Wholesale Wars Episode IV
A New Hope

By Miguel Lopes - Telecom Rebel
July 2017
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‘It is an era of Minutes War. Rebel carriers striking from hidden angles, have won their first victory against the evil OTT Empire…’

As my intro shows, the current voice wholesale market could almost be compared to the Star Wars saga. It would seem logical to associate the carriers to the evil galactic empire and the OTTs to the rebels.

But the truth is that currently the OTTs are the oppressing empire and the carriers are the fighting rebels trying to once again secure their place in this telecom galaxy.

EPISODE 1

So, what happened? When and why has this shift in the wholesale dynamics taken place? The when is still not clear. A valid assumption would be to say that it happened over the last decade. The why on the other hand is simple. OTTs moved quickly, they leveraged new technologies (IP) and business models to overthrow the carrier’s dominion, while the carriers turned a blind eye into the growing menace, dismissing it and clearly underestimating it. Now they have recognized the threat and, though slowly, have been taking concrete steps to counter it using the similar weapons.

Many experts claim that we are experiencing the 4th Industrial Revolution. It’s not uncommon for the advances in technology to drive new business models, which is what we are experiencing now. The evolution of virtualization and cloud technologies is allowing the vendors to offer agile models to carriers, giving them the flexibility they need to grow quickly without breaking the bank.

Additionally, the exponential spike in computing power has also opened the doors to the introduction of Artificial Intelligence (AI) and Machine Learning (ML), without the need to have a gigantic mainframe server to run them. These can be powerful weapons for the wholesale carriers if they are willing to use them. But technology can only take you so far if your mindset is not in the right place. Carriers need to be open to explore other models, offer real value to their customers, not just a dumb pipe.

THE FORCE AWAKENS

An interesting angle would be to change the wholesale paradigm of routes and terminations and create a value chain offering that would help their customers take the ,fight to the OTTs. The perfect starting point would be to use one of the fastest growing phenomena in the voice communications - the Unified Communications (UC). According to Gartner, the UC will generate US$22 billion by 2020, with a Compound Average Growth Rate (CAGR) of approximately 24%.

It’s also an important driver in the global increase of voice minutes, as instead of fighting to get the terminations, the wholesale carriers would try to secure the origination. I can hear the critics and pundits excitingly denying that a wholesale carrier would have the capability to create such a value chain and that the concept in itself is ridiculous. My answer to those is simple and factual, not so long ago it was also considered ridiculous that you could transport voice over the IP networks and that companies, such as Skype, would ever have any success in the voice communications (mic drop).

Incumbent carriers with presence both in the retail and wholesale market initiated such offers, but they can afford the model of selling directly to the enterprises and then seamlessly transiting those minutes into their wholesale counterpart. Nothing wrong with that approach, but the amount of effort to chase the enterprise market directly is not attainable by smaller wholesale carriers, and definitely way out of the comfort zone for the bigger carriers that deal solely in the wholesale space.

REVENGE OF THE CARRIER

I say, “out with the old in with the new”. Imagine wholesale carriers offering UC as a managed service to other carriers which will extend the service to their customers. No, it’s not a pyramid scheme, it’s actually a sustainable ecosystem that does not rely only on routes and termination. It offers true value to smaller service providers that need the global reach that the wholesale carrier networks have and the tools to make them competitive against the OTT services in the retail space.   

While we discuss shifts in business models and paradigms, we also have to talk about disrupting on the technology side (remember how the OTTs Empire won initially?). It is a known fact, though slowly changing, that carriers don’t build software applications. Rather they rely on vendors to drive their technical roadmap and offers. It is also a golden opportunity for vendors to thrive and offer true value with their applications and not just promises of innovation.

Remember how accessible AI and ML are nowadays? They can help the vendors to push the expectations to a point where the imagination is truly the limit. When someone mentions AI, my mind suddenly drifts to the 2001 Space Odyssey classic and that menacing red light coming out of HAL 9000. Using AI does not mean we need it to be able to question the meaning of life. AI can actually offer some simple features that make a true difference.

A practical example would be a simple sales call. All enterprises use voice communications to talk with their customers and drive their sales. Now, imagine having on your UC application an AI assistant that can analyze those conversations and provide actionable insights on them. That AI assistant can connect the dots by knowing which actions to perform depending on the word and emotional analysis of that sales call, whether to create an analytical report in the CRM software or notify a customer service manager that should contact the customer in case he or she was not happy.

You might be asking, “How can I build an AI that offers these ‘simple’ functionalities?” The truth is, you don’t need to, as there is a new ecosystem of players that allows you to integrate these features easily into your application. This could be the differentiator for a service providers to choose your ex-dumb, now smart pipes as their voice trunks.

The concept of a wholesale carrier offering disrupting services and models outside their comfort zone is indeed a new hope for the industry and a powerful way to win this galactic war with the OTTs. Just like Star Wars, it sounds like science fiction, but unlike Star Wars, the technology and models are available. All that is needed is the will to change.

Wholesale carriers still possess something the OTTs don’t , which is the physical network. After all, they were the evil empire once. The wholesale rebels have the weapons at their disposal, they just need to use them to take their rightful place in the galaxy.

May the force be with them.

Miguel Lopes



About the Author:

Miguel started in 1999 as a software developer and in 2002 he co-founded a network solution provider in West Africa. Futheron, in 2007 he co-founded what would be the first Wi-Fi ISP in Cape Verde and the first company to break a 21 years local telecom monopoly. Five years later, Miguel accepted the invitation from Ezelink Telecom to revolutionize the company strategy in the Intelligent Hotspot, IoT and Smart City solutions as Director of Technology. During his tenure at Ezelink Telecom, the company launched several innovative unique products that did not go unnoticed and made Ezelink one of the references for Wi-Fi and Smart City solutions in the region.

Since 2015, Miguel has been working in Silicon Valley and been involved in several projects to help Service Providers monetize their voice business. Currently,
he is Vice President of Product Line Management for Applications at Dialogic.

His career also includes participation in the United Nations ESCAP as part of the regional connectivity task force and young entrepreneurship.


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