Self-Service and Kiosk Information

Wringing some savings out of dial-up

Few folks are more conscious of the costs of doing business -- and ways of driving them down -- than retail ATM deployers.

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Wringing some savings out of dial-up
by Ann All, editor 02 Dec, 2003

Few folks are more conscious of the costs of doing business -- and ways of driving them down -- than retail ATM deployers.

Yet they may not realize they can wring some dollars out of their phone costs by partnering with companies that buy phone time in bulk and pass at least some of the savings along to their customers.

Jay Morris, senior vice president of sales and marketing for Ernest Communications Inc.(ECI), a competitive local exchange carrier (CLEC), and Matthew Mudd, president for new TNS subsidiary POSLink, which acquires phone time from both CLECs and incumbent local exchange carriers (ILECs) such as BellSouth and Pacific Bell, say that deployers can cut at least 15 percent -- and sometimes far more -- off phone costs by purchasing service through them rather than directly from local carriers.

Not to mention the administrative costs involved with coordinating phone service for multiple business lines -- in the case of large ATM providers, across multiple states.

"We become like an internal phone department for them," said Morris. "They make just one call to add or remove a phone line anywhere in the country or to troubleshoot a problem."

A phone line can be an often-overlooked "foothold into a merchant location," Mudd said. "ATM providers don't want to get into the phone business. So at some point there's going to be an uncomfortable point in the conversation when the provider has to tell the merchant to go and get a phone line."

Mudd also believes that the more control an ATM provider maintains over the phone line, the less likely a merchant will be to switch providers.

The upsell

ATM providers can earn some incremental revenue by reselling services for other phone lines that may be located in a retail location.

"In addition to delivering value-added telecommunications services to these accounts which saves their merchant locations money, ATM providers benefit through recurring commissions from ECI and gain a competitive edge by delivering more value to their merchant accounts," Morris said.

"It's another tool in their sales kit, another reason to be back in front of that merchant," agreed Mudd. "The perception of the merchant is that 'hey, this guy is helping me get a great deal on my phone service.'"

As interest in new ATM and point-of-sale transactions such as phone top-ups grows and the cost of higher bandwidth communications such as DSL, satellite and wireless continues to come down, ATM providers may have an opportunity to convert at least some of their retail accounts to the newer technologies, Mudd said.

ECI has been in the communications business for 18 years and has been a certified and registered CLEC for seven years, primarily working with payphone providers. According to Morris, the company is the largest provider of local phone service to the payphone industry with accounts in 35 states. Most of ECI's clients are large, multi-location accounts including c-stores, restaurant chains and other retailers in addition to ATM and point-of-sale deployers.

The company has signed about 50 ATM companies in the past two years, since it began pursuing that market, including some of the largest providers such as Cardtronics.

"Many ATM companies got their start in the payphone industry, so that helped us with name recognition," Morris said.

Morris, a board member of the ATM Industry Association for the past two years, said that ECI hopes to help develop a technology forum within the board to help identify new potential revenue opportunities for ATM providers, such as the aforementioned sales of services such as DSL and wireless communications.

TNS created its wholly owned POSLink subsidiary in July and has since established relationships with ATM providers including Cardtronics and E*Trade Access. The "two-year plan" is to focus on offering local and long-distance phone services to the nation's top 50 metro areas first and then expand from there, Mudd said.

No fuss

Both companies sell phone services directly to large ATM providers and also work with transaction processors to reach providers with fewer machines.

All that is needed to switch services is a list of phone numbers; the change generally occurs in just a few days. No change in phone numbers is required.

"After we get a list of numbers, we'll present them with a proposal showing price and implementation schedule," Morris said, adding that ECI makes an effort to terminate services with ILECs at logical points in billing cycles to help avoid the lengthy cycles of debits and credits that can sometimes occur with a switch in service.

POSLink offers a Web-based administration tool that allows ATM providers to monitor the status of lines being switched.

Neither ECI nor POSLink serves as its own switch. POSLink plans to develop that capability in the coming months, while ECI has no plans to do so. ECI offers what it calls an Unbundled Network Element Platform (UNE-P), which Morris said makes the process of switching local providers similar to the process of switching long-distance carriers and has been adopted by the majority of CLECs throughout the U.S., including AT&T and MCI.

"We think it's a little easier to work with a provider like us that doesn't run its own switch," Morris said. "It's far less involved. You never have to worry about a switch being up and operating when you make a change. It really is just a matter of the ILEC flipping a switch."

"While we take advantage of the current UNE-P and local resale arrangements possible through CLECs and ILECs, we view these as temporary arrangements, designed to allow CLEC competitors to gain entry to local markets," Mudd said. "Our goal is to deploy a facilities-based local switching platform based on proven TNS technology into the TNS global network, which we will supplement with UNE-P services. This approach will enhance our ability to guarantee delivery of transactions now and as the regulatory and technology landscape of the local loop changes."

Posted at December 3, 2003 08:35 PM