The global pandemic accelerated the drive to digital for countless companies as they lost the chance to interact personally with customers, employees and suppliers. Among the beneficiaries of this shift are companies that create software for enterprise users of telco networks.
Twilio, one of the leaders in this industry, reported a 55% year-on-year revenue increase for 2020. "Our customers in nearly every industry have had to identify new ways to communicate with their customers and stakeholders – from patients, to students, to shoppers, and even employees – essentially overnight,” said Glenn Weinstein, chief customer officer at Twilio, in a release issued last summer. "We believe the solutions being built today will be the standard for digital engagement in the future.”
Who will build these solutions - service providers or software developers or both? That's a question many investors are asking, according to Morgan Stanley executive director Meta Marshall. Marshall said during the company's recent Technology, Media & Telecom Conference that investors often ask her why telcos don't start to write more software. She put the question to Bandwidth founder and CEO David Morken, who answered without hesitation.
“I think that they are large monopolies and by definition do not have either the DNA, the vision, the creativity, the flexibility to do it," Morken said. “I think that the incumbents will continue to abdicate their role for serving enterprises. And I think that’s the real opportunity that all of us are pursuing, and that’s both domestic and worldwide. ... I think if you play it forward three to five years the net massive share losers will continue to be incumbents, and this cohort of challenging, dynamic teams, both domestically and internationally, will have displaced them.”
Morken naturally sees his own company as a leading contender to displace incumbent telcos. Bandwidth owns a network, unlike most of its competitors in the cloud-platform-as-a-service (CPaaS) space. Bandwidth's goal is to take market share from incumbent telcos.
“We will continue to challenge and displace incumbents with our software platform and network," said Morken. "That means Colt, and that means Tata, and that means Verizon, AT&T and Lumen.”
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Of course, if the world's leading service providers did charge successfully into software, the game could change fast for companies like Bandwidth and Twilio. Both TM Forum and GSMA have tried to create forums for service providers to create and share common APIs, but these efforts have not gained much traction. Service providers also have their own sets of APIs, particularly around IoT applications.
But according to Morken, service providers have no time to lose in this area. “What the season of 2020 did do was accelerate radically decision-maker mentalities for abandoning Verizon, AT&T and Lumen, or international incumbents, and moving how [enterprises] build product, how they build customer experience, how they engage with employees to the cloud," Morken said. "All industry is recognizing that they must get cloud-based and that the incumbent providers of communications everywhere have really failed to keep up.”