The Big Interview

BIG INTERVIEW: Nick Ford, president of carrier services, IDT

Alex Hawkes

26 May 2015

Nick Ford, president of carrier services at IDT, offers some compelling evidence on how quality can help drive revenues in the voice market.

“We already have statistics showing that we can get 40% longer call durations by using a HD voice interconnect,” he says. The longer the consumer is on the call, the more the call costs.

It’s difficult to think of another global carrier in today’s market so firmly aligned with voice as IDT. Handling an estimated 16 billion minutes of voice traffic per year, IDT primarily supports its retail brand, which targets immigrant communities.

As a result it doesn’t have “typical” traffic flows. “We have traffic going into Latin America and Asia, and that’s a great opportunity for us as a wholesaler.” says Ford. “We have a great set of direct interconnects. We began by terminating the substantial voice traffic from our retail business, and on the back that have built a successful wholesale business.”

Earlier this year, IDT’s voice business captured headlines worldwide as it reached an agreement with Cuban incumbent, Empresa de Telecomunicaciones de Cuba (ETECSA), to exchange international long distance voice traffic between the US and Cuba.

Receiving approval by the US Federal Communications Commision (FFC) in February, the move marks the first direct phone connections between the US and Cuba in decades.

“For the first time, Cubans calling home to Cuba can get a direct link through the US and don’t have to go through Asia or Europe like they have in the past,” says Ford. “It’s something we are very proud of.”

Ford hopes to build on its relationship with ETECSA, exploring areas such as mobile top up and in the long-term money transfer services.

“We will be very well positioned as trade opens up between the US and Cuba,” he says. “Cuba is a good example of how if you keep trying then there is still opportunity out there.”

 

A volumes game

While many carriers over the last few years have looked at the slim margins in voice and either exited the market or tried to diversify their service offering, IDT defiantly focussed on growing its share of the voice market.

“There is a realisation now that voice is such an important part of the telecoms industry,” says Ford. “Voice is a huge revenue generator. If you walk away from voice, then you have a real problem trying to find new revenues to fill that void.”

Ford admits margins remain under pressure in the voice market, and most likely always will be. He does, however, see opportunity opening up for the larger voice players in the market.

Over the last few years, some carriers – most notably BT – have looked to outsource their voice business, and Ford predicts this trend to continue.

At the same time, the consolidation sweeping across mobile markets in Europe could have wider implications for wholesale.

“Rather than have a dozen partners, mobile operators may aim to have three or four, where they can leverage their volumes but not have the headache of having to manage a dozen interconnects,” says Ford.

Ford therefore believes that it could become a “volumes game”, where being a big player counts. “I think we are well positioned to take advantage of that,” he adds.

Ford believes quality is the other area that counts in the voice market. IDT differentiates its wholesale offering between platinum, gold and silver, and he claims demand for platinum quality has grown considerably in recent years.

“If you have crystal clear call quality, you talk more and spend more,” he says. “We have seen a huge jump in our retail consumer base asking for the highest quality interconnect.”

In the past, operators often charged more for higher quality voice services. Now, he says, they don’t have to, as the longer calls are generating more revenues. “We are trying to get consumers to talk more rather than charge them more,” he adds.

Ford views HD voice and VoLTE services as a natural progression for the industry. “Consumers expect a high-quality level of service for voice which they don’t with other services,” he says.

 

Life in the fast lane

Away from the world of wholesale, Ford is a huge motorcycle enthusiast. Commuting to London everyday on his motorbike, he also spends March through to October competing in the UK Hottrax National Motorcycle Endurance tests. Sometimes lasting up to six hours, the races can be both mentally and physically exhausting. “The bikes don’t ride themselves,” he smiles.

Ford is part of a team of four mechanics and two riders that last year successfully won the rookie 1000cc championship.

He is therefore a big believer in team work: “I always try to empower the management team. They understand their regions and the particular challenges they face more than I do. My role is more to coach and help them to develop,” he says.

IDT’s senior management team meet every three months in the company’s London office, flying in from across the globe. Likewise, Ford makes frequent visits throughout the year to IDT’s regional offices, meeting with customers along the way. “This is an international business and it works because we get on planes and meet people,” he says.

Ford also adopts a hands-on-approach with IDT’s wholesale partners, in particular when it comes to managing and maintaining quality on the network.

Its platinum routes are said to primarily use direct interconnects via Local Network Operators (LNOs), Mobile Network Operators (MNOs) and Regional Network Operator (RNOs). Using over 1000 CLI-certified routes, IDT conducts daily testing in collaboration with Ascade, and is one of the BSS provider’s largest customers.

“It’s about having a proactive view on managing quality on the network. We see it as an important differentiator,” he says.

Networks issues are “part and parcel of telecoms” says Ford. “IP is still a new technology in comparison to TDM. We are very fortunate as we got into the IP space early and so have a very good understanding of the challenges it brings.”

IDT has a substantial engineering team in place to fly across the world and deal with any networks issues. “Certainly when it comes to turning up new interconnects or troubleshooting existing interconnects, if your partners don’t have the experience then it makes perfect sense for us to fly in one of our experts. It also helps build relationships and trust,” he says.

 

Wholesale gets a new label

IDT’s substantial voice business has also provided a solid platform for it to trial and test new value-added services. “We see voice as a vital play that continues to grow, but we also have the ability to add value added services over the top of it,” he says.

Operators for too long viewed the OTT market as threat, but Ford believes this perception is beginning to change. “The OTT players have at times been blamed for stealing from wholesale volumes, but I feel at times they have also contributed to the market,” he says. “They found a new opportunity and a new niche. So yes they do carry huge volumes of traffic, but they also found a new channel to grow traffic.”

In May 2014, the company launched IDT Messaging, a white-label OTT messaging service that combines IP and SMS messaging.

The product allows mobile operators to launch their own messaging applications, similar to OTT applications that use IP messaging, and has features such as group chats, video and location sharing.

The aim is to weave SMS together with IP applications; so operators can provide SMS messages, as well as OTT messages, all in one application. Where IDT believes it can differentiate from OTT players such as WhatsApp and Facebook is that they do not have direct access and control to SMS, and to run such a service through a third party provider would be too expensive.

Part of the offering includes Magic Words; a contextual content-engine for messaging. “When messages go into the cloud we start to build an analysis of what conversations are about, where people are, and then give them useful bits of information, woven into those conversations,” he says.  “For example, if there are four of us meeting for dinner after work, we can create a link to recommended restaurants in that location, and if somebody is perhaps coming from further afield we could check their train times. We are trying to bring together things that we can all do on our smartphones by using many different apps, and instead create one comprehensive app.”

OTT white label services, says Ford, are a great opportunity for carriers moving forward to better compete with OTT players.

“I think carriers have to start looking at ways to monetise and compete. OTTs have traditionally been quicker to market and more nimble than carriers,” he says. “A white label OTT service allows them to get to market much quicker.”