Conferencing Bridges Gap in Profits

Posted: 09/1999

Conferencing Bridges Gap in Profits
By Liz Montalbano

Since long distance margins are thinning faster than a receding hairline, resellers
face continual pressure to add more profit-boosting products and services. They don’t have
to look far. With its healthy margins–averaging between 30 percent to 50 percent,
according to wholesalers–audioconferencing can cover the bald spot those shrinking
margins are leaving in a reseller’s profits.

"Our private-label companies tell us that this product is far more profitable than
any other product they have today," says Judy Riley Brown, vice president of sales,
marketing and customer service for Conference Plus Inc., Schaumberg, Ill., who says 60
percent of her company’s business is private-label conferencing services. "The
profits have eroded in the long distance marketplace. You have to build your profit
margins in other products."

One way is with a service nearly anyone can use–all the customer needs is a phone
line.

"Companies that may not have been interested in offering conferencing products
before are now very interested basically because it is a relatively easy service to sell
these days," says Diane Robbins, senior manager of private-label sales for Conference
Plus. "It’s especially [true] if you’re talking about audio, because everyone has a
telephone."

Robbins says it’s that ease of use that makes teleconferencing services a "quick
sale" for resellers trying to interest retail customers in a broader product menu.
"[It’s] a quick way to get their foot in the door to start talking to clients about
some other services they offer, whether it’s data or long distance or whatever they’re
highlighting," she says.

Supplier Consolidation

Conference Plus and Confer-ence Call USA, Atlanta, are two of the few remaining
wholesale conferencing companies that have not merged without companies (see list, below).
In the past few years, the industry has done some consolidation.

In 1997, the formation of Vialog Corp., Andover, Mass., merged six independent
conferencing centers–Telephone Business Meeting, Inc. (Access), Reston, Va.; American
Conferencing Company Inc. (Americo), Oradell, N.J.; CallPoints Inc., Montgomery, Ala.;
Communication Development Corp. (CDC), Danbury, Conn.; Kendall Square Teleconferencing,
Cambridge, Mass; and Conference Source International (CSI), Atlanta. This year, the
company purchased A Better Conference Inc., Palm Springs, Calif., and Conference Pros
International Inc., Houston, in January, and A Business Conference Call, Inc., Chaska,
Minnesota, in May, and announced consolidation of all the operating centers in June.

Vialog also plans to close its Oradell and Danbury, Conn., operating centers in the
third quarter of this year, and the Houston and Palm Springs centers by the end of the
year. To absorb those centers, it will expand its other facilities and combine the Andover
and Cambridge operating centers in the first half of 2000.

Three other wholesale conference calling providers–Aloha Conferencing, Honolulu;
Williams Conferencing, Denver (a division of Williams Communications, Tulsa, Okla.); and
Summons Conferencing, Norcross, Ga.–are in the process of a merger that will be completed
next month. The combined company, Genesys Conferencing, will have its North American
headquarters in Denver.

Turnkey Providers

Wholesale conferencing providers have offerings for both private-label and agent
programs. Brown says many times, a company will start out as an agent for Conference Plus
and then transition to a reseller program once they firmly establish their business.

"A lot of times, people don’t have [a significant amount of] potential
immediately, but want to get into this and start out in an agent program," Brown
says. "Once they build their business, they migrate out of that and go into a private
label."

For private-label customers, Conferencing Plus provides a turnkey solution. All of the
customer service and billing aspects–including electronic billing and commission reports
for the sales personnel–is done by the wholesaler, and Robbins says Conference Plus also
provides training for a reseller’s sales force and helps them market the product. The
company even has representatives help a reseller’s sales force work with end users to help
them implement conference services in their own organization.

The service is branded in the resellers’ name so when a customer dials in to a
conference call or needs customer service, a Conference Plus representative or automated
system answers as if it is the reseller.

