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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Disrupting the Conference Call Market – Again

Comments (9)

Yesterday, Gold Systems released their new Conference Server.  This is a new conference call product built on top of Microsoft Office Communications Server. 

I’ve been a user of conference call services since the early 1990’s.  I remember when you had to set up a conference call in advance with an AT&T operator, get a unique dial in number, pay a ridiculous fee for the entire experience, and worry about how much the bill was going to be as you anxiously sat on the call and listened to people go round and round about whatever topic the call was about.

In 1997, I was a seed investor in a company called Vstream.  While it started off as a video streaming business, it evolved into one of the first “reservationless conferencing” systems.  After several name changes they settled on Raindance, incorporated web collaboration into their products, built a meaningful and profitable business, went public, survived the Internet bubble, and were ultimately acquired by West Corporation.

When Raindance launched its reservationless conferencing service, I remember it being a huge breakthrough.  I got this little credit card like thing with a unique conference call number (8006333) and a pin.  I could set up a conference call by telling people the 888 number to dial into (888-742-8686 – god, it’s absurd that I can remember this shit – I need to do a major garbage collection routine on my brain) and giving them my conference call number.  At the time, this was super magic unique; today it is commonplace.

Reservationless conferencing rapidly accelerated the growth of the conference call market on one dimension while web collaboration accelerated it on another dimension.  As this was happening, the telecommunication costs dropped steadily.  I vaguely remember the cost per person per minute on a conference call being north of $0.30 at one point; at each board meeting we talked about the number being smaller ($0.15 was a big moment).  Of course, at $0.30 / minute the margins were absurd; at $0.10 / minute, not so much.  While this was happening, the whole Free Conference Call movement emerged so in some cases the price was theoretically free (note the important use of the word theoretically.)

I left the Raindance board in 2002 so I missed what I expect were endless conversations about the impact of VoIP on the whole shebang.  Fast forward to 2009.  We are all really comfortable with reservationless conferencing.  So comfortable in fact that we probably don’t notice that you can do what used to take a data center full of gear and pipes on a high end server today running Microsoft Office Communications Server.  Oops.  Hi Mr. Disruption.  Welcome back.

If you want a quick feel for whether this is cost effective for you, take a look at Gold Systems’ ROI calculator to see what your savings over your current approach would be.  And – if you want more info on this, contact my friends at Gold Systems.

  • http://askbusinesscoach.wordpress.com courtney benson

    You brought back all that garbage in my brain. I too, remember AT&T and Vstream. Are you an investor in Gold?

    • http://intensedebate.com/people/bfeld Brad Feld

      Yup – I’m an investor in Gold Systems (and have been for a long time).

  • http://intensedebate.com/people/pberberian Paul Berberian

    The Gold System ROI calculator shows a cost at 7, 5 or 3 cents per minute which is a function of upfront setup costs. The cost of conferencing has continued to decline but has leveled out in the past year or so (why I still follow this industry I don't know). Wholesale costs are around 2 cents per minute to resellers – which means small companies can get conferencing around 4 to 8 cents a minute. Large companies north of 1M minutes a month can get 2.5 to 1.2 cents a minute – conference providers (those with equipment VoiP or TDM) pay around .7 to .8 cents per minute for LD. Their average selling price is still around 5 to 8 cents – so healthy margin even today. BTW for free conferencing to work it needs to be TDM based so they can collect on exchange fees.

    Bottom line VoIP never really delivered on the promise of zero cost transport for business use – the telcos just lowered their rates to make VoIP just another way to connect a call.

    The big change is the cost of the hardware to do a conference call and still waiting in the wings is international. In my mind – the big revolution on conferencing will be one price per minute globally (around 5 cents a minute or less – business grade).

    Now what you can do in the call and how it all links to tools you already use like Exchange will potentially be disruptive.

    So are we at another disruptive point in conferencing – I don't think so based on price. Disruptive service offerings must be price competitive but offer a ton more functionality and integration – and hopefully a true international solution. Price is just no longer the issue. Just my .7 cents – and I need to forget this stuff as well.

    • http://intensedebate.com/people/terry_gold851 Terry Gold

      We were paying 11 cents a minute for conferencing just a few months ago, so maybe they were taking advantage of us, but we're not alone if they were. If the customer wants to buy the servers (and these are standard Dell servers with no exotic hardware) and the software, we can get the price down to 3 cents a minute which includes toll-free access for even small users.

      Office Communications Server (OCS) with Exchange and Unified Messaging is already becoming disruptive. Our offering makes it easy to pay for the initial deployment of OCS out of an existing conferencing budget. Once the customer sees how easy it is for us to slip this into their operations, we'll show them how to start expanding their use of OCS, adding presence, video, etc., and then move towards dumping their expensive PBXs.

      Microsoft is being very clear that they intend to see Exchange users be able to power down their PBX and legacy voice mail systems. I haven't had a PBX phone for six months, and we're very close to just turning off the PBX and having only SIP trunks.

      So I agree, that's where the disruption happens. I just think that in the process, conferencing bills are going to get a lot smaller. Mine sure did. :-)

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