How Microsoft Teams Operator Connect is accelerating market change

With over 280 million monthly active users, Microsoft Teams is one of the most substantial offerings on the market for Unified Communications, but there is a crucial aspect of Microsoft’s software that Carriers and Voice Service Providers should be paying attention to.

Moving into 2023 and beyond, telephony will become a more influential part of Microsoft Teams.

How then is Microsoft Teams creating waves in voice? What changes are we seeing in the industry as a whole? More importantly what is the opportunity for Carriers and Service Providers?

Microsoft’s move into voice services

As part of its FY2021 Q4 Earnings call Microsoft CEO Satya Nadella confirmed that telephony is a “huge new opportunity”. Nadella revealed that Microsoft has “nearly 80 million monthly active Teams Phone users, with total calls surpassing 1 billion in a single month this quarter”. He continued his statement, highlighting the potential growth of Microsoft telephony – “we’re just getting started”.

From a Teams Phone perspective, of the 80 million that are active monthly users only 10 – 20% are currently enabled for PSTN calling. This number is expected to double over the next 3-4 years, posing a huge window of opportunity for Carriers and Service Providers. If we combine this with global forecasts showing an accelerated growth phase of Teams telephony, user numbers are set to soar.

Microsoft recently shared that it had 345 million paid seats for Office 365, a 17% year-on-year increase in the product’s commercial revenue. This in turn translates into direct growth for Microsoft Teams which is estimated to add 3 million new users per month to its already impressive 280 million monthly active users.

However you look at it Microsoft is the unignorable giant in the market. Teams has demonstrated impressive growth and continues to grow. With this, the demand for voice-enabling Teams also grows. Whilst Direct Routing remains the most popular way to voice-enable Microsoft Teams, the new Microsoft-approved Operator Connect solution is growing in popularity.

How is Microsoft Teams Operator Connect influencing market change?

Teams Operator Connect is the Microsoft-approved way for external Carriers to connect their phone systems to Teams. Operator Connect offers the Teams administrator the ability to engage directly via Teams with Carriers for their lines and minutes. They can do this knowing that they have an approved and certified connection with Microsoft Teams.

Microsoft is not alone when it comes to offering a Bring Your Own Carrier (BYOC) solution, but with the development of Microsoft Teams Operator Connect, they should be considered one of the main sources of market change when it comes to voice communications. The sheer size of Teams alone means that whatever moves Microsoft makes, its competitors have to follow.

The impact of Microsoft implementing Operator Connect has prompted others to introduce their own Carrier programs. The likes of Webex and Zoom are now offering Carriers the opportunity to open new channels to the market. With this knock-on effect, Bring Your Own Carrier (BYOC) services are the next natural progression for the market. They could quickly become the standard for those looking to deploy calling via Unified Communications in the future.

What risks do Service Providers face because of Microsoft Teams and Operator Connect?

There are two main considerations that Carriers and Service Providers need to address: Are they comfortable missing out on a potentially lucrative new route to market? Are they remaining relevant in this changing market, where end-users expect access to agile ways of working?

1 – The risk of ignoring Microsoft Teams Operator Connect could mean missing out on huge earning potential

The UC market is expected to grow to $169.82 billion by 2025. This means that traditional Carriers may quickly miss out on huge chunks of revenue as sentiment moves to the cloud. Microsoft leads the way when it comes to the UCaaS platform of choice, answering customers’ needs with an agile, cloud-based solution. With this growth also comes the need to voice activate the UC solution. Teams is leading the way with Unified Communications as a Service and in particular the ability to activate voice.

• Teams has gone from deploying telephony for 12M users in Q4 of 2021 to a predicted 25M users by the end of 2026 across North America and Europe. Forecasts show that most of these users will be on Operator Connect.
• Teams is Microsoft’s fastest-growing application of all time. It sits at the top of the Gartner Magic Quadrant for Unified Communications as a Service.

As the Teams platform surges in popularity, Operator Connect is by association seeing huge amounts of growth. Estimates show that Operator connect will be used at 17M+ endpoints by 2026 and  Microsoft has already approved a collection of 46 partners to deliver Operator Connect. These Operators include the liked of BT, Telstra, and AT&T. Not only is this a growing market opportunity, your competitors could be gunning for your market share. Operator Connect makes it easy for Teams administrators to easily order the lines and minutes they are looking for.

2 – The risk of ignoring Microsoft Teams could mean you lose relevance in the voice market

There is one undeniable trend emerging in the communications industry – a massive shift towards cloud-based services. In fact, studies have shown that by 2024, around 74% of new Unified Communications licenses for business will be cloud-based.

When it comes to cloud vs traditional in the UC universe, there are a number of differences. Any sort of on-premises solution is likely to have large up-front costs, whereas cloud based offerings do not. Unified Communications as a Service (UCaaS) is flexible and cost effective in the way that businesses can simply activate licenses as needed but traditional UC is far more static.

We can see that the industry is moving away from traditional forms of communications, which are largely made up of on-premise solutions, in favour of cloud-based options. But at what pace is this migration happening? When working from home became a necessity revenue growth for traditional communications rapidly levelled off whilst alternative cloud systems boomed. As the efficiency of the cloud was recognized, upward trends continued. In terms of total revenue, cloud is now expected to eclipse traditional on-premise UC by 2025. This is despite the fact that cloud communications took only a fraction of the market share in 2019.

6% of enterprises are already fully cloud-enabled, with expectations for this number to grow to 28% by 2026. Here is where we start to see the huge amount of opportunity available to providers who enable cloud-based solutions.

How is this accelerated market change affecting competitors?

On February 14^th 2023 Avaya declared bankruptcy for the second time in the company’s history. They have stated that the move was to “accelerate transformation and fortify capital structure”. From this we can draw parallels from their chapter 11 filing to their failure to effectively transition to the cloud.

It’s not like Avaya didn’t try to move to a more cloud-based offering. They were simply too slow to mobilise and were ultimately left behind.

It will be interesting to see the shape of Avaya after this turnaround is complete. Will they further their partnerships with leading UC providers as they develop a more cloud-based platform?

Is there an easy way for Carriers and Service Providers to keep up with demand?

Throughout this post we have talked about how Microsoft already provides for a large number of seats. How then can this help you as a Carrier? Microsoft’s market dominance combined with the Operator Connect Accelerator programme makes it easy for Carriers and providers to enable cloud solutions.

The world of Unified Communications does not stop at Microsoft’s front door however. Studies show that there may be 110M+ endpoint users  by 2026 across not just Teams but also Zoom, Webex and other UCaaS providers. With this you may not want to restrict yourself to one UC tool. This is where Carrier Automate comes in.

Carrier Automate is not only an official Operator Connect Accelerator partner (having developed and delivered our solution in partnership with Ribbon). We also offer voice-enablement for multiple UCaaS services all in one package – with Carrier Automate you only need to onboard once. You can then enable all of our partnered Unified Communication services, with us helping you every step of the way. So whether you’re looking to onboard to Teams, Webex or Zoom, Carrier Automate offers expert integration services, insights, and onboarding.