Zach Diab, sales and marketing director from Conference Pros, which is still operating
under its own name until Vialog transitions completely into its consolidation, says his
company also provides a turnkey solution that brands the service with a reseller’s name,
but gives its wholesale customers a choice when it comes to billing. "Most of them
prefer that we do the billing for them, but we have an option that we leave it up to their
discretion," he says.

Both Diab and Mimi Englander, Vialog’s assistant vice president of marketing, also say
all their resellers’ conference calls run over Vialog’s network, so there’s no need for a
reseller to be facilities-based.

"Once we program the line to go through our reservation department, they start
routing their traffic to our network," Diab says. "Everything that we need from
them is [to] just give us their retail rates so [and] we can at least know if their client
asks us what their rates are, we can provide them with the information."

In contrast, Conference Plus operates on a Centrex platform rather than a switched
network, and works with resellers to route conference calls from resellers’ own networks
to their platform.

"Therefore, they reap the rewards for the minutes on that network, and we in turn
charge them for the bridging time," Robbins says.

Service Variety

There’s more than one way to audioconference, which is why wholesalers offer up a host
of options for their resellers. Some of the options are operator-attended calls, which use
operator assistance to help conference attendees dial in to calls, or operator-on-demand
calls that allow callers to enter a passcode to dial in to a call, but have an operator
available for help at any time.

There are also options to toll-free numbers. Diab says Conference Pros offers both
calling that includes long distance charges and calls that require end users to incur the
long distance cost of the conference call.

"That’s called a local line," he says. "Some clients want everybody to
pay their own long distance charges to their own long distance carrier."

Conference calling also has some standard services–which Diab calls
"knickknacks"–that are par-for-the-course options for most calls. These include
listen-only mode, which mutes most participants while allowing one or more to moderate;
question-and-answer sessions, which allow participants, assisted by an operator, to ask
questions at the end of listen-only mode; roll calls, which verify attendance of
conferees; electronic polling, which allow participants to vote on issues discussed on the
call; and audiotaping and playback services, which allow a call to be recorded for
playback for any period of time after the live conference has ended.

Liz Montalbano is news editor for PHONE+ magazine.

Internet Gives Conferencing a New Look
By Liz Montalbano

Even as audioconferencing continues to be a successful way to boost reseller margins,
live web conferencing, fueled by the exploding popularity of the Internet, is yet another
way for a telco or Internet service provider (ISP) to add heft to its service portfolio.

In mid September, WebSentric Software GmbH, a German company with its U.S. headquarters
in San Mateo, Calif., launched Web-Based Presentation Conferencing (WPC), which allows
customers to set up their own conferences via the web. Other more traditional conferencing
companies, such as Vialog Corp., Andover, Mass., and Conference Plus Inc., Schaumberg,
Ill., also offer wholesale web conferencing and presentation services, and report margins
for resellers are even bigger than they are for providing audioconferencing services.

Mimi Englander, assistant vice president of marketing for Vialog, says if a retail rate
for an audioconference is 50 cents per minute, the rate for a web presentation would be
about $1.30 per minute, adding that margins for the service are about 50 percent.

According to Jim Routh, director of business development for WebSentric, web
conferencing is a valuable alternative to audioconferencing because it combines three key
learning elements: sight, sound and interaction.

"Studies find people remember 20 percent of what they hear, 80 percent of what
they see and 90 percent of what they do," Routh says.

WebSentric’s WPC solution consists of two components: WebPresenter software, which can
be used to design a presentation if a user does not have access to software such as
PowerPoint; and Presentation.Net conferencing service, which allows registered users to
host live, interactive web conferences.

WPC is geared to even low-bandwidth users, requiring only a PC with a web browser of
4.0 or better and an Internet connection of 28.8 kilobits per second (kbps) or more.

With web presentation services such as WPC available at the wholesale level, all
resellers have to do is leverage the opportunity. Vialog’s Englander reports while web
conferencing isn’t being used on everyone’s desktop at the moment, there’s no reason it
can’t have widespread appeal.

"It’s really gaining in popularity," she says. "It’s a question of
letting people know that the service exists."