Hosted Voice -- the Future of Revenue Growth for Service Providers.

NEW YORK -- AMI-Partners

--SMB market adoption of VoIP will bring new levels of productivity to the market and allow service providers a more strategic position in the SMB IT value chain

--While premise-based solutions from Avaya, 3Com, Cisco and others have a head start in the SMB sector, hosted voice services from Covad, MCI, SBC, and Qwest promise a key to increased communications revenues

A pending AMI-Partners report, The Emergence of Hosted Voice Services: Enabling Service Providers to Transition from Commoditized to Value-Added Services, indicates that

--Hosted voice offerings continue to make strong inroads into the SMB sector -- and the market, while still hesitant, shows strong interest and adoption plans.

--As downward pressure on basic communications services strain the margins, the RBOCs (BellSouth, SBC, Verizon and Qwest) and other hosted-voice service providers see a path to increased revenue.

--Service providers must move swiftly to capitalize on this opportunity as IP premise-based solutions from Avaya, 3Com, Cisco and others have a considerable head start and are better understood by the mass SMB market.

--SMBs increasingly note the importance of VoIP service. While less than 6% of small businesses reported VoIP to be important in AMI-Partners' 2003 survey, this number swelled to 25% in some market segments during 2004.

--The SMB market for hosted voice services will grow at a 55% CAGR over the next three years.

The above findings will be included in a new report from New York-based Access Markets International (AMI) Partners, Inc. AMI-Partners is a leading consulting firm that specializes in IT, Internet, telecommunications and business services market intelligence -- with a strong focus on global small and medium business (SMB) enterprises. AMI conducts the industry's most comprehensive annual tracking surveys of SMBs in 20 countries, including North America (U.S. and Canada); Europe (U.K., France, Germany, Czech Republic, Poland and Russia); Asia-Pacific (Australia, China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan and Thailand); and Latin America (Mexico and Brazil).

AMI's upcoming study shows that hosted voice services will continue to revolutionize the way small and medium businesses communicate. Hosted solutions are yet to become mainstream in the market, and some hesitation lingers as many businesses still desire an on-premise solution. However, AMI-Partners believes that several factors:

--cost advantages,

--future proofing,

--predictability of monthly service charges,

--easy-to-use interfaces and

--feature-rich, productivity-enhancing services

will propel many businesses past these minor concerns and drive broad market adoption. "Any firm focused on cutting costs and increasing productivity should seriously consider the benefits of a hosted solution," commented Michael Lauricella, Vice President Telecommunications Practice. "There are advantages to both premise-based and hosted; however, many businesses irrationally dismiss the hosted alternative given its newness. The fact is, hosted solutions present a reliable and viable solution to many of this nation's 6.3 million small and medium businesses as well as enterprise customers."

Many U.S. service providers have moved swiftly to deliver hosted voice solutions to the market:

--Covad Communications, the DSL pioneer, is aggressively promoting VoIP services and recently announced the ability to deliver its hosted solution over DSL, dramatically opening the addressable market.

--MCI has had its MCI Advantage product in the market for several years and reports modest growth.

--M5 Networks, operating only in the New York metro, continues to show strong revenue growth with its hosted voice service.

--SBC, despite potential revenue cannibalization, has entered the market with its PremierSERV offering.

--Qwest introduced its OneFlex offering in June of 2004 both in region and out of region.

--Verizon, with its iobi Professional service, is cautiously testing the hosted voice market.

--Traditional CLECs, such as XO Communications and McLeodUSA, have entered the VoIP space with hosted offerings of their own. Surviving CLECs did so through the delivery of integrated access and hosted voice services that are a logical evolution to their product set.

The above listing is just a small sample of the activity in the U.S. market. AMI's upcoming report will look in detail at the business strategies of all of the above operators as well as several others. For each service provider, the report will assess the technology platform, go-to-market strategy, target market, strengths and weaknesses, and future product plans.

For more information about this study, AMI-Partners, or our global SMB research, please call AMI-Partners at 212-944-5100, e-mail [e-mail], or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, formerly group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years' experience in IT, telecom, online communications or multimedia.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last eight years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in 20 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

For more information on AMI-Partners or our global SMB surveys, please visit www.ami-partners.com or call 212-944-5100.