Thriving telcos and survivors of 2017
I recently completed my annual world wide customer tour with our regional sales leaders and met thriving telcos everywhere. In a time span of 24 days, we visited executives of our top 25 customers across 14 countries in Europe, Asia, and the Americas. There is a lot I learned living out of a suitcase for a month. For example I learned that sacred monkeys can bite and that cat-poo-chino tastes really good.
I also learned and concluded that the world of communications companies in 2017 boils down to three main categories:
Transformers: Cool, fast and disruptive, these companies have found focus in a market vertical where they add a ton of immediate value to end users with an innovative solution. Some of them started off years ago as pre-paid card ITSP, others as consumer MVNO or wholesale SMS aggregator. Each has acquired solid expertise in the obscure world of telecom networking technology, interconnect policies and quality of service.
As the more traditional telco business models went flat with the advance of FREE P2P communication apps in the recent 2-3 years, each of the Transformers have spotted a huge A2P opportunity in a specific B2B market: transportation, hospitality, travel, healthcare, finance, education, insurance, government, and others. The common denominator across these companies are as follows:
- Solid baseline business with millions of transactions on a daily basis: SMS, calls, USSD.
- Established track record as a trusted business communications partner.
- A new transformative A2P business model where the value per telco transaction is $0.10 (ten cents) or more. 100x higher than the wholesale rates of $0.001 per transaction.
- The value of their new vertical offering is not only underlying quality telco networking but also highly integrated contextual communications behavior that enhances the end user experience in a frictionless and intuitive manner.
- Sharp top notch development team who demands communications APIs, frameworks and tools that are as powerful and flexible as the rest of their web and mobile app development arsenal.
Pipelines: Titan, robust backbone carriers of the bulk of airwaves and cable traffic across mobile and land line end points. Multi billion dollar annual revenue incumbents at national and international level, closely interwoven with government regulatory bodies. Vast majority of business communications runs over their infrastructure and will continue to do so.
They are gradually transforming to all-data networks with calls and messaging becoming features of various applications running over IP. In order to accommodate the insatiable demand for bandwidth, these Tier 1 carriers are focused on modernizing their infrastructure to do more of the same – better and faster pipelines for generic traffic. Much of their focus is on software virtualization, NFV, SDN, SDR, IMS, SDP. Top line revenue may stay flat for years to come and that is fine. Tens of billions of dollars fine. All is good as long as the data services margins stay ahead of the shrinking voice and SMS margins.
Explorers: Companies in this category aren’t as big as Tier 1 carriers, but aren’t as cool and fast as transformers. Living a very dangerous life out in the open ocean, subjected to the elements and moods of nature. While their captain realizes they need to make quick correction in course, the rest of the crew is used to the old ways of doing things and is finding it hard to move past administration of old school networking equipment.
Crossing the chasm is a big and scary endeavor. Indecisive and afraid of embracing the vast opportunity to bridge telecom and business verticals, they are missing it with every passing week hoping and wishing that the currents will take them to the treasure island. Some get lucky with an exit to a bigger competitor at a 1-3x multiple. The rest face the odds of navigating without a compass.
I saw first hand examples of each of these categories in all major markets across multiple languages, currencies and cultures.
I found it was most fun conversing with Transformers and plotting together for world domination. Its inspiring and invigorating to brainstorm with sharp and brave executives who are out to make a difference. Their apps contribute to the RestcommONE Marketplace in a meaningful way and at the same time push us to keep building a modern and relevant communications platform that truly delivers on the omni-channel promise.
At the recent annual Restconn conference we made a number of announcements with some of our cool partners participating in the launch of RestcommONE Marketplace. Webinars, press releases and other joint marketing initiatives will follow in the coming weeks and months.
If you are a Transformer type of CEO, congrats! Drop me a note if we still haven’t talked about your disruptive new business and RestcommONE Marketplace.