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Will Whoosh! work?

You’d have to be living under a rock to have missed my super fun TelecomTV talk announcing the latest product addition to Totogi, the telco SaaS software company where I’m acting CEO. We’ve just launched a CPaaS offering with 100% Twilio-compatible, Application-to-Person (A2P) APIs, which are designed to be handed over to telcos to sell to enterprise customers. We believe when operators add this new product to their catalog, they can take on Twilio and win the strategic position they need with enterprise IT departments, along with the loyalty of the developers who are crucial for their burgeoning Network APIs.

The telco industry needs to act urgently on this, as Twilio is expanding its ownership of this valuable position daily. You may know that Twilio’s meteoric rise, driven by its deep developer-centric approach, landed the company with an $11 billion+ valuation. Its ingenious approach to A2P APIs provided easy access, transparent pricing, and rapid innovation that quickly garnered the loyalty of a vast developer base. While it’s a shame telco didn’t pioneer this approach, what if we could adopt Twilio’s strategy and leverage telcos’ position as the owner of the network to outmaneuver Twilio? I think we can.

Enter Whoosh!, Totogi’s latest product, designed to entice developers into the telco ecosystem by creating 100% Twilio-compatible APIs. With Whoosh!, operators can provide enterprises with an almost invisible transition from Twilio to their platform. By using the carriers’ owner economics, they have the potential to strategically undercut Twilio’s pricing to win enterprise business. I argue telcos should take the shot, and take it now—before it’s too late.

As someone new to the CPaaS space, I’ve already learned that broaching this subject is like touching a third rail. So, naturally I got some initial questions and thoughts from people who think my strategy won’t work. I thought I’d address them head on, so here we go!

Question 1: Twilio is unprofitable, so why on earth would a telco want a piece of that (crappy) business? 

The issue with this question is that it confuses Twilio’s profitability with Twilio’s gross margin. Readers are right; Twilio’s profitability is just barely positive. But just because it’s not that valuable doesn’t mean it’s not operating in a valuable space. 

Instead, let’s look at Twilio’s gross margin. Twilio’s gross margin sits at 49%, which implies that Twilio buys connectivity from telcos and doubles the price to its end customers. This suggests that telcos can undercut Twilio’s pricing because, unlike Twilio, telcos don’t have to buy the connectivity they already own. This isn’t merely a price war; it’s about leveraging the telco industry’s inherent strength. Telco should use pricing as a weapon against Twilio to win back market share. This is huge for telco.

Question 2: Enterprises don’t want to sign deals with each telco to send messages; they want to sign with just one vendor. 

I 100% agree with this. But this question is anchored in the old approach, where we thought of A2P APIs as being sent only to a carrier’s own native endpoint.

Twilio’s success underlines the market’s hunger for simplicity. Telcos can emulate this model, too. Operators should leverage their already established interconnect, roaming, and the forthcoming interoperability agreements being formed for Open Gateway and use them for A2P messages. 

Yes, I know, I know—sending a message to an endpoint outside of your own network will cost more than sending a message fully on-network. But these costs are tiny and can be factored into the pricing you extend to your enterprise customers. 

By taking this approach, telcos not only offer the same simple approach of Twilio, but also gain ownership of the invaluable developer relationship. Telcos need developers for their network APIs and should bend over backwards to keep developers in their ecosystem. Successful execution of this strategy would give a carrier a huge advantage over its competitors. The telco in each country that gets to market first with this approach would have the first-mover advantage in a winner-takes-all race. If you want developers, this is the way to do it.  

Question 3: Telcos have already conceded those “boring” A2P APIs. We are working on CPaaS 2.0, the network APIs, aka the “cool” stuff.

There’s a misconception here that we should close the door on A2P APIs or that it’s too late. Sure, Twilio has won round one. However, A2P API developers remain pivotal for telcos. It’s the realm where programmable-communications APIs have gained traction and adoption. Innovators like Twilio and Sinch fixed the initial adoption issues developers faced with telco services such as cumbersome purchases, challenging usage, and telcos’ general innovation slowness. Telcos shouldn’t sidestep this foundational aspect while chasing the allure of “5G network APIs.” Both realms are intertwined; embracing A2P APIs bridges the gap with 5G network APIs. It’s crucial for telcos to make strategic moves now to ensure Twilio doesn’t own the entire space. We must strike now for a significant stake before the window of opportunity closes further.

I’m sure more questions will come as we figure out how to take on Twilio. To all those intrigued by this vision of enterprise telco and ready to dive deep into the possibilities that Whoosh! offers, I cordially invite you to join us at TMForum’s Digital Transformation World in Copenhagen, running September 19 – 21. See a demo and learn more about our new offering. Together, we can navigate this novel approach, reimagine the future of enterprise telco, and carve a path to reclaiming our piece of the pie. Don’t miss this chance to own it for your telco. 

See you there!

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