In preparation for a panel that I am taking part in at ITEXPO, next week, “New Game, New Rules: How Startups are Changing Communications” I started to think about the changes that the telecom industry is undergoing.
It seems to me that we are seeing a “Perfect Storm”. The convergence of technology, pricing and advances in user experience research has really set the startup landscape on fire.
Lets have a look at technology. At the beginning of it all we had Telephone Networks. If you wanted to call someone you had to use their network and of course pay for the call. Almost two decades ago, companies such as Deltathree and ITXC started to build IP networks that transported calls over dedicated “pipes”. This IP infrastructure circumvented the legacy networks and resulted in the cost reduction of delivering calls worldwide which continues until today.
The next technological development was the proliferation of VoIP services such as Vonage, 8X8, Net2phone and many others that used your existing internet connection to make calls. These services eventually became to be known as “OTT” services since they were deployed “Over The Top” of your existing provider.
As the name OTT implied, the customer could use alternative services but their connection was still supplied by “The Phone Company”. At the end of the day behemoths such as AT&T and Verizon still exercised tremendous strength over the market.
Today this is changing due to three fast spreading technological trends.
1. “The Cloud”
2. Use of APIs
The growth and ease of use of cloud based resources has taken down CAPEX costs to almost zero. When you throw in the ubiquity of Telecom APIs, the result is you can start a “Phone Company” with almost no investment! It has never been so easy to take a service from idea to deployment.
Telecom Application Program Interfaces or APIs as they are more commonly known are a group of routines which enable the programmer to add functionality to his application without actually having to build that functionality. For example lets say you want to add SMS Text Messaging to your service. In the old days you would have to put together an SMS server and interface it with your application. With an API not only do you not need to build the server, you don’t even need to understand how it or the SMS protocol works. All you need is to incorporate a short piece of code which will tell your service provider that you want to send a SMS message. Thats all. They will know what to do with it.
I like to say “There is no more Telecom Network, it is just a collection of APIs“. There are APIs and service providers for every telephone function you can think of. With companies like Tropo, Twillio, Plivo among others, you can build a whole “phone company” without even owning one switch or server!
As the Plivo people write on their web site
Currently, we offer HTTP APIs that let you add Voice and SMS capabilities to any web or mobile using any web standard language. We simplify the notorious complexity of the telephony business into a simple infrastructure service: we take care of everything from carrier management to call quality and messaging deliverability to 24/7 technical support.
You can “mix and match”. Use one API provider for voice calls, another for SMS messages and a third for call recording. This situation of course raises the question – What is a Phone Company? Is it the likes of AT&T and Verizon or maybe the Bank of America who uses an API to communicate directly with customers???
The latest technology to really blow this market wide open is WebRTC. As we mentioned above, most of these services are OTT and still tie the consumer to a certain extent to his phone company.
WebRTC is setting out to change that. As Serge Lachapelle who heads the WebRTC initiative at Google related – We realised that you could do many things on the web, right out of the box, but you could not make calls on the web without downloading a special client. WebRTC sets out to change that. The standard browser now includes all the functionality needed to make an audio or video call.
Although still in “early days” and not yet fully supported by all browsers, WebRTC is a business game changer for communications services. All that is needed to supply phone services is a browser! And it can be on any computer… which effectively means that I am no longer tied to my phone company or ISP. I can fire up a browser on any computer to make and receive calls, just like I use Gmail or other web based email services to send and recieve emails.
So now we are left with the question – If it so easy, how can Telecom Startups differentiate themselves and make money?!? This is a question that we have spent a lot of time on at fone.do while we develop our new phone service for the SMB market. The short answer in my mind rotates around two letters – UX. User Experience aka UX is the key today to providing a compelling service which customers will adapt and use. I hope to discuss this more next week at ITEXPO in Miami. Looking forward to seeing you there!