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How the MS Teams Payment Plan Might Affect Small Businesses and CSPs

Estimated Reading Time: 3 Minutes

Note for European customers: On October 1, 2023, Microsoft unbundled Teams from its Microsoft 365 and Office 365 suites in the European Economic Area and Switzerland. This measure, taken proactively by Microsoft following an antitrust investigation conducted by the European Commission, allows new enterprise customers to buy Microsoft 365 subscriptions without Teams. A standalone version of Teams is available for €5 per month or €60 per year.

Microsoft also said that it will enhance the interoperability of Microsoft 365 and Office 365 with external apps and services. It also plans to create new mechanisms to enable third-party solutions to host Office web applications because it has "heard requests from competitors of Teams that they would like to rely on Microsoft’s functionality instead of building their own." No date was given for these two changes.

All information above was taken from Microsoft's blog.
In April 2023, Microsoft retired its business-oriented free version of the Microsoft Teams app, Microsoft Teams Free (classic). In announcing the change, the company suggested that users who don’t want to upgrade to a paid subscription switch over to the new Microsoft Teams (free). But even though their names are similar, the old and new free apps are not the same—and the transition from one to the other has been somewhat… confusing.

We have been following this topic closely and here's a summary of our findings (all the links are listed at the end of the blog post).

Impact on CSPs

With this transition, free accounts for Teams, the most popular over-the-top (OTT) unified communications and collaboration (UC&C) service, now offer an almost-standardized set of functionalities. Communications service providers (CSPs) will see no direct revenue from non-paying users. Even with users that upgrade to paid plans, CSPs are still largely left out of the revenue loop. Of course, CSPs are still a fundamental part of the experience, because they provide the infrastructure and handle the data that makes everything work. But their data plans become simple commodities for Teams users. That means that subscribers gravitate towards the CSP that offers the cheapest price or the fastest speeds, while OTT providers get most of the financial benefits.

The partnership/reseller route is always an option for CSPs wanting to provide Teams to their customers—even if reselling OTT apps "delivers the least value for operators," according to leading TMT management consulting firm Analysys Mason. Since a CSP provides the same app that competitors do, there is no way, as a reseller, to differentiate offerings to help acquire new customers. On the upside, that approach can help CSPs avoid the loss of customers who are looking specifically for OTT options.

Impact on Small Businesses

At first glance, the move from Microsoft Teams Free (classic) to Microsoft Teams (free) seems to affect only the size and duration of online meetings: Group meetings are now limited to 60 minutes and 100 participants. But the biggest drawback of this transition was that users could not automatically migrate their information from the old free app to the new one. The process had to be done manually. This pushed small and medium enterprises (SMEs) to opt for the paid version in order to avoid the loss of data. Microsoft Teams Essentials, the most affordable of Microsoft's pricing plans, starts at US$4 per user per month. For a typical SME moving its employees to the new app, that would mean paying US$4,800 per year for the first 100 employees, and US$48 more per employee after that—just to have a unified UC&C solution.

An Opportunity for CSPs

CSPs offering their own UC&C solutions could help SMEs that are feeling forced out of free web conferencing. By individualizing apps to the needs of specific markets using Telecoms Low Code, CSPs can offer lower prices per user than OTTs, differentiate themselves from competitors, increase their revenues, and retain and acquire new subscribers. CSPs can provide SMEs with affordable UC&C services that not only meet all their needs, but also easily adapt to their industry, and keep their data stored safely within national borders. Plus, since CSPs are already providing phone lines and data plans to many users and companies, they can easily bundle business services and UC&C services to allow subscribers to be seamlessly connected, regardless of their location or data plans.

Are you interested in learning more about how ECT can help you offer your own UC&C solution? Click the button to download our one-page information sheet.

ECT Editorial Team

The information presented above has been gathered from the following links:

Analysys Mason

Windows Central


The Verge

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Unified Communications and Collaboration

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