Diversification is the best route to innovation
07 July 2017 | James Pearce
Edwin van Ierland left iBasis two years ago, but now he tells James Pearce that he has returned to the wholesale carrier desperate to bring innovation to the market
In a world of shrinking margins, innovation becomes ever more important, but for Edwin van Ierland, the returning head of voice at iBasis, that innovation is not forthcoming in the wholesale industry.
After 15 years working across wholesale for KPN and iBasis – before and after the former bought the latter – van Ierland stepped away from wholesale to become general manager at global maritime firm Imtech Marine – now RH Marine.
Speaking to Capacity about innovation, one thing van Ierland says he realised during his two-year stint away from the carrier industry is just how much it needs to innovate.
“What you see currently in the market is everyone complaining about a shrinking market,” he explains.
“Nobody is coming up with effective, practical solutions. The Catch-22 is why is everyone talking about the market shrinking when two, three, four years ago everyone was talking about the need to change.
“The maritime industry was completely different, but I can bring a fresh look back to iBasis,” he adds.
It was this fresh opportunity to innovate that drew him back to iBasis. When CEO Feddo Hazewindus, who took the reins after van Ierland had moved on, first approached him to return as SVP global sales voice, he did so seeking support in the sales organisation.
“And the ball started rolling – it went from support, to strategic advice, to setting up the sales again. But I didn’t think about it for long. I was instrumental in setting up the deal for iBasis and KPN.”
So what does iBasis and the industry in general need to do as a whole to deal with falling demand for traditional voice minutes? “We are at a stage where iBasis 3.0 is necessary to survive the upcoming decade again. If I can play a role in that, then why not? From an outside view I can look at what we need to change, which bad habits are still in the company, which processes have become too bureaucratic – are we still looking outside in? – and these are what I will be focussing on. The industry has changed but there is scope to show my skills.”
He acknowledges that incumbents are rarely recognised as the lead innovators, but claims that one thing KPN and iBasis have is a history of trying to position itself at the forefront of innovation.
“Coming from the 150-year legacy of KPN, we made the first step to combine TDM and voice over IP, we tried to become successful in SMS A2P, but a wholesale carrier cannot approach that market in a wholesale manner. We did a good job building up a good GRX network in combination with an IPX and LTE network.”
Despite these positives, he still looks elsewhere around the market and he sees wholesalers that have moved quicker, innovated faster, and positioned themselves as ready to deal with an ever-changing market.
Praise for BICS
One such company van Ierland praises is Belgian firm BICS, saying its move to position itself as an end-to-end communications platform as a service (CPaaS) provider helps put them ahead of the rest of the industry.
“Compare us with BICS – they did it five years earlier,” he says. “If we compare iBasis 3.0 with BICS, they made a bold decision with the acquisition of TeleSign. They are ahead of the industry, I think, in thinking about different ways of collaboration and partnerships. For iBasis it is fundamental that we do the same. We are in process of defining our scenarios on what is the best way forward.”
Diversifying an offering is one way van Ierland sees wholesalers innovating – expanding a footprint to beyond what the traditional wholesale market has involved, such as voice, SMS and data.
For iBasis, that diversification will come across three different routes: internet of things (IoT), roaming and mobile solutions. It still makes significant revenues from voice, in part driven by its heritage as a voice over IP provider and one of the first OTTs.
“The core strength for iBasis is that we still have a significant amount of business in the voice business,” he adds. “What is also new is that we have a roaming asset from KPN that is included in our portfolio. IoT, roaming and the mobile solutions, going in that direction, there are diverse goals you can aim at.
“For us? It is clear that the voice minute of the past will not be the voice minute of the future. It will change, the methodology will change, the process will change, and the approach to the market will change. That will affect partnerships with OTT players who will bring new flavours to the incumbent.”
VoIP is one area where providers can still innovate, he adds. Though some legacy wholesalers who have traditionally raked in huge numbers through voice minutes, may be reluctant to splash the case on new networks, van Ierland claims it is “a no-brainer”.
He took aim at those employing defensive strategies, saying that failure to innovate will put a number of wholesalers at risk of failing to survive.
“VoIP is a no-brainer for wholesale. I can understand arguments against it, but it is a defensive strategy, protecting their own TDM business. A decade ago, we looked at taking the best of two worlds. BICS did the same, as did other parties, and the only way going forward at the moment is based on IP. LTE, 4G, interworking, IPX, are all based upon technologies that are IP-based. I can understand why parties are trying to protect their business but it’s the core problem within our industry.”
KPN’s 2009 merger with iBasis, he explains, was “an exit strategy” – the first step, and one of the first examples, of an OTT and traditional incumbent coming together.
This, he adds, is the perfect example of why a combined TDM and IP strategy is a key innovation for any company still looking to make money from voice. iBasis contributed €867 million to KPN’s overall revenues – which were €6.7 billion overall.
“We just celebrated 20 years of iBasis, and what we are continuing to contribute to the KPN group proves that the combination of TDM and IP is absolutely essential to survive. It takes very sophisticated back-office systems, very sophisticated monitoring systems. If you want to invest in that, it will take time and money. Will the business case give a significant ROI? That’s a big question.”
Roam like home
Another challenge for the wholesale industry, in Europe at least, is the recently introduced wholesale roaming regulations across the EU, roam like home.
For those not aware, roam like home is an EU regulation that means mobile operators cannot charge EU customers more for using their mobile devices while in another EU country. The way this has been implemented is the introduction of caps on the amount operators can charge each other for roaming voice and data.
For voice, the impact is negligible, according to van Ierland, but for data, there is actually an opportunity for innovative offerings that will be driven by increasing demand for bandwidth while abroad.
He said KPN had seen user demand rise fourfold over the last year before the introduction of the new regulations on 15 June 2017. This, he adds, could grow as much as tenfold once roaming data becomes cheaper for the end-user.
“If you look at roaming, and especially the data part, the price will drop from 7c per megabyte to 2c. Everyone knew about that – so the question is what will be the impact of the expected growth of data? We see already that data has grown both inbound and outbound more than 400% so imagine what will happen when the new rules come in,” he says.
“I expect it to grow to at least 10 times the amount. Imagine the impact on the network,” he forecasts.
“I think in the chain from retail to wholesale, you still see silos and organisations not working together. In wholesale, you immediately see the impact of such a growth in data.
“Given the growth figures, unlimited data packages offered to the market – I don’t know what will happen. But if one network fails under the new rules, I think someone will realise that is not the best idea.”