Amazon torpedoes telephony. So where are the new telco products?

Amazon has, to nobody’s surprise, turned Alexa into the universal speaker phone. Telcos should be ashamed of their lack of relevant access products.

Alexa call mum

There’s a big talk about the “IP transition” for the PSTN, and how telcos are going to invest loads of money in replumbing their vertically-integrated voice services for the 21st century. I have a strong feeling that fate is going to turn those investments into stranded assets.

The arrival of “over the top” VoIP and its effect on telephony margins is very old news. I started blogging about it in 2003, and made a minor living in 2004-5 consulting on the rise of players like Skype and what to do about it.

We are now at a new inflection point. Whereas the first wave of “over the top” voice was about delivering a telephony substitute, the next is about completely replacing telephony.

Your kids already regard anything without a touch screen as broken, and anything without that capability is an abandoned legacy interface. SMS isn’t a better morse code, and telephony is now the morse code of talk. No amount of network engineering is going to make a “telephone” into an acceptable communications experience for future customers.

Amazon’s Alexa is growing at a startling rate, and is one of the fastest-adopted consumer technologies in history. I am not an analyst — I write no reports, attend few conferences, and never listen to a single droning PR ‘briefing’ — so you will have to dig out the statistics for yourself. The trend is beyond obvious.

The coming of machine intelligence, voice recognition, personal assistants and more has been foreseen for a very long time. The growth of online identities anchored in non-telco worlds (Google, Facebook, et al) is also hardly news. The idea that the PSTN system of telephony will continue to dominate voice communications forever is fantasmagorical nonsense.

I and my start-up colleagues at Just Right Networks are busy setting up the commercial launch of quality-assured cloud application access. The technology has been around since 2007. I wrote about it in 2008 for Telco 2.0. Technology is not the barrier to telcos building new cloud-ready access products. We don’t need expensive parallel networks just for voice.

You have to ask yourself: why is there not a single new retail or wholesale product (and fresh revenue line) out there to support and integrate with Alexa? How has this whole industry entered into total denial that the application action has all shifted to the cloud players, and telcos are just their truckers?

Because the disruption that’s coming is going to be big and ugly. Telephony is the original (and presently best) form of shared virtual reality. But many more forms of shared virtual communications spaces are going to arrive. And you won’t be “dialling” them.

It is companies like Amazon that are going to tie them to their cloud commerce and communications platforms. They will supply the identity and trust systems. The “terminals” will be ambient, worn and embedded. And all this will need some kind of fit-for-purpose data transport.

The end result is going to be that companies like Netflix, Microsoft, Amazon and Google start to put their own equipment into telco networks to not only distribute content, but also to control quality. They aren’t going to wait for you to figure it out via SDN, because this can be done incrementally with managed overlays.

And at that point, the telecoms industry will be in deep doggie doo. Once you’ve lost control over the systems that match supply and demand, you’re no longer in control over your destiny. (Indeed, my start-up is really doing high-frequency trading against BT’s network to extract the quality arbitrage. Thanks for the capex, guys!)

The margins from overpriced circuit products sold to enterprises will collapse, as assurance becomes available on broadband. There will be absolutely no differentiation on the retail side, so more margin collapse and consolidation. The interconnect revenue from voice (and SMS) will go into freefall. And telcos will be faced with a small cadre of powerful global cloud platform buyers. (Is oligopsony a word?) Oh, and SD-WAN will hollow out every other arbitrage of bearer, space and time.

None of this is news, either. I said it all at eComm back in 2009 when I worked for BT as Strategy Director. This is an industry that’s had a decade plus to get ready for this moment. And it has failed in both vision and execution.

As far as I can see, the only interconnected quality-assured product of notable success that’s actually been delivered in that time is VoLTE.

One product.

From a trillion dollar industry.

OMG. Or maybe WTF?


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