8x8 2006 Annual Report Download - page 10

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7
branding arrangement.
Competition
Competitors for the Packet8 residential service include AT&T Callvantage, iConnectHere, Lingo, Net2Phone,
Sunrocket, Voicepulse and Vonage, as well as cable television companies, such as Cablevision, Cox, Comcast and
Time Warner, incumbent telephone carriers, such as AT&T and Verizon and other providers of traditional and
legacy telephone service. Our videophone service competes with other providers of videophone services and
videoconferencing systems, including Polycom, Lifesize, Tandberg, and various software offerings that implement
videophone functionality on a personal computer. Competitors for the Packet8 Virtual Office service include
traditional PBX and key system manufacturers and their resellers, including Avaya and Toshiba, Centrex services
offered by incumbent telephone companies, and VoIP services offered by Covad and other companies.
Operations
We have a centrally managed platform consisting of data management, monitoring, control and billing systems,
which support all of our products and services. We have invested substantial resources to develop and implement
our real-time call management information system. Key elements of this system include: customer provisioning,
customer access, fraud control, network security, call routing, call monitoring, media processing and normalization,
call reliability and detailed call records. Our platform monitors our process of digitizing and compressing voice and
video into packets and transmitting these packets over data networks around the world. We maintain a call switching
platform, which is a software-based product that manages call admission, call control, call rating and routes calls to
an appropriate destination or endpoint. Unless the recipient is using an Internet telephony device, the packets
(representing a voice and/or video call initiated by a Packet8 subscriber) are sent to a gateway belonging to one of
our partner telecommunications carriers where the packets are reassembled and the call is transferred to the PSTN
and directed to a regular telephone anywhere in the world. Our billing and back office systems manage and enroll
customers and bill calls as they originate and terminate on the service.
Network Operations Center
We maintain a Network Operations Center, or NOC, at our headquarters in Santa Clara, California and employ a
staff of individuals with experience in both voice and data operations to provide twenty-four hour operations support
We use various tools to monitor and manage all elements of our network in real-time. Additionally, our NOC
provides technical support to troubleshoot equipment and network problems. We also rely upon the network
operations centers and resources of our telecommunications carrier partners to augment our monitoring and response
efforts.
Customer and Technical Support
We maintain a call center at our headquarters in Santa Clara, California and have a staff of employees and
contractors that provide customer service and technical support to customers. In addition, we have outsourced
certain customer support activities to third parties. We also provide customer service and technical support directly
to our resellers, and certain resellers provide their own support directly to their sub-resellers and end users.
Customers who access our services directly through the web site receive customer service and technical support
through multilingual telephone communication, web-based customer service and e-mail support.
Interconnection Agreements
We are party to telecommunications interconnect and service agreements with VoIP providers and PSTN
telecommunications carriers. Pursuant to these agreements, VoIP calls originating on our network can be terminated
on other VoIP networks or the PSTN. Correspondingly, calls originating on other VoIP networks and the PSTN can
be terminated on our network.
Suppliers
We outsource the manufacturing of the videophones, broadband phone adapters, business telephones and cordless
handsets to third-party manufacturers. We do not have long-term purchase agreements with our contract
manufacturers. We currently rely on one telecommunications provider to originate and two telecommunication