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When Mark Spencer, founder of Digium and creator of the Asterisk open source communications framework, first conceived of a PBX written entirely in software he was attempting to avoid the closed-market expense of a business phone system. The move opened the competitive door to a wave of new and unique cloud services that fly in the face of conventional telecommunications business models. By “de-proprietizing” the telecommunications business and embracing the growth of both advanced IP networking services and open source development models, these technologies are redefining what is possible in the realm of business telecommunications.

As part of our ongoing series on how the cloud is changing the face of the tech industry, Bryan Johns, Digium’s community director, takes a look at how cloud architecture and open source technology are giving the traditional telecom business a run for its money.

How the Cloud is Impacting Open VoIP Services

Bryan M. Johns, Community Director, Digium, Inc.

Historically, business telecommunications has been a highly exclusive club of well-financed service providers highly dependent upon business models that are pegged to over-subscription, product bundling and oligopolistic market control. Telecommunications infrastructure has been a world of very expensive, highly proprietary equipment and telecom applications like voicemail, conferencing, three-way calling, and caller ID have been developed exclusively by large service providers who intended to put them in the market. The nearly simultaneous advent of cloud network architectures, open telecommunications software platforms (and their expansive feature-sets), and server virtualization has created a unique moment in time for the telecommunications industry. One could argue that this business will never be the same.

A scant five years ago, businesses shopping for telecommunications products or services had only a handful of options—analog lines or a PRI connected to a proprietary PBX along with a best efforts Internet connection like DSL or T1s for Internet access. Today, a business with an Internet connection of acceptable speed and quality can select from a wide array of cloud-based telecommunications services sized exactly to their needs. These services bring new capabilities at an affordable price and are powered in no small part by open source technologies deployed in the cloud. The result: an “unbundling” of telecommunications services that provide the consumer choice, flexibility, and functionality not typically found in conventional telecommunications companies.

The combination of the cloud and open source communications platforms has also birthed an exciting new application marketplace where creative new business models are being developed on a near daily basis. Companies that enable the underlying service of these applications (think ifbyphone or twilio) are acting as cloud “facilitators” for a new generation of applications from companies that are developing their own telephony applications. None of these things were attainable by the average business five years ago and we have open telecom frameworks in the cloud to thank.

Where consumers used to be lured to telecom companies by bundled product offerings and the promise of “savings” for buying everything in one place, the cloud now allows them the ability to save substantial amounts of money each month by purchasing their services over the Internet on an ad-hoc basis. Toll-based products such as long distance and international calling have been disrupted by cloud services like Skype and Google Voice. This market transformation has only just begun and the ways in which it will impact conventional telecommunications are not completely clear, but it is safe to assume that cloud services will gain market share from the incumbents as the result of their capability, flexibility and affordability. The only uncertainty is how and when the conventional telecoms will respond.