Category Archives: Articles

T1 – Bypassing Monthly Expenses

By Roger Koenig

Telecommunications transmission in North America is now almost entirely digital. Every time you make a call across the country, or across the city, your voice is being converted to digital numbers. Only in the “last mile” (the telephone office closest to your caller) is the digital speech coding converted back to an analog electrical voltage to drive a telephone. The standard means of digital transmission and connection that makes this possible is called T1 or Digital Signal 1 (DS-1). It has become the basic building block of the telephone network and the fiber optic transmission lines that link it.

T1 transmission came out of Bell Labs approximately 30 years ago. For the last dozen years, T1 transmission has been available for business telecommunications users to create private networks, linking sites with voice, data, and video communications. A T1 line appears to the user as a plastic box on the wall. You plug into it at each end with a wide modular plug. Equipment called multiplexers or channel banks convert the T1 digital line into 24 or 48 individual telephone lines or high-speed data channels.

The Universal Communications Pipe: Technically, T1 is a method of sending digital “1” and “0” pulses on two pairs of copper wire at a high speed. The standard speed, or “bit rate,” is 1.544 megabits per second, enough pulses to support 24 or 48 simultaneous telephone conversations in each direction.

You can think of T1 transmission as a digital “pipe.” You put “1” and “0” bits of information in at one end, and the information comes out at the other end exactly as you put it in – whether the other end is in the next town or across the country. As a point-to-point leased line service, a T1 has no connection to the telephone company switch. There are no per-minute charges for calls over the T1, only a fixed monthly charge of leasing the “pipe.” What you transmit on a T1 leased line is up to you – DID lines, remote dial-out lines, data, talk paths, or remote operator connections. The telephone company neither knows nor cares what type of information is being carried in the T1 communications pipe.

Messaging services are profitably using T1 lines that have monthly leases anywhere between $400 and $4,000 per month depending on distance between sites and the number of accounts handled. Lines are typically leased from the local telephone company for consolidations within your Local Access Transport Area (LATA), and from a long distance company (AT&T, MCI, Sprint) for consolidations between LATA’s. There are also 600 independent fiber optic transmission companies in the U.S. that specialize in leasing T1 circuits within specific cities or geographical areas of the country.

Digital Is Cheaper: Messaging services, like the rest of the telecommunications industry, are going digital. The motivation is a matter of saving money while providing a better quality of service to customers. Two pairs of copper wire using digital T1 transmission are cheaper, easier to maintain, and sound better than using 24 pairs of copper wire to do the same job with analog techniques. The monetary savings telephone companies, or “carriers,” enjoy by using T1 is being passed on to customers. Rates for analog private line services, including Foreign Exchange (FX) lines, have been going up while rates for digital private line services (T1) have been going down. In some areas, you can lease a full T1 line – capable of connecting 48 DID, concentrator, or call-out lines – for the same monthly expense as four analog FX lines. Telephone answering, paging, and voice mail services are using T1 leased lines for mergers, consolidations, market expansions, and to reduce monthly FX charges.

Transparent Consolidations: Let’s talk about a typical T1 installation between messaging service locations such as Akron and Cleveland. The overall goal is to transport all of the service lines from the Akron Office to the Cleveland Office. Existing DID, call-out, and concentrator lines in Akron are connected to appropriate cards in Channel Bank 1. The channel bank converts or “multiplexes” all of the 24 analog line signals into a single high-speed digital signal – the T1. At the Cleveland end of the T1 line, Channel Bank 2 converts the T1 signal back into 24 analog lines. The lines are then connected to the Cleveland Switch exactly like local DID, call-out, and concentrator lines. All customer accounts from Akron are transported to Cleveland combining the two services into one larger service.

To the messaging service customers, the consolidation of Akron into Cleveland is transparent. Connecting (or “cutting-over”) the Akron lines to the T1 Channel Bank is typically done late at night. Customer answering, voice mail, and paging accounts are immediately handled in Cleveland after the “cut.” All current Akron customer account information and messages are entered in Cleveland before the cut. Due to the T1 digital technology, there is no loss in speech quality by transporting the Akron lines to Cleveland.

Most significantly for the messaging service, there are no per-minute toll costs for DID or call-outs from Akron to Cleveland. All communications traffic goes over the messaging service’s private T1 network. The economics of T1 lines has paid-off for consolidating messaging businesses from 10 to 300 miles apart.

The Sum is Less than the Halves: Every business has costs considered “fixed,” such as rent, office equipment, insurance, accounting, and overhead management. Other expenses are “variable,” depending on the volume of customer accounts handled, such as operations staff payrolls.

The major motivation for messaging service to consolidate or merge with T1 lines is to cut expenses both fixed and variable. For fixed expenses, operating one office is obviously cheaper than the overhead associated with two offices. One switch, voice mail system, and paging terminal costs less than two. Not everyone realizes, however, that variable expenses are lower for larger messaging services than smaller ones.

The statistics of telephone call traffic dictate that the bigger you are, the more efficiently you use operators, equipment, and trunks. This is due to the averaging effect of telephone traffic coming from large groups of callers. In a large group, each operator or voice mail port can handle more calls on average. Callers have a lower probability of waiting on hold or getting a busy tone. Airlines, credit card companies, and insurance companies learned this a long time ago. Reducing payroll and overhead costs is the reason that customer service operators for these high-volume companies are typically at one large site in the country.

[From Connection Magazine, January 1994]

A Novice’s Guide to Marketing & Sales

By John E. Hudson

Marketing has long been a fancy of mine. The reason I find marketing so interesting is that it deals with the way people develop and react to different concepts. It also provides insight into the process a particular individual uses to develop the rationale for the decision they just reached. The key to a good market program is to focus on, and exploit this human trait. Creating a plan to suggest consumer acceptance before the targeted prospect develops the sense of need is a great skill.

