Carriers are scrambling right now as they see OTT services such as Skype and WhatsApp eating into their revenues. In a conversation with David Walsh (pictured), GENBAND’s new CEO, we discussed how OTT players have taken 30% of voice traffic in seven years and how service provider voice growth is now around 3% per year.
In response to this onslaught of new competition, carriers have come together to develop standards which will allow their telecom equipment to run on off-the-shelf servers so they can more effectively compete with their app-based competitors. This initiative: network functions virtualization or NFV will help turn hardware-based telcos into software telcos allowing them to be more flexible in rolling out new offerings while saving money in the process.
This however will take time to happen and carriers need to respond immediately to this emerging threat.
To get carriers into the OTT game immediately, GENBAND has purchased OTT player Fring, one of the earliest apps on the iPhone to support VoIP. The company has amassed 40 million users and Walsh infers they are big enough to scale but small enough to not be a major threat to telcos which of course make up GENBAND’s customer base.
GENBAND has just turned itself into the arms dealer allowing carriers to fight back against OTT with their own white-label solution.
Think about it – what is the biggest problem a carrier has when competing with a software company run by a bunch of hackers who live on chicken wings, Mountain Dew and pizza? The answer is corporate culture – carriers aren’t software companies. They don’t understand user interfaces, slick design or much of what consumers are looking for today.
In a way, GENBAND has become Hitch, the movie in which Will Smith plays a character who helps men look and act in a way which will allow them to get dates. Yes, GENBAND is making carriers sexy.
Fring will be the consumer offering and complement NUViA, the company’s white-label Unified-Communications as-a-Service offering for the business market.
Walsh was a wealth of information – saying the company is taking SBC marketshare away from Acme Packet/Oracle and will continue to do so with a competitive feature-set and significantly lower maintenance costs.
You may be wondering, if this idea were so smart, why isn’t this happening all the time? Why aren’t all equipment vendors running out and buying OTT communications providers? The answer is – someone has to lead and GENBAND is doing so. The idea may not work as well as intended but there are a lot of reasons why this move could be very successful
One example is OTT has the potential to kill a carrier relationship as customers churn but if the operator can come up with a way to bundle the best of OTT with better quality and reliability it could keep more of its customers from defecting. It was at this point in the conversation where Walsh mentioned users get knocked off Viber calls when a network call comes in. His implication was carriers can keep this from happening if they control the OTT experience. Another plus is carriers can use Fring to enable enhanced services like an immigrant calling plan for a group of people in a new country who want to keep in touch with their family overseas. For example, picture a calling package in one country which comes bundled with a local number in another.
Walsh says carriers need to reinvent themselves… He is right. GENBAND thinks that in order to provide real-time communications services to customers, even if they are of the OTT variety, they need to work with a company who is an expert at providing such offerings. They want to be the company carriers pick to fight the good fight and keep customers from defecting completely to non-revenue producing OTT.
How the market reacts to this news will be interesting. In a way, GENBAND just became a competitor to its customers but at the same time they are Hitch. Whether carriers decide they want to be sexy or not is there decision but it seems this move by GENBAND could fast-track many carriers into solid OTT slayers. If this works as GENBAND plans, there will be a solid response (lots of copycatting) across the competitive communications infrastructure landscape and it will be fascinating to see how this story plays out.
To learn more about NFV and becoming a software telco to effectively compete against OTT, be sure to participate in Software Telco Congress, Nov 20-21st, 2013 in Santa Clara, CA.