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Study Finds Rich Opportunity for German Operators to Lead Market and Avoid Market-share Loss to VoIP-only Competitors

HANOVER, CeBIT, March 19, 2007 -- Traditional telecom operators must act now to prevent low-cost Internet service providers and other non-traditional telcos from dominating the German Voice over IP (VoIP) market, according to research of the German SME telecommunications market sponsored by BroadSoft, Inc., a leading provider of VoIP application software.

Key Statistics from the Survey:

  1. 64% of German SMEs are interested in VoIP services
  2. 32% of SMEs consider traditional German telcos as VoIP providers
  3. Only 15% of SMEs are aware of the advanced features through VoIP

The research, conducted by Savatar Consulting, found parallels between the current German market and the status of the US market in 2005, when traditional operators subsequently lost their market leadership in VoIP services to non-traditional operators. The research found that currently, traditional operators lead the German VoIP market with 32 percent of SMEs regarding them as the main business VoIP provider, compared with only 8 percent favouring non-traditional operators. These results are extremely similar to the US market’s makeup 18 months ago. Since then, however, Vonage, Skype and other VoIP-only competitors have carried out aggressive VoIP marketing campaigns. Today the non-traditional operators lead the US VoIP market with 23 percent and the traditional operators trail at 10 percent.

“Over the past 18 months we’ve witnessed incumbent US operators be indecisive or make a catalogue of missteps that have allowed non-traditional operators like Vonage and Skype to wrestle away control of the market,” said John Macario, president of Savatar Consulting. “German operators risk repeating exactly the same mistakes and losing their dominance in the market. The key lesson to draw is that German SMEs are interested in VoIP and if you do not pro-actively promote your IP products to them, they will buy VoIP services from one of the growing number of non-traditional voice providers instead.”

The BroadSoft-commissioned research found there is a substantial untapped market in Germany with 70 percent of SMEs interested or very interested in VoIP. Whereas in Europe overall, nearly 64 percent of SMEs had no or little interest in VoIP services, according to Savatar.

Despite the strong interest in Germany, the market remains largely uneducated about the benefits of IP voice services with 84 percent of German SMEs primarily viewing VoIP as a way to make inexpensive calls, while only 15 percent primarily considering VoIP as a means to acquire advanced voice features that can replace an expensive on-site PBX. In the more mature US market, only 43 percent of SMEs primarily view VoIP as a way to make cheap calls, while about 20 percent perceive VoIP as offering more advanced voice features, and 20 percent identify VoIP as way to more easily and economically manage the enterprise network.

“There is a natural reluctance for traditional telecom operators to promote VoIP products because of a perception that VoIP leads to margin erosion. This research demonstrates that it is more important

than ever for all operators -- especially the larger brands -- to proactively educate the SME market on how VoIP services can offer significant enterprise productivity improvements in today’s highly mobile, converged workplace,” said Craig Decker, vice president of EMEA Sales for BroadSoft.

“Many incumbents see the value in VoIP solutions like those available through BroadSoft’s BroadWorks® platform,” said Gerd Ternes, regional vice president, central and eastern Europe for BroadSoft. “In Germany, they need to heed the feedback in the Savatar study from this important target market and aggressively extend their brands into the VoIP space to fend off the competition.”

Savatar interviewed 410 European SMEs -- in the UK, France, Germany and the Netherlands -- about their perceptions and experiences with business VoIP. The research included quote requests for VoIP services from European operators to assess the maturity of the sales process. Savatar has also carried out identical research in the US market.

About BroadSoft

BroadSoft provides VoIP application software that enables the delivery of hosted telephony and multimedia services. Its flagship BroadWorks® technology empowers wireless, wireline and cable carriers to deliver next-generation voice and multimedia applications and advanced features that enable them to increase revenue, enhance competitive differentiation and elevate customer satisfaction. BroadSoft's family of carrier-class software products delivers the scale, open architecture and reliability that the world's leading telecommunications companies demand to serve mission-critical enterprise and residential broadband customers. BroadSoft provides VoIP applications to 7 of the top 10 and 13 of the top 25 largest carriers worldwide, as measured by recent annual revenue, including Korea Telecom, Singtel, Sprint, Telefonica de Espana, Telstra, T-Systems, and Verizon. For additional information, go to www.broadsoft.com.

About Savatar

Savatar is a management consulting company that helps telecommunications clients succeed in selling VoIP solutions to the small and medium business (SMB) market. The firm has worked with large carriers, wholesalers, equipment providers, and software developers to define product, establish sales channels, and optimize sales techniques for VoIP products in the SMB market. For more information, please visit www.savatar.com.


About BroadSoft:

BroadSoft, now a part of Cisco, is a technology innovator in cloud PBX, unified communications, team collaboration, and contact center solutions for businesses and service providers across 80 countries. We aim to empower users and teams to share ideas and work simply to achieve breakthrough performance. For additional information, visit www.BroadSoft.com.

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