By Simon Woodhead
Happy New Year!
We find that the new year is traditionally the time when people like to dust-off relationships, reflect on the past year and put in place provision for the new. It (and the preceding quiet period) are a great time for customers integrating with our APIs and streamlining things for the year ahead. We like January, but this January is more important than any other, because this potentially affects the future of your business.
I’ve ranted previously about naive procurement and the “let’s beat some carriers up” approach to relationships. There’s some who excel at handling that – rolling out the red-carpet and enthusing about their non-existent network while pick-pocketing you. That’s not us though, so please move along if you want your ego stroking by a fake, and to delude yourself and your spreadsheet until next quarter when you do it all over again.
We value strategic relationships and customers we can genuinely partner with for the long-term. As a 26 year old business, we’re proud that some of our first (including the first) customers are still with us, as well as many others we’ve picked up along the way that themselves measure decades with us. We’ve grown together, they’ve shaped our offering, and trust me, we’re there for their 3am Sunday crisis or any other time they need us because our interests are aligned. That’s a nicer way of working, it is real and I’d suggest it builds a better business for both parties.
We’re delighted to add more and more customers, especially those that have the making of being long-term strategic customers. We love it even more when our approach and values resonate so much that we can displace an incumbent, especially BT, as we did again over the Christmas period. As one of my colleagues refers to it – we were invited to be a bridesmaid and became the bride. I want to tie this in with my earlier assertion – that your choices this January matter more than ever – and explore some issues there.
First, let’s dispense with what you know. You know we champion a fair and transparent marketplace, and ultimately fight for the end-user. You know we have the freshest largest network amongst our peer-group – we buy infrastructure not Ferraris. You know we invest continually in our software stack and control our own destiny. You know we believe passionately in ownership of the entire supply chain and will never blame our ‘partner’ – if it breaks, generally we broke it, and definitely we’ll be fixing it. You know we’re 5 years ahead of most in being already fully IP on the interconnect side, having completed the Secret Club work late 2020, early 2021. And you hopefully know that our economics (both buy-side and internal efficiencies) are such that there is nobody in the UK market we cannot beat if we want to. Yes, including that “shhhh don’t tell anyone” mega deal you sold your soul for.
But there’s more and 2023 is going to see more chickens coming home to roost. 2022 shone a light on those who’d made bad infrastructure choices and false claims. 2023 is going to expose poor supply chain decisions. I’m not about to pick on those who haven’t spent a penny on their infrastructure in a decade, but instead go straight for the biggest bully in the room: BT.
For the longest time, BT’s IPX has been, as I said in an earlier blog, like Medusa – on any particular day, or for any particular regulatory consultation, it appears to be whatever suits BT strategically. Note: suits BT strategically, not what is good for its customers or their customers. This has really irked us for a decade or more as scrotes are enabled to hide behind the greyness that creates and deny end-users their rights to port, while regulatory review after regulatory review appears to defy logic and side with BT rather than what is right for the consumer and the market. When you have, as I’ve been told, paid lobbyists walking the corridors of Government, and more lawyers than Ofcom have staff, that has to buy a degree of getting your own way one way or another. We only have common sense and a will to make things better!
But the winds are changing and in my waters I feel the last place you want to be in 2023 is an IPX customer, and now is the time to change. I recognise some like speaking to this week’s new graduate “account manager” to get the best ever deal, and to boot get an impressive logo for their website (put it right alongside “regulated by Ofcom” and a few bought awards perhaps) to wow the public how big and clever they are. Others have been convinced that they’re buying from source and can save money, which is patently untrue in both respects. I’ve talked about market structure lots before but when you actually dive into the contract annexes, pricing ‘notes’ and dozens of price-lists, as we have done recently for a new strategic customer won from IPX, they’re likely paying a substantial premium. But there’s more… We think in 2023, IPX poses a regulatory risk to your business.
