Once again we turn our attention to those brave sellers, installers, and maintainers of telephone systems - the interconnects. As with last year's survey, a short questionnaire was posted on our Web page for the companies to complete. All information featured in the following chart was voluntarily supplied by the interconnects.
The number of participants is up from last year, but the total is still only half the response from just a few years past. You'll notice that the majority of surveyed interconnects fall into the $1M-$9M revenue range for 1999; these small to midsized businesses generally maintain their revenue goals and survey positions year after year. But what about the big dogs at the top? As evidenced in last year's survey, about one quarter of the respondents were involved in a merger or acquisition and expected a significant revenue increase. As these companies grow to be nationwide maintenance and service providers, rather than local distributors, the "interconnect" label may seem restrictive or less appealing.
In Joanna Elachi's article, "Telecom Study from Phillips Group-Info Tech", she addresses the growing gap between the local distributors and the national firms. Frank Stinson, Senior Product Manager at The Phillips Group-InfoTech, said, "Larger distributors like Avaya Communications, Williams Communications, etc. are able to offer more sophisticated maintenance contract features such as advanced remote monitoring and repair that smaller local channels do not have the resources to offer. And while many regional players offer remote monitoring, most do not offer the same level of sophistication." While over 60% of respondents rely on new equipment sales for more than half their revenue, MAC (moves, adds, and changes) services account for over half of the remaining income - meaning a serious potential loss for interconnects who can't afford to deliver enhanced services at competitive prices.
Also, the rise of convergence software, equipment, and infrastructure alongside traditional telecom has left some small interconnects at a loss. "Increasingly complex applications have also resulted in higher labor and training costs for all maintenance providers. Smaller vendors do not have the resources to absorb these costs without passing some of them along to the customer. But, in a price competitive market, it is very difficult for them to do that," said Stinson. Seemingly, as these mega-interconnects continue to expand in size, service, and expertise, they disassociate themselves from the perception of an interconnect as merely the seller and installer.
Overall, the interconnects' 1999 revenues were lower than their projections. Warwick Communications took the largest step up, grossing $1.1M over their projected revenue. A.L.T. Communications and TOTLCOM both slightly exceeded their projections and forecast a steady increase for 2000. The new #1 interconnect, Expanets Inc., fell $40M shy of its 1999 projection. What puts them on top for 2000? Expanets' recent deal as Lucent's main distributor promises to push the company's revenue over the billion-dollar mark. (And one would presume Lucent-specific enhanced services aren't far off.)
If you are an interconnect that didn't appear in this year's list, please visit www.teleconnect.com next fall for the online questionnaire to participate in the 2001 Top Interconnect Survey.
2000 Top Interconnects Survey - Part I
2000 Top Interconnects Survey - Part II
2000 Top Interconnects Survey - Part III
2000 Top Interconnects Survey - Part IV
Next Stop...Abbreviation Station
Abbreviations used in the following chart for services rendered and products sold by these interconnects. Respondents were asked to select six of their available product categories from the list below.
AA - Automated Attendants
ACDs - Automatic Call Distributors
ATM - Asynchronous Transfer Mode Equipment
AUD - Audioconferencing
CA - Call Accounting
CABL- Cabling/Structured Wiring
CELL - Cellular and Pagers
CEN - Centrex BOC Agenting
CTI - CTI Software/Softphones
DA - Digital Announcers
DSL - DSL Equipment
FAX - Fax Servers/Software
HEAD - Headsets
HUB - Routers, Hubs
INT - Systems Integration
ISDN - ISDN Products
IVR - IVR Products
KEY - Key Systems/KSUless
LD - Long Distance
LOC - Local Telephone Service
PAG - Paging and Intercom
PBX - PBXs and Comms Servers
POP - Screen Pops and Readerboards
POW - Power Protection Equipment
TOL - Toll Fraud Prevention Devices/Services
UM - Unified Messaging
VID - Videoconferencing
VM - Voicemail
VOFR - Voice Over Frame Relay
VoIP - Voice/Fax Over IP Equipment
VPN - Virtual Private Networking
WLESS - Wireless Adjuncts/Cordless Phones
