Market shift in telecommunications gives Ivrnet the advantage
A fundamental shift in the telecom market that is punishing some companies has actually had a reverse effect on Ivrnet by giving them an enormous advantage. For Ivrnet, the profit margins have increased as a result of this market shift.
Improved technologies, combined with healthy competition, have significantly lowered the cost of telephone communications across Canada. This market shift has severely narrowed the profit margins of companies that provide the telephone services but it’s been a benefit for consumers of those services, such as retail customers and for companies like Ivrnet. With the telephone as the platform for many of Ivrnet’s applications, the cost to provide the application to the customer has significantly decreased.
“That’s a huge benefit to us because that’s our largest cost area,” says David L. Snell, president of Ivrnet.
“An impression exists that we are a telecom company and that our revenue is based on selling calls. Actually, we are an application provider and our revenues are based on applications and our costs depend on call rates.”
Ivrnet has taken advantage of this situation by dramatically expanding its network of (high-capacity trunk lines) and the company now has direct access to most major Canadian cities, including Toronto, Victoria, Edmonton, Vancouver, Saskatoon, Regina, Winnipeg and Calgary.
Prompted by the lower usage rates for long-distance calls, Ivrnet recently signed leases for exclusive use of cross-country trunks. The company expects to save $250,000 over the expanded geographical reach.
In the past, Ivrnet was restricted in offering some if their more economical applications because the cost in long-distance charges was higher than the forecasted revenue. Today, Ivrnet can offer its entire suite of services – including a new generation of applications – at the same low prices consistently across the country.
“We are able to provide services in markets that we were unable to do just a short time ago,” Snell states.
Ivrnet has not only seen costs drop but profits have jumped because of the altered market. There’s been an exponential increase in the use of Ivrnet products thanks to the lower telecom rates.
From the onset of Ivrnet’s expansion into new markets in 2006, the company’s national and international usage increased 63-fold by 2009.
Snell predicts continued growth with this advantageous market, “By the end of 2010, we expect usage to have increased 100-fold.”