New World Service Providers

Anyone who has been in the networking industry for over ten years will recall when the term ‘new world service providers’ (xSPs) was coined to denote a new breed of carriers who promised to disrupt the telecommunications industry. Some of these xSPs were competitive local exchange carriers (CLECs), others were Internet service providers (ISPs) or hosting companies.

Although they emerged with plenty of fanfare and promised to deliver a broad set of powerful new data services, when the bubble burst the majority of these companies disappeared as the telecommunications industry fell into a long, dark, ‘nuclear winter’.

The recent surge in demand for web-based services has rekindled the original dreams of those xSPs who survived and is attracting a new generation of service providers hoping to capitalize on this new round of business opportunities.

Over the past six months, a series of xSPs have informed me of their intentions to deliver a combination of managed IT services and Software-as-a-Service (SaaS) solutions in response to growing customer adoption of these ‘out-tasking’ alternatives.

Two of these companies, Telus and XO Communications, are working with Jamcracker—another survivor of the era—to provide managed IT services and SaaS solutions. They are leveraging Jamcracker’s ‘aggregation’ platform which enables carriers and other channel companies to resell a widening array of on-demand services.

Verio, a division of NTT Communications, recently unveiled a portfolio of Business Solutions that includes a set of managed security and storage services, as well as SaaS customer relationship management (CRM) and collaboration solutions.

Wayport, which many know as a leading provider of internet access services in hotels and other travel locations, is also expanding its portfolio of services. It is the provider of AT&T’s private labeled WiFi service in McDonald’s outlets. It is collaborating with Wyndam Hotels to support the hospitality company’s loyalty program. It is providing other hotel chains an assortment of facilities management services via its remote service capabilities.

Each of these xSPs sees a new world of on-demand service opportunities, and are scheming and teaming to capitalize on them. Although they each face significant challenges achieving long-term success, today’s ‘perfect storm’ can propel them to more positive results than in the past.

Widely deployed broadband networks and an assortment of other enabling technologies make it easier and more cost-effective to deliver managed IT services and SaaS solutions. And, a new set of business pressures are making companies of all sizes more receptive to these services and solutions.

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