Working in an IP world
15 February 2011 |
Angela Partington talks to Willem Offerhaus, CEO of iBasis about the challenges involved in developing his business in an IP world.
With his seat as the new CEO of iBasis barely warm, our interview with Willem Offerhaus was a fascinating opportunity to hear about his plans for the KPN-owned company. Following a merger of iBasis and KPN’s international wholesale voice operations in 2006, iBasis eventually become a wholly-owned KPN subsidiary in 2009, when interim CEO John van Vianen took the helm; Offerhaus has clearly arrived during what has been a period of great transition for the business.
Offerhaus moved to the role of CEO from another position within the KPN company umbrella, as VP of sales at subsidiary Getronics, a provider of ICT solutions. Offerhaus spoke with great enthusiasm about leveraging the telecoms experience available within the broader group. “I’m not from a carrier background, but there is a lot of knowledge within the group. That is my starting point within the company.”
Developments in IPX
“Probably the biggest development going on today is around IPX,” says Offerhaus. iBasis has a strong background in IP; by 2006, 90% of its traffic was carried over IP, and today more than 70 customer use IP interconnects to access its Premium Voice service. Experience shows that for fixed carriers and consumer VoIP or VoBB providers, “IP is just not an issue.” Although mobile operators remain more cautious about putting their voice traffic over IP, it is starting to happen slowly.
Offerhaus is realistic about the work involved in migrating international voice traffic to IPX, however, admitting the process has been challenging: “I do think whole adoption of IPX will take some time. It always takes longer than you think, but every new development shows that IPX will work.” The company regards IPX as offering many of the benefits of IP, including enabling multiple services over a single IP interconnect, dynamic capacity, and time-to-market efficiencies for new services, as well as delivering the security and quality of traditional TDM networks.
The iBasis’ IPX already covers around 180 countries, and although he was reluctant to share too many details, Offerhaus did reveal that iBasis is continuing to conduct IPX trials – “on both a technical and a commercial basis” – with a large global operator, and also with an operator in Asia.
Offerhaus is optimistic about the outcome: “Following on from some successful trials and some early adopters, IPX will pick up momentum. It’s definitely taking a fair amount of our development potential.” And there is a strong belief that the value of IPX will continue to increase as more operators connect to IPX providers.
One of the biggest factors affecting the uptake of IPX, Offerhaus believes, is the need for people to become more familiar with the technology, comparing it to the acceptance of cloud technology. “People often think that the cloud will be an issue, and that it won’t work for them. But in the end, every couple of months you see customers going over and implementing some very critical and core applications on these services. I think IPX will happen, even if it takes some time.”
He is honest about the obstacles which have historically prevented voice traffic moving to IP. “In the past, you couldn’t achieve the consistent, reliable level of quality that customers needed.” He admits, too, that on mobile calls there is already a degree of degradation in call quality, making any further reductions in quality problematic. There have also been other problems to overcome: “On the VoIP offerings that were available, you couldn’t have features like calling line identification, roaming, ISDN and fax. I think a lot of the reluctance today is the legacy perception of VoIP.” But Offerhaus believes things have really changed in the last 12 to 18 months, citing iBasis’ new Premium Voice product that achieves high quality voice, with guaranteed features, over IP.
Offerhaus is realistic about helping customers manage the transition towards the new technology: “That’s where we can help.” Maintaining legacy systems is important – “There’s still some good business to be done there” – as much so as implementing the IP service and making the platforms available when customers want to move over.
Offerhaus is realistic about the economic conditions in telecoms and the impact this will have on the market: “We have a downward trend in value in this industry.” Perhaps not surprisingly, many of his early concerns appear to be towards standards of delivery and execution of services. “Last year, we had a 20% revenue growth by making sure we executed services better. This year, operationally, there are still things we can do to improve quality and generate growth in market share.”
One of the developments Offerhaus is keen to highlight is iBasis’ treatment of intra-regional traffic in Asia. iBasis has recently expanded its network footprint in Asia, with new infrastructure deployments in Hong Kong and Singapore, and points of access to 30 countries in the region. This will enable Asia-Pacific service providers to use the iBasis network within Asia for voice termination services for their intra-regional traffic. Previously, traffic originated in Asia and was routed through an iBasis facility in Amsterdam before terminating back in Asia. “This is a good example of where customers will experience higher quality services,” says Offerhaus. “The latency in our old routing was not helping the quality of our service.”
While admitting that these steps can, with hindsight, seem quite easy, Offerhaus believes that “they do make a difference between yourself and the competition.” He is planning to undertake similar intra-regional routing in other areas, identifying Latin America and possibly Africa as other places of interest.
Offerhaus – as every CEO in his early days in office – is aware of the need to strike a balance between maintaining quality, embracing technological developments and managing business growth. “Even in today’s market, you can grow revenue, but if you don’t create any value you won’t have the opportunity to innovate for the future.” He plans to avoid declining markets and to target the margin and value opportunities. “But a parent company always expects you to deliver revenue. We have to do everything.” With a global business behind him and developing technologies ahead, it is going to be interesting to watch him try.
History: iBasis is one of the largest carriers of international voice traffic and is a global leader in VoIP, with a market share of more than 20%. In December 2009, iBasis became a wholesale subsidiary of KPN.
CEO: Willem Offerhaus joined iBasis in January 2011. Prior to joining iBasis, he was VP of Sales for KPN subsidiary Getronics.
Customers: iBasis targets very large telephone carriers, fast growing VoIP providers and mobile operators. More than 1,000 fixed and mobile operators and VoIP providers outsource some or all of their international voice traffic to iBasis.
Network: The iBasis network spans more than 100 countries and includes its global VoIP infrastructure and extensive TDM. It has headquarters in the US, Latin America, EMEA and Asia-Pac.
Products and services: In addition to global voice termination, iBasis provides mobile data services and prepaid calling services, including calling cards sold through distributors and its online Pingo offering, an online prepaid international calling service.
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