Is Microsoft’s Direct Routing Equitably Priced for Operator Partners?

It’s clear to see that Microsoft’s Cloud services are in a nice position. With almost 300 million Office 365 subscribers, phenomenal growth in Azure, and over 115 million daily active users on Microsoft Teams, they have built a huge platform that will be in every conversation about workplace integration for the next five years.  

One of the enticing effects of owning a platform like Microsoft Teams is that it is already priced into the Office 365 subscription, a compelling argument for adoption, in a sense already bought and paid-for by the business consumer with the Microsoft User license. Along with the vast number of users and a wealth of add-ons to the platform (file sharing, calendar, meetings, etc.), there are many opportunities for Microsoft to further monetize the Teams solution. 

Micah Singer, Managing Director of TeamMate Technology believes that, with the addition of Operator Connect, now is an interesting moment to consider whether Microsoft is being equitable in their relationships with telco operators.   

“There is no question that Microsoft has taken steps with the introduction of Direct Routing and now with the introduction of Operator Connect to make it easier to integrate Teams to PSTN. 

“These tools have, and will continue to, attract Operators to partner with Microsoft and promote Microsoft Teams.” 

Singer said that, although the theory behind Direct Routing and Operator Connect paints a benevolent picture of Microsoft’s vision for telephony partnership on the Teams platform, the reality is that by partnering with the Seattle giant, telco operators are paying an exorbitant toll. 

“The good news for business customers is Microsoft only charges $8 for their version of the corporate PBX which includes Direct Routing. The bad news is that even if you want to combine Microsoft Teams and your existing PBX or Trunk they still charge $8. It is the operator and the business customer who must absorb this significant add-on cost.”  

Although marketed as a free platform, Microsoft offer packages to businesses for domestic and international calling minutes, PBX features and audioconferencing, much in the same way as other telco operators, that can cost a small business of 10 employees up to $3,000 a year. On top of the usage-based costs, Microsoft announced last year that it would be charging for call recording and contact center APIs as well as other ‘advanced features.’ 

Singer added that, although Operator Connect, like Direct Routing, appears to be an embrace of the operators, telcos will have to factor Teams interoperation as an expense that can run as high as 30% (if it is like Direct Routing in that regard).  

What this means is all Operators, including service providers, UCaaS, SIP Trunk, Hosted PBX and Call Center, can and should integrate into Office 365 in general, but at a substantial cost in tolls to a brand-new voice toll booth operator – Microsoft. 

“On one hand, this is good for business customers because they can easily use their existing service providers in Teams, but, on the other hand they now must overpay for this convenience. In all, under the guise of operator partnership, Microsoft is getting the better commercial deal” 

The result

Singer also added that while the technology Microsoft has deployed is helping grow Microsoft Teams for Calling these high tolls to partners are keeping the VAR, Reseller and Service Provider market at bay, rather than encouraging them to embrace the Microsoft Teams for telco services. 

There is also the consideration of the court of public opinion. Against the backdrop of an anticompetitive European lawsuit filed by fellow collaboration platform Slack, the decision to introduce tolls will be seen as anti-competitive by operators and a mechanism to monetize their monopolistic dominance. 

“I would argue that the high tolls that hinder close partners with the operator community are bad for Microsoft because it will slow down the adoption of calling from Microsoft Teams.  

“With the introduction of Operator Connect, the concern is that Microsoft might be adding a streamlined and certified way for operators to sell to businesses, which would be good for partners, but if Microsoft uses the same partner logic as normal Direct Routing and overcharges, it will be interpreted as competitive rather than collaborative to Operators.” 

 

 



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