to discuss changing technology and ways to maintain industry growth.
Connie Brennan, publisher of Nevada Business Magazine, served as moderator for the event. These monthly meetings are designed to bring leaders together to discuss issues pertinent to their industries. Following is a condensed version of the roundtable discussion.
What is cloud computing and why should businesses utilize it?
Jeff Grace: We tell our clients cloud computing isn’t new technology. The increase in usage is because of its reliable, high-speed, low-cost Internet connections and computing resources. It’s plugging into the electrical grid.
Jeff Oberschelp: It has two sides. There’s computing tech capacity or capability, and hosted applications where you plug into the cloud. The data and software isn’t where you are, and you probably pay a service fee for it. More people will be going to hosted environments in the cloud.
Marilyn Burrows: It eliminates the need for small businesses to invest in its own I.T. staff and puts pressure on us, from a network standpoint, to keep producing the bandwidth everybody uses.
Mike Ballard: Consumers and businesses connecting to the cloud need that last mile connection (the final leg of delivering connectivity from a provider to a customer). National statistics show business customers increase their last mile connection by 33-50 percent a year. Every other year the size of the pipe a business needs to connect to the cloud doubles.
Joe Brondon: Data is critical. You have to put in backup systems and make sure it’s environmentally controlled. You can look at a decentralized location where your stuff is off-site. It’s an operational expense as opposed to a capital expense where you access data storage. The pendulum swings away from buying new servers and phone systems because voice services are going to VOIP (voiceover internet protocol) and hosting solutions. Customers are migrating toward it.
What are SIP Trunking and VOIP?
Cheri Hickman: Session Initiated Protocol (SIP). It’s the newest carrier service available, and it’s done over broadband.
Oberschelp: Voiceover Internet Protocol means you can send a call and it goes over the Internet versus the public-switched network.
Grace: There’s one high-speed Internet connection coming to your office. Your voice and data are carried over the same line. It’s flexible and software based.
Brondon: You go from two pipes, a voice and a data, with the ability to do VOIP and SIP Trunking. We now provide one pipe, an Internet protocol pipe. Across that pipe you can run voice, data and video applications.
Burrows: It allows dynamic circuitry. If you have purchased 100 lines of fixed circuitry you can buy SIP Trunking. If you have 100 phone numbers you can add 100 if you need it in a hurry at a call center, for example.
How do you expect mobile communications and gadgets to evolve?
Burrows: At Cox, it’s integrating your home services with mobility. We have entered the mobility business, and we will be in Las Vegas. We’re in five markets currently.
Frank Yoder: Video is exploding on the pipelines. Two-way video is the next big thing. You see it with Face Time and Skype.
Grace: Tablet options are predicted to rise 1,000 percent by 2015. Apple created a new market with the iPad. Now other cool devices are coming out such as the ASUS Transformer. It’s a tablet you can connect to a keyboard.
Ballard: The applications that will be built for businesses on tablets are another thing that will require companies to have a bigger network. Ten years ago I had one cell phone. Today I have four children, four iPhones and an iPad. My 16-year-old daughter borrows my laptop to Skype with friends.
Hickman: I don’t have to carry a laptop half of the time. I use my phone to connect to my office and my exchange server.
Oberschelp: Whether it’s on a cell phone, computer, tablet or television, people will want to have the same applications everywhere. The 20-somethings and teenagers are driving the consumer applications. It’s incumbent on us to make sure that whatever piece of content or application they want is available on any of those four screens.
What safeguards are in place to protect communication systems?
Oberschelp: CenturyLink has an IP-based backbone that traverses the U.S. If there’s a cut in one part of the backbone it heals and goes elsewhere. Most of the major carriers are set up similarly. You’ll lose an end point to a customer if there’s a terrorist attack. You won’t lose a whole city or a major portion of the network.
Burrows: Cox is the same. We’re on that fully redundant IP backbone around the country with multiple carriers providing carriage.
Grace: Where customers or organizations are more at risk is the broadband providers. The end user organizations need to engage more with I.T. providers to assess risk. I’m not an expert in legal or insurance issues, but I still have to understand the tip of the iceberg. Clients need to take the same approach with technology. You need to understand a little to make informed decisions. Many times, because technology is complex, business owners and managers take a hands-off approach.
Ballard: The end user organization, especially while we’re in this cost-cutting mode in the challenging economic environment we’re in, were slow to build redundancies into their systems. Oftentimes you don’t learn until you’re burned.
Is increased technology lessening the need for an I.T. staff?
