BroadSoft vies for more growth through new VoIP application

Innovations can lower cost in a growing industry

Next week, the company plans to unveil a VoIP application initiative called BroadSoft Xtended at a key telecommunications industry trade show in San Jose, Calif. The initiative adds technology to BroadSoft’s existing software platform to provide new innovative applications, said Michael Tessler, BroadSoft president and CEO.

‘‘Say you are a developer of a game on a mobile phone. If you can build on every mobile phone platform, then you can more easily distribute that game around the world,” Tessler said.

Besides increasing clients’ market reach, the Xtended initiative can allow them to create innovations to lower costs, he said.

BroadSoft has seen some great growth lately. The company ranked last year as the fifth fastest growing technology business in Maryland, according to Deloitte & Touche LLP.

BroadSoft, which was founded in 1998, also ranked 42nd in the Washington region and 526th in the nation last year in Inc magazine’s annual study of the fastest growing private companies. The privately-held company saw revenue rise from $5.4 million in 2003 to $36.8 million in 2006, according to Inc.

The business has 260 employees worldwide, with about 100 in Maryland, Tessler said. BroadSoft recently opened new offices in Tokyo, Japan, and Beijing. Clients include some of the largest carriers in the industry such as Sprint Nextel Corp. and Verizon Communications.

Some VoIP companies haven’t done as well. Qovia, a former Frederick company that received funds from the Maryland Venture Fund, was purchased by Cisco Systems last year after shedding some employees.

Cable providerssee VoIP growth

As an industry, VoIP is growing in popularity. The number of VoIP subscribers in the United States increased by 63 percent to 14.8 million from 2006 to 2007, and should rise to more than 23 million by 2011, according to TeleGeography Research, a Washington, D.C., division of market research company PriMetrica.

Much of that increase was due to advances by traditional cable companies in digital voice services, said Paul Brodsky, a research analyst with TeleGeography. Comcast Corp., one of Maryland’s 20 largest private employers, pulled ahead of VoIP provider Vonage Holdings Corp. last year by more than doubling consumer subscribers to 4.4 million, according to TeleGeography figures.

Time Warner also pulled ahead of Vonage in the past year, ending 2007 with 2.9 million subscribers. Vonage now has 2.4 million consumer subscribers, according to TeleGeography.

While revenue last year at Vonage increased by 36 percent from 2006 to $828 million, the company still showed a net loss of $265 million, which was less than the $339 million loss in 2006. Jeffrey Citron, Vonage chairman, said in a statement that 2007 was a ‘‘difficult period marked by numerous legal challenges.”

‘‘Almost all of the growth in VoIP last year was by traditional cable companies,” Brodsky said. ‘‘Many pure-play providers are adjusting to go after small and medium-sized businesses. They can’t compete with the cable companies in the consumer market.”

The market for VoIP services hosted by a provider with Internet access — which does not require more expensive hardware — is expected to increase from $236 million in 2006 to $1.4 billion in 2010, according to Access Market International Partners. Most of the growth is projected to be in the small and mid-sized business market.

Rockville market research and analysis business EurekaFacts LLC is among the local companies employing VoIP. EurekaFacts has a small call center with 10 stations for telephone interviews and more stations beyond that for interviewers to log in remotely, said EurekaFacts President Jorge Restrepo.

‘‘This gives us new capabilities that we didn’t have before,” Restrepo said. ‘‘We can do larger surveys. Interviewers can call from home and from rural areas. That allows us to generate savings for our clients and our company.”

EurekaFacts just released a new set of segmentation products designed to help companies better understand and market to the fast-growing Hispanic market, and the VoIP system will aid that program, Restrepo said.

The VoIP market for companies such as Comcast is only expected to widen since they provide cable and broadband services to millions of households and can bundle VoIP services, Brodsky said.