You see, when you buy a service off Simwood, we’re honest about your place in the world and ours. In fact we’ve counselled Ofcom previously that given the whole market except BT work in a particular way, maybe certain realities should be recognised. They disagree and their view is that you have obligations to discharge and while, in many cases, we discharge them for you, they are still yours to live and die by. Others believe IPX discharges them for them which seems in doubt. With us you’re also saved from capture by incoming legislation because we’re honest about what we’re selling and you’re buying; it looks like with IPX you’re caught. Let’s explore those issues because they could affect you and at a minimum present uncertainty.
There’s a really interesting situation going on at the moment with a long-time scrote, an IPX customer, that we’ve had endless trouble with around number portability, who has gone out of business again. In that situation there’s a process called the “provider of last resort”, co-written in-fact by our very own Pete Farmer, and adopted by the industry. For one of our customers who had failed, that would see us keep number ranges in service and protect the end-users as much as we could, facilitating as seamless a transition to a new supplier (or owner) as we could. This also ensures those who have ported numbers away and are no longer even customers, also retain service. You’ll have seen similar things in the electricity market lately although that is more of a billing relationship than a real-time lifeline. Makes sense though right and reflects the spirit of the relationship you’d think?
Well not if, as BT has, you’ve argued for years that you’re simply transiting calls and not hosting ranges at all. Do they admit that was all untrue and they are in fact hosting number ranges and providing number portability, enraging a regulator who’s bought their unique BS even though it runs counter to what the rest of the industry say and do? Or do they instead let the customer fail, let end users past and present lose service and enrage a regulator who knows they’re the only party who can do anything about it, despite their cognitive dissonance over what service they are or are not providing; in doing so rendering every other customer who thinks BT have discharged their obligations for them in breach of the very same regulator’s General Conditions? We wish end-users the best there and we look forward to seeing what karma does with the situation.
Then there’s the TSRs where the intent, we understand, was not to capture small operators with under £634k of revenue, and really not to bite under £1bn of revenue. Many have already seen those sentences and moved on, presuming they don’t apply. Well, those who have jumped into IPX are, by our reading, in scope for some of the same regulations affording a £1bn operation. That is a death blow for many I suggest.
You see this industry is unique in that customers are also suppliers, in accounting terms at least. Some of our largest costs actually come from customers while our largest revenue sources come from what the auditors would consider to be suppliers. Confusing eh?! It gets a lot easier when you ignore the money flows and look at contracts – who is supplying who with what service? So if we’re hosting your numbers, that is clearly a service we provide you which I think is pretty fair and accurate even though the money flow might contradict it sometimes. Similarly, even though BT may spend 3x with us what we spend with them it’d be vain and delusionary to call them a customer – they have the market power.
However, being so straightforward would undermine many of Medusa’s past arguments; she suggests you’re actually her supplier and therefore she can gouge other operators like us for an uncontrolled premium over the capped interconnect rates for transiting her network to reach the ports you also pay her for. For traffic from Medusa to us we treat your ranges like ours, for all our interconnects – she pays the same price-controlled rate for both – as the idea of transiting ourselves to reach ourselves is preposterous. That’s lucrative for Medusa and one of many asymmetries in her favour, but it isn’t so nice for you Mr IPX customer because it implies you’re a supplier to BT and therefore need to comply with the same TSR obligations as other people above the £1bn revenue level.
So there’s a taste of two of a few chickens hopefully coming home to roost in 2023 and hopefully being decisively (and visibly!) resolved by our regulator in ways we’ve suggested to them previously. Doing so would be good for the market, clarifying and levelling for participants at all levels, and most of all avoiding more potential service disruption for end users. Not doing so could get very messy for end-users and cost a few people their livelihoods.
If this blog has opened your eyes to some risks, and you want to progress to a better long-term relationship that’ll support your business, talk to us. We are willing and able to be your primary carrier, where we aren’t already – we know we can beat anyone out there for genuine volumes, and provide a wrap and level of service unrivalled – and I guarantee, on the very rare occasions