While this may sound like a subliminal message, it really isn’t. Today’s technical name is pro-active marketing. You can really call it what you want. The bottom line is to create a market need using your strengths in order to capture a position of leadership. After you have done it, you tell the world about it and they stand in line to give you money.

Sounds great doesn’t it? You know the market really needs what you have to offer. Are you ready to start tomorrow? Why not?

These are the key attitudes necessary to create an aggressive marketing campaign that will increase your sales volume and profit dollars. A common mistake of business is the belief that price management allows you to maintain a level of business that is necessary for long term success. To develop long term business success you must provide value to a select group of individuals who truly believe you are the only source for what they seek.

There are several items critical to the development of a successful, aggressive marketing plan: Market Leadership, Risk Management and Selling Tactics. Without these essential skills it is difficult to control the business environment because you don’t have a complete picture of how outside influences affect the market.

Market Leadership: If you are not willing to define the industry accepted criteria for a specific product or service offering, your competition will. The prospect will always have an opinion of what they want to buy and how much they are willing to pay. They will also have an opinion on the perceived value of your goods and services to their business or to them personally.

Selling Message #1, Perception. Create an industry need only you can fulfill!

To lead the market it is necessary to teach it about the benefits of purchasing goods and services from you. The consumers are influenced by what they read, see and hear. Rarely do you find an independent thinker. People want things that make them successful. So, your objective is well defined. Create a message that is believable and is verifiable by references in the market segment.

Risk Management: Aggressive campaigns must be measurable. The primary goal is to take control of the market. Other elements that must be influence dare, the content of services offered, the proper price structure, and the acceptable standards for conducting business. These are the goals. To be successful you must have criteria for measuring your success at reaching these goals. Risk management consists of many elements. Each of these issues deals specifically with the elements that affect your potential for success. Also, each has an associated out-of-pocket expense. This makes it mandatory to manage the effectiveness of the program.

Selling Message #2, Value. By tailoring our products to the requirements of their market, we have helped our customers succeed.

I believe the two most critical issues in a pro-active marketing campaign are the “time line for success,” and the “barriers to entry.” Many business planners deal with these issues separately. In my opinion, it is mandatory that these two issues be dealt with as a set. This is especially true in a small business that has limited resources in time and money.

The “time line for success” provides a schedule of events that must occur during the campaign. You manage the campaign with a series of milestones. Each milestone has a set of goals associated with it. The milestones will change with each new campaign. As you approach the milestones at the end of the schedule, you should have specific goals for capture rate and customer acceptance.

If you are meeting your goals on the time line you set, you are on the road to success. As soon as you sense that you are having trouble meeting the goals, reevaluate both the goals and the timing for success. You may find that the market is not what you expected, or your goals are too ambitious. Apply the rule of “time versus money.” Will the project create the income I want in a time frame that is acceptable to me and by business? If the answer is no, or maybe, you should consider abandoning the project. If you do closeout the project, you need to know why it did not succeed. Some parts were successful, some were not. It is equally important to know why elements of any project succeed or fail.

Selling Message #3, Need. The market needs your services because you told them they did!

Entry barriers have a major effect on the time line. The level of market awareness by the consumer, as well as the number and quality of your perceived competitors, can severely impact the timing required to succeed. In either case these are two items that you must understand and factor into your campaign before you commit to spend your business development dollars.

Other issues affecting your decision to enter are; market segment knowledge, your time commitments to other projects, personal and business resources, and the cost of technology to serve the market. The bottom line in risk management should not be viewed as a negative. It is good business to know your strengths and limitations. This kind of knowledge allows you to optimize your personal and business resources. Any time you decide to take an aggressive position you should be well prepared to win.

Selling Tactics: Creating an aggressive marketing plan without an aggressive selling plan is like practicing all your life to hit a home run and then never getting up to bat. If your intent is to attack the market you need to:

  1. Develop the language of the industry
  2. Solve the problem
  3. Manage the selling cycle
  4. Steam roll the competition

These four items are dealt with in sets. Language development and solving problems go hand-in hand. In order to successfully sell in a market segment you must develop their vocabulary and understand how and when to apply it. We have all seen it É someone tries to sell us something and they have no concept of how it’s used, or why we would use it. If that applies to us, why wouldn’t it apply to our prospect? To make the sale, allow the prospect to be the hero. We win because we allowed them to provide solutions to the individuals they are responsible to.

Selling Message #4, Ask for the Order. At some point in the selling cycle you must stop selling and ask for a commitment from the buyer. Managing the selling cycle and steam rolling the competition are keys to sales success. The only way to steam roll the competition is understand and manage the selling cycle. This means that you, or a sales manager, must take an active roll in preparing the sales staff to be well trained in creating the approach to closing the sale.

The requirements for closing a sale are part of the risk management portion of a marketing plan. To complete a sale for anything certain needs have to be met. The other portion of the sales cycle is managing the flow of the sale. By managing the flow it makes it difficult for competition to invade the prospect.

Selling Message #5, Winning. To win both the seller and the buyer must believe that their objectives are being met. Remember, the company that defines the buyers needs, presents products to fill those needs, and controls the selling cycle will always win in the long run.

Conclusion: Some industry critics believe that aggressively attacking a specific business segment is risky and leaves a bad image if it is done improperly. To some degree they are correct. The business that is not prepared to actively solve the buyer’s needs will fail and negatively influence the prospect on the value of goods offered to them by another company. The message is be prepared to win. Fill the needs of the prospect at the point of sale.

John Hudson is a Product Director for Comverse Technology, Inc.

[From Connection Magazine, January 1994]