Automatic boost for audio conferencing - Global New Analysis - Brief Article

Recent events in the US have thrown the audio conferencing industry into sharp focus. Although no one would be surprised to hear that worldwide telephone conferencing revenues are expected to exceed US$3 bn ([euro]3.3 bn) by the end of 2001, they might be interested to note that this growth is being driven not by demand for high end operator-assisted offerings but by on-demand, low-cost automated conferencing services.

In its latest quarterly results, Paris-based conferencing giant Genesys reported that while overall audio conferencing call volumes rose by 43 per cent in the year to 30 September, those generated by automated services increased 165 per cent. These services are now responsible for 38 per cent of Genesys' total conferencing revenues and 53 per cent of call volumes.

It was a similar story at rival conferencing solutions provider ACT Teleconferencing, which saw quarterly gross profits jump from 46 per cent to 54 per cent of net revenue between June and September this year. ACT attributed this improvement to increased demand for high margin automated services. The company said that 70 per cent of its conferences were automated in the three months to 30 September, as compared to just 40 per cent in the same period of 2000.

What is driving this stampede for automation? Does the change in demand simply reflect the fact that lower prices have made conferencing accessible to smaller businesses or does it represent a change in the way conferencing is being used by existing corporate customers? A bit of both according to Bob Deverell, Managing Director of Hong Kong-based conferencing solutions provider Asia Pacific Business Services. "Audio conferencing is growing fast for medium and large companies," he says. "Small enterprises are still reluctant users and probably have less need as they are not so geographically dispersed. In our experience once a traditional end user experiences the convenience of an unreserved service he will use it for most of his conferences. However, senior, stage-managed events are still handled by operators to minimise risk to the chairman."

While prestige events with large numbers of dial-in or dial-out participants are good for a one-off revenue boost, the-majority of conferencing providers are interested in signing up habitual conference callers and tapping into these long-term call revenues. It is exactly these types of conference that lend themselves to on-demand, automated solutions.

Richard Pickering, Managing Director of conferencing platform provider NewVoiceMedia, adds: "We have found that on-demand services negate the need for 90 per cent of the high end, operator managed, reservation based conferences. In our experience, regular conference users prefer an ASP approach, because they have no capital expenditure or monthly commitments, which are increasingly important considerations to both customers and distributors alike in the current financial climate."

Although instantly available self-service conferencing has its obvious attractions, doesn't the absence of an operator inevitably mean lower conference quality? "It often does, particularly with established providers," says Deverell. "An automatic service actually requires a higher level of support service and better quality lines as there is no operator to correct problems when the call is first established."

However, the current conversion rate from traditional to automated phone conferencing as reported by major players such as Genesys and ACT would indicate that most users are happy with the quality of service they are getting. For these traditional conferencing providers automation means higher margins but this in turn means increased competition from the growing band of telcos and independent service providers eager to grab a share of the market by undercutting their established rivals. While talk of a conferencing price war may be premature it will not have gone unnoticed by traditional UK conferencing providers that newcomers are now offering automated services for as little as ten pence per minute.

COPYRIGHT 2001 Horizon House Publications, Inc.
COPYRIGHT 2002 Gale Group