As 2010 turns the corner on 2011, Andrew Pryfogle sees reason to be optimistic. As president and CEO of cloud services master agent Terrapin Solutions, he’s just landed a nifty deal to market a white-label hosted IP PBX service from Pac-West Telecomm.
That’s just a start. Looking beyond his own front door, he said, hosted VoIP and especially the cloud are poised for a banner year.
“When we see Microsoft and Cisco spending millions upon millions of dollars to educate the world about the cloud, that’s a massive opportunity for us and for hosted VoIP,” said Pryfogle, who founded Oakland, Calif.-based Terrapin in 2008.
“We are still at an early stage where a lot of businesses understand that the cloud is important, but they don’t understand what it is,” he said. As the gospel is spread, “you are going to see a much bigger shift even than what has already happened.”
White label offerings like the latest from Pac-West are playing an increasing part in driving that shift. Pac-West’s Telastic hosted IP PBX provides a pay-as-you go pricing model with no up-front capital expenditures. It includes a broad range of IP PBX features, flexible partitioning of domains for wholesale and retail customers, Web portals for all system user levels, and multi-tiered rating and billing.
“From a VAR’s perspective, the attraction to a white label deal is the prospects around revenue,” Pryfogle said. “In an agency deal it’s not your brand, it’s technically not your customer. You are at the whim of a carrier or service provider as to whether they will continue to pay you commissions.
“As a white label partner you own the customer, you are building the equity around your brand, you are deciding the profit you will make on that customer because you set the price. You have no danger of that revenue going away unless that customer goes away”
That doesn’t make white labeling a sure thing. There is still the risk of bad debt, as well as the need to support the customer with all the appropriate apparatus. Not everyone can rise to that level, “but if you have those capabilities, you can actually make a lot more money on a white label deal than you could on a traditional agency deal,” Pryfogle said.
Terrapin plays a middleman role in the effort to capitalize on that opportunity. On the one hand, he represents a mix of carriers and service providers looking to bring their offerings to market. He then serves these up to a gathering of some 1,400 individuals, VARs, integrators, and IT support organizations.
From his perch in the cloud he has watched for the past 12 months as hosted VoIP has taken an ever more prominent place among the pantheon of telecom technologies.
“Hosted VoIP has moved way up market for us. It used to be a great solution for SMB customers with under 100 users or even under 20 users. That has changed dramatically. We have bigger and bigger deals where hosted is a better solution for the customer,” he said.
Recently for example Terrapin crafted a deal between managed services provider Appia Communications and Total Carrier Solutions. Together they orchestrated a hosted VoIP deployment for 600 seats in nine different countries.
With 300- to 600-seat deployments becoming more common, 2011 will likely see a shakeout among the fast-growing number of competing firms looking to service these deals. “It does separate the boys from the men among the suppliers,” Pryfogle said. “When you get into much larger deployments there are much more complex things to deliver.”
As the smaller companies struggle to service these ever-bigger accounts, they are feeling price pressures from behemoth companies like Comcast and AT&T who are looking to enter the space and have the muscle to do so with force. The result, Pryfogle said, will be a swift winnowing of the field.
While Terrapin isn’t immune to such turmoil, Pryfogle enjoys a somewhat comfortable position. However the faces may change among buyers and sellers, the broker’s place remains largely unaffected. Still, there is competition from Intellisys, Telarus, Telecom Brokerage Inc., and others.
To ensure stability Terrapin has tried to carve a niche for itself, becoming a source of cloud expertise within the general hubbub of the hosted VoIP space. So effective has that effort been, that even other master agents are contracting with Terrapin to take the cloud component of projects off of their hands.
Total Carrier Solutions brought in Terrapin to sell and manage cloud services, as has P2 Telecom, Pryfogle said. He’s able to draw their confidence in part by the weight of his own track record: He founded hosted VoIP company GoBeam 10 years ago and later saw it sold to Covad.
Terrapin also is actively courting new deals, as for instance its latest arrangement with Pac-West. (And Terrapin/Pac-West are not the only organizations going the white label route. Read Enterprise VoIP’s recent coverage of another white label VoIP provider: Telcentris Launches VoIP-Provider-in-a-Box Platform.
The Pac-West white label product puts another tool into Pryfogle’s hands, and that is just what he likes to have: Options. As a neutral third party, he said, the best thing a master agent can do for a customer is to put choices on the table.
“As trusted consultants we can go in and really advocate for our customer,” he said. “That is refreshing for me. I can tell you definitively there is a not a service provider out there who is the right fit for everybody, so there is a sense of integrity in it for me, in this effort to find the right solution for our customer from among all the suppliers that are out there.”