The purpose of this CXTech Week 9 2021 newsletter is to highlight, with commentary, some of the news stories in CXTech this week. What is CXTech? The C stands for Connectivity, Communications, Collaboration, Conversation, Customer; X for Experience because that’s what matters; and Tech because the focus is enablers.
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Twilio Invests, not Buys, Syniverse
In CXTech Week 27 2020 I highlighted Syniverse had split into 2 divisions. In preparation for likely M&A.
With Sinch buying SAP in 2020 (the Tweedle Dee to Syniverse’s Tweedle Dum of the US messaging aggregation duopoly), then Inteliquent in 2021; two of Twilio’s North American wholesale interconnect options have disappeared into Sinch. Tyntec did try to break this duopoly back in 2017, when it bought the assets from Iris Wireless, which had peering agreement with both SAP and Syniverse, but that’s another story.
Twilio will invest up to $750 million cash in Syniverse and become a significant minority owner of Syniverse. Carlyle Group remains the majority owner of Syniverse. Why didn’t Twilio buy Syniverse, or at least the aggregator part of the business? It comes back to the span of control issue I discussed in this simple programmable communications model article.
No one business spans applications and aggregation equally, they focus on one or the other. Twilio has decided a strategic investment in Syniverse can give it the preferential access is needs, without the distraction of being in the PSTN aggregation business. While Sinch has focused on dominating the PSTN aggregation business.
What 6G Should be
William Webb has been on a tear of late. In CXTech Week 8 2021 we reviewed his note on how well 5G is shaping up. With this note, he makes 4 excellent recommendations for 6G:
- Wait until 2025 to start 6G work, and not to set a target date for its completion until what it should be is well understood.
- Do not leave 6G design to the engineering research institutions – they will have a critical role once we decide what it is, but should not control the initial framing of the problems it needs to solve. (Else we’ll end up with another phallocentric design, using the words of Daft Punk: Harder Better Faster Stronger.)
- Look to the economics of network provision and design a system that realistically will deliver ubiquitous good-quality mobile broadband.
- Focus on getting existing connectivity such as NB-IoT, packaged in a manner that allows us to realise the 50 billion vision. Check out his book on the “The Internet of Things Myth” with Matt Hatton.
These recommendations should be a template for 6G.
Outages: “There but for the grace of God go I,” John Bradford (1510–1555)
Outages happen when you’re offering a service. They’re a fact of life. Whenever a competitor experienced an outage, the quote that always came to my mind was, “There but for the grace of God go I,” John Bradford (1510–1555). It’s not a time to gloat, rather make sure you’re not next.
Simwood had a problem on Handling 999 and 112. They shared the situation, root cause, and remediation for all to learn and not repeat their mistake. Well done!
On Friday (26th Feb) Twilio had a broad outage. I noticed first from some posts on Reddit. It impacted most of Twilio’s services, with the exception of Programmable Voice, Elastic SIP Trunking (including voice calls), and email. Within a couple of hours it was resolved. It was unusual because of the breadth of services affected. With SMS there’s always some route which is experiencing problems, as you can see in their reports.
AT&T’s Pay TV Business goes from $67B to $16B in 6 years
The Pay TV business is tough, the market is in decline, the content owners keep wanting more of the pie, and the customers are walking away as the bundles are too expensive. Back in 2012 I set this out in the TV Delivery Evolution report.
An important point is the growth of fragmentation, people choosing a consumption model that is right for them. The expensive bundle is OK for some, especially where sport matters. The time poor, quality conscious, sports-neutral families often find some combination of streaming preferable.
Today we have a plethora of streaming options, for my family Disney+ is not that interesting because it’s Disney, and the MCU / Star Wars franchises are stale. While for some it’s must-see viewing. A case in point on fragmentation.
In 2018 AT&T announced the end of Satellite TV, when they said they’d launched their last satellite for TV. So the spin off of the Pay TV business is not a surprise. The transaction separating the US video business implies an enterprise value for the new company of $16.25 billion.
This figure is a big drop from the US$67 billion that AT&T spent on DirectTV in 2015. That deal valued DirecTV at US$48.5 billion, and AT&T took on US$20 billion in debt.
However, this move enables a future merger of DirecTV and Dish Network satellite with less regulatory hurdles. But I’m not sure such a merger will achieve much wrt scale. I see fewer and fewer inverted nipples on people’s homes, as once you have decent broadband internet, satellite TV just seems so 1980s.
AT&T’s Pay TV strategy was to achieve scale and improve margins in the business. But the strength of content owners, their plans to go direct with streaming, the decline in Pay TV customers, the continued fragmentation of Pay TV providers, and head-winds in TV advertising all conspired against AT&T achieving its goal. As partially discussed in my 2012 report. Does the Pay TV business still make sense? It depends.
