Softech moves into cut-price telecom lines market

Dublin software company Softech Telecom plans to become the first global aggregator to use the collective buying power of its customers to buy telecommunications lines at a discount for them.

Softech Telecom produces software that enables companies to track, manage and analyse their voice calls, e-mails and other data traffic. Softech managing director Mr Henry Woods said the software would also allow a precise analysis to be made of the telecommunications needs of a company.

"When we know that, we're postulating that, by aggregating all that traffic together, we can bring it to bandwidth brokers and get better rates," he said.

Bandwidth brokers are online companies that match buyers and sellers of excess capacity on global networks. The Gartner Group has estimated that only 5 per cent of capacity on the world's fibreoptic networks is being used.

Brokers such as London-based Band-X - which recently opened a Dublin office - auction that excess capacity online. Most buyers are Internet service providers or other telecommunications companies, which then provide the bandwidth to companies.

Mr Woods's proposal would allow companies to buy directly from the brokers through Softech Telecom, sidestepping the intermediary provider. "It's very consistent with what we've been doing," Mr Woods said. Softech Telecom already has large to medium-sized customers worldwide using their iCMS software, he noted. Mr Woods said Softech also would begin to offer an application service provider (ASP) programme, under which customers would let Softech manage and maintain their iCMS software and the data it generated. The ASP service would create a potential customer base for the aggregation service, he said.

"We put two customers together, and we're in business," he said. He expects to introduce the service within a year with a main base in the Republic. Given the abilities of the software already, little or no technical development work is needed to allow Softech Telecom to gather data for the service but the company needed to determine how to price and manage the service, he said.

Although dropping in price, bandwidth remains expensive and carriers still earn large margins, according to Mr Woods. "There's plenty of room for those prices to be knocked down," he said. Contracts from online brokerages for telecommunications lines run from six to 12 months but he expected them to drop to a month's duration or even less. "I think it's not long before they're for a day or even a minute", he said, because the new generation of traffic management software can switch and manage traffic with such precision.

Softech Telecom, a privately-owned company, would pursue funding to introduce the service as well as expand other areas of the company. The company has also formed partnerships with companies such as PricewaterhouseCoopers, Micro soft and Cisco. The company has offices in eight countries and is opening offices in Dubai, San Francisco, Dallas and Sao Paolo.