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TeleBright.com Targets the Little Guys With Savings
Rockville Firm Gives Free Advice on the Best Deals from Local, Long Distance
Carriers
By AMY L. BERNSTEIN
Daily Record Business Writer
October 4, 2000
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James Giddings, general manager of Safford
Lincoln-Mercury, is getting the same service
from Telebright.com as he received from a
consultant - only this time it's free and he's
saving 33 percent on his monthly telephone bill.
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At one of Maryland's largest car dealerships - Safford Lincoln-Mercury in Silver Spring - business has been brisk lately. That's the good news. The bad news is that, until recently, the dealership's phone bills were through the roof - more than $3,000 a month, on average.
To tackle the problem, Safford's general manager, James Giddings, hired a telecommunications consultant to find a way to bring costs down. Instead, Giddings said, costs went up - and he was stuck with the consultant's bill to boot.
Then Giddings got a call from a friend who told him to check out an online telecommunications brokerage service called TeleBright.com - a Rockville start-up which promises to help small and medium-sized businesses shop for better deals on local and long-distance phone service, as well as wireless, Internet and data services.
So Giddings logged on. And soon, he said, "TeleBright was giving us the same service as the consultant - for free - and now we're saving over a third on our monthly bill. It's pretty neat."
Telebright's plan
TeleBright analyzed the dealership's phone bills, found it was over-paying for local phone service, and then presented more than half a dozen cheaper options. Safford has since switched both its local and long-distance carrier, based on TeleBright's analysis.
"I'm a novice at this," Giddings said. "I'm not in the phone business."
Most large corporations employ telecom managers to wade through the techno-speak and the thousands of competing options available - from Internet dial-up to DSL, T1 lines and Web hosting. TeleBright and its dot-com competitors, including Simplexity Inc. in Herndon, Va., and Telezoo.com in Arlington, Va., are targeting smaller companies that cannot afford in-house telecom experts.
"It's just, 'Keep it simple, stupid.'" - James Giddings
Generally, these dot-coms bill themselves as neutral parties interested in building relationships between telecom vendors and customers.
"We bear no interest in which vendor the customer chooses," said TeleBright's president and CEO, Chet Thaker. "We're focused on creating an apples-to-apples comparison among calling plans."
TeleBright, which launched last November and currently employs 21 people, is going after businesses in the $1 million to $50 million range.
"Small businesses typically end up paying relatively high rates in telecom compared with larger businesses because they don't have the volume and they don't have the expertise to select the best deal," Thaker said.
As a result, Thaker said, many small businesses pay 10 cents to 12 cents a minute, "whereas if they took the time to compare and negotiate they could bring that cost down to 5 to 6 cents a minute. That's what bigger companies enjoy."
Making
TeleBright and its competitors generate revenues through a structured commission fee charged to the vendors linked to their sites. In TeleBright's case, the commission ranges from 5 percent on deals with local phone service carriers to roughly 10 percent for long distance. It's a recurring revenue stream for TeleBright - and carrier partners are not permitted to pass this cost along to customers.
Thaker said it's a good deal for the carriers, because the online commission rate is lower than that paid to a traditional sales force.
Tom Kilcoyne, CEO of Simplexity, said customers enjoy "a high-tech, high-touch kind of sale," including online chats about purchasing strategies, and plenty of handholding for comparison shopping.
Both TeleBright and Simplexity have succeeded in cutting deals with other business Web portals to broaden their reach. Simplexity has channel partnerships with Microsoft, Best Buy, Intuit and others. TeleBright signed an agreement last week with AllBusiness.com, a self-described "virtual business partner" for small and growing businesses.
But like many so-called business-to-business Web sites, the online telecom industry is in its infancy - and has not yet captured the attention of some of the nation's largest communications companies.
"We don't have a lot of play in the Internet-based agent arena at this point," said Jim Smith, a spokesman for Verizon Communications, the mid-Atlantic's largest carrier. "It's an area worth exploring. We're going to look at it."
Nor will it be easy for telecom Web sites to make money. Simplexity, which launched in January, has secured two rounds of private financing so far, totaling $28 million. But Kilcoyne said the site is still a few years away from profitability.
"These businesses will have to do a lot of volume because their margins are thin," said Albert Krall, a managing partner with Andersen Consulting LLP in Reston, Va. "And they have to provide value-added services to make them the ones you want to go to."
Still, industry analysts predict that online telecom services - like other industry-specific B2B Web sites - are poised for tremendous growth. Forrester Research in Cambridge, Mass., estimated recently that the online telecommunications industry could reach $47 billion in revenues by 2004.
For James Giddings, the advantage of these sites is clear. "It's just, 'Keep it simple, stupid.'"
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