Grace: No. There’s still a role and a job for the I.T. people, but it’s different. I.T. people are traditionally afraid of cloud because it threatens their job. If they’re smart about these new technologies they will get more engaged to solve business problems.
Brondon: Some are cutting the I.T. organizations and moving forward. Other leaders look at I.T. people who can do software development or I.T. development to help billing or marketing platforms. They’re shifting away from a support mechanism to a development mechanism. Part of their core business strategy is to bring in that I.T. brain trust to figure out how they can grow their business as opposed to just supporting.
Oberschelp: If an I.T. guy says to the marketing department, ‘I can make $50,000 a month as opposed to costing $10,000 a month,’ the marketing department will take that $50,000 conversation every day.
Ballard: The I.T. guy will be employed in a service company rather than an enterprise company. Our major I.T. employer 10 years ago was MGM Mirage. In the last year, it has outsourced the majority of the I.T. staff to a Xerox subsidiary and downsized.
How has the industry weathered this economy?
Burrows: We used to build 40,000 new homes a year in Las Vegas. Last year it was less than 3,000. It dramatically changes your business. It changes your operating costs and what you focus on. We think our biggest residential opportunity is to put people back in those empty homes.
Brondon: It changes the way you compete. During periods of growth, you could sustain a good portion of business with people coming into the marketplace. We’re not seeing that as much now. There’s more competition for a set number of businesses. That’s changed the dynamic of how we go to market, focus our resources, and deploy our sales organizations. The economy has shifted from a high growth environment to a stable- to some degree a declining marketplace. We still have to deliver profitability and weather the growth.
Hickman: It’s helped me because I’ve had many competitors go out of business. I purchased one a couple of years ago and I’ve taken over the customer base of others. I had to streamline the way I did business and take advantage of technology. I have sales representatives working remotely from their phone. I don’t have to put a roof over their head. It’s like they’re in the office.
Oberschelp: Most of us were affected by the capital investment. People that bought large capital gear from us have slowed down. It’s picking up again this year. We’ve gone from selling large gear to selling cloud-based or hosted applications. We’ve changed our selection of products and the way we deliver them.
Grace: We’ve had to diversify our client base. Coming into 2009 we were heavy in construction, and now not so much.
Yoder: For large and small businesses, the recession hit and made us rethink and refocus our businesses. The larger companies have a bucket of money, and it has to decide where to spend that bucket. For smaller businesses its more survivability and it may not have a bucket at all.
Will the industry get more competitive as business increases?
Brondon: You will see more mergers and acquisitions. Competition will increase with different types of businesses coming into our marketplace and playing. The challenge is we will see competition from people we didn’t expect.
Hickman: My specialty is phone systems for small and medium-sized businesses. I’ve joined an organization out of San Diego that took me nationwide. In the past I never would have looked into it. I’ve reevaluated and truly believe that’s the best way to go now.
Ballard: Building a network requires a lot of capital. Those that have access to capital are winning, able to consolidate and bring efficiencies into the system. We built a strong network in Nevada. Our customers are the state, the county, the city, USC, Zappos and high-end customers. To do what these larger companies demand, I need more capital. I couldn’t get it locally.
Burrows: The problem is the dollars aren’t getting bigger, but the demands for services get more complex. There is more competition to simplify the solution for the customer. Everybody stopped thinking they created all of the solutions. You’re better off partnering or acquiring people in the space you’re interested in.
Oberschelp: Scale matters. You have to be large enough to have access to capital and take advantage of your scale to reduce costs. Diversify your portfolio. You can’t do it on one product anymore. CenturyLink bought Savvis Santa Clara to get into the cloud and datacenter space. We had to deal with Verizon Wireless because we know it’s important to have that other screen.
Grace: The level of competition is going to remain because things change so quickly. Facebook, for example, hired a PR firm to write negative stories about Google. Facebook has some competitive advantages to Google because it knows your gender, location, age and likes.
Does Nevada have advantages for call centers willing to relocate?
Ballard: We had lost it when our home prices went through the roof and people couldn’t afford to live here. It has come back. Las Vegas is attractive to call centers because it’s a 24-hour town.
Yoder: I have companies in the call center industry and it’s having trouble finding people to fill the seats now because it’s come back strong. Call centers rebound quickly because the jobs are usually not higher-end paid jobs.
Brondon: You don’t hear that there’s a tornado warning or eight feet of snow outside. Our weather is fantastic. We have infrastructure for people to get to work if they don’t have transportation. There’s UNLV and the College of Southern Nevada, where you can recruit.
Burrows: We constantly have around 60 openings that we’re recruiting for all the time. It’s hard to find the appropriate folks to fill the roles and many of those are in the call centers.