Worst of Pay TV Cord Cutting is Over
We’ve passed peak cord-cutting. Fragmentation in streaming is now stalling further adoption, coupled with simple economics (add up all the streaming subscription fees) and it makes the pay TV bundle nearly as attractive.
It’s now about fragmentation. Netflix, Amazon, and YouTube are more than enough for my family; with the occasional purchase of content like “His Dark Materials”.
I found YT a bit sucky on the ‘big’ TV as my son calls it, but with the latest Sony TV the quality is quite good with Android TV, so some of my mobile device snacking of UK shows (like 9 out of 10 cats does countdown) has moved to the ‘big TV ‘while we wait for everyone to gather in the family room.
Automation turns job killer at KPN
The continuation of a trend that was present when I first joined BT in 1990, Project Sovereign, where BT staff reduced from 240k to 125k in 7 years. Today it employs 104k people. Now most of that reduction came from outsourcing, divesting businesses, and not doing stuff (layoffs).
This article is good on the numbers, for example since 2018, KPN annual sales have dropped about 6%, and yet revenues per employee have risen from €453,624 ($549,071) to €522,174 ($632,044) over this period, an increase of 15%.
Back in 2018, Finland’s Elisa claimed to have seen a 15% reduction in customer complaints since clearing its own NOC of employees, along with a 50% fall in “incidents.”
As a student working on a summer project on repeat faults on residential phone lines, I received what felt like half a tree’s worth of printouts. I remember one period where reported fault rates fell by over 50%, and discovered that was during a work stoppage, I’m not sure if it was technically a strike. Without people opening cabinets to the elements and working on repairs across the network, fault rates fell. The challenge for my project was correlating a repair to another fault. But it backs up the Elisa numbers give or take 30 years 😉
Bandwidth Q4 Results
Total revenue for the fourth quarter of 2020 was $113.0 million, up 82% compared to $62.0 million in the fourth quarter of 2019.
CPaaS revenues surged 83.7% to $98.1 million from $53.4 million in the year-ago quarter. Accounting for 86.8% of total revenues, the improvement was primarily backed by higher demand for work-from-home connectivity solutions amid coronavirus-induced lockdowns. Elevated volumes of political messaging traffic was a contributing factor as well.
Bandwidth gained 109 CPaaS customer additions and 700 new Voxbone customer accounts during the reported quarter. Adjusted CPaaS gross profit jumped to $50 million from $26.3 million in the year-ago quarter, with respective margins of 51% and 49%. Bandwidth ended the quarter with 2,848 active CPaaS customers.
Vonage Scraps Plan for Sale of Consumer Business
Consumer VoIP is a mature competitive business. Likely the valuations from a potential sale were low. Many of those legacy consumer customers likely haven’t done a market review to see if they can get a better deal, e.g. with Google Voice. It took me several years to realize what was once a good deal on international calling from Vonage was not longer the case for me.
So Vonage decided to hold onto the asset. They expect to generation $600 million of cash from Consumer over the next five years.
Vonage’s revenues in 4Q were driven by its communications platform service which saw sales rise 17% year-on-year to $230 million. Within this, application programming interface (API) revenues increased 33% highlighted by high-value APIs (video and comms services, not atomic stuff like SMS), which grew 130% as customers continued to expand usage on the platform.
In 1Q FY21, Vonage expects revenues to generate between $314 million to $318 million on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of between $42 million to $46 million.
For FY21, the company’s revenue guidance is between $1.32 billion to $1.34 billion, with adjusted EBITDA forecasted to land between $190 million to $200 million.
People, Gossip, and Frivolous Stuff
Paul Stovall is now SVP, Global Sales at Prove, previously with TeleSign.
William Chia is now Manager, Product Marketing at GitLab. Previously he was with Twilio, and before that Digium (Asterisk).
Heena Mistry is now Marketing Manager at Pipeline Publishing. I’ve known Heena for many years, since her time with Sigma Systems.
Todd Carothers is now EVP of Corporate Strategy at Alianza, Inc. They bought Counterpath as reported in CXTech Week 50 2020.
Kathy Yu is now Vice President, Innovation Manager, Group Digital Transformation at Swiss Re.
Valeria Corna is now Strategy Partner at Digitas UK. We worked together on a couple of projects with KAE about a decade ago.
Amancio Bouza is now Chief Product Officer at Contovista.
At TADHack-mini Chicago 2015 Matrix, a founding sponsor of TADHack, teamed up with Trossen Robotics to offer the HROS1 Humanoid Endoskeleton for the best hack using the Matrix platform. And below is the LoCoBot – I have to find a way to get LoCoBot into TADHack 🙂
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