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Silicon Valley's assault on Mobile's Gated Kingdom

Barbarians at the IP gateway

Internet Security Threat Report 2014

How mobile operators can profit from OTT

Pinger’s TextFree is hugely popular with US teens, running on iPhone, iPad, iPod Touch and Android gear: its users sent 2 billion messages in January, the company says, and it reached profitability two years ago.

Pinger offers its users a real-world telephone number and they can call anybody in the world.

“The only way to bridge the web with the telephony world is with a real number,” reckons Tyntec’s Giovanni Benini. This has been allocated out of a pool reserved by Tyntec.

It all works thanks to the way termination fees are handled. Tyntec terminates all the calls, and so long as Pinger users receive as many calls from the "network" as they make outside the network, the inbound and outbound termination fees are balanced. A counter on the Pinger app tells the user whether they’re in balance.

Tyntec’s part in this is providing the numbers it has obtained from a huge international pool, but more importantly, because it terminates the calls, divvying up those termination fees. Pinger, which was co-founded by top Palm and Handspring exec Joe Sipher – a voice of common sense in the Valley when I reported from there - also makes money from advertising.

I saw a number of services using Tyntec’s tt.one gateway – which is what it calls the servers that sit in a telco, doing the transcoding and translating between the GSM world and the OTT players. One is online dating, providing anonymous communication. Another is customer engagement marketing, again, providing an ad hoc disposable number that can be called or texted.

And if a small startup Pinger can become the face of mobile – why can’t Facebook? Facebook already has more users than any mobile network, and some people already spend more time inside Facebook than they do watching TV. The signs are that it’s already experimenting with telephony; at Barcelona it’s announced billing relationships with the world’s largest carriers.

And that would have seismic effects on a telco industry anxious about cannibalisation and fretting about data.

Martin Geddes, who founded Telco 2.0 consultancy and has worked at BT and Sprint, lays out the telco’s troubles in a stirring and brutal diagnosis called Peak Telco.

“The traditional vendors are dying. Their multi-year cycle times are hopelessly mismatched to the environment. In their place, a raft of 'internet-time' startups are taking their place, filling in the missing features that decades of neglect of the voice and messaging business have left behind,” writes Geddes.

“You mean I still can’t record and search my calls in 2012? Wow!”

Disruptive Analysis’ Dean Bubley has been writing about the OTTs for as long as anyone, and is bullish about their chances of success. He said: “RCSe was last year’s initiative by GSMA and RCS was four years ago. What we’re really talking about is coalitions of the losers.

“All it takes is one operator to break ranks – like Free Mobile has done in France. One operator has to say, you know what? We’re actually more accountable to our shareholders than the GSMA.”

But there are quite a few pratfalls and potholes standing between the OTTs and industry leadership. Some of these could be fatal. In the next part, I’ll look at a few. ®

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