8x8 2008 Annual Report Download - page 10

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8
Alternative voice and video communication providers
There are many alternative competitors for the Packet8 residential service including AT&T Callvantage, Skype, and Vonage.
There are also many competitors for our videophone services and videoconferencing systems, including Cisco, Polycom 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, Nortel, Mitel
and Toshiba, Centrex services offered by incumbent telephone companies, and VoIP services offered by Covad, XO
Communications, Cbeyond and other companies.
Operations
We have a centrally managed platform, consisting of data management, monitoring, control and billing systems, that 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 customer premise equipment. 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 they 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 at our headquarters in Santa Clara, California and employ a staff of 17 individuals
with experience in both voice and data operations to provide 24-hour operations support, 7 days per week. We use various tools
to monitor and manage all elements of our network, and our partners’ networks, in real-time. Additionally, our network
operations center 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 78 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 some resellers
provide their own support directly to their sub-resellers and customers. Customers who access our services directly through our
web site receive customer service and technical support through multilingual telephone communication, web-based and “chat”
sessions and e-mail support.
Interconnection Agreements
We are party to telecommunications interconnect and service agreements with VoIP providers and PSTN telecommunications
carriers, such as Global Crossing and Level(3) Communications. 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. While we believe that relations with these providers and carriers are good,
we have no assurance that these partners will be able or willing to supply services to us in the future.
Research and Development
The VoIP market is characterized by rapid technological changes and advances. Accordingly, we make substantial investments
in the design and development of new products and services, as well as the development of enhancements and features to our
existing Packet8 products and services. Future development also will focus on the use and interoperability of our products and
services with emerging audio and video telephony standards and protocols, quality and performance enhancements to
multimedia compression algorithms, support of new customer premise equipment, new service offerings, and wireless and
mobile applications. We believe that the development of new products and services, and the enhancement of existing products
and services, are essential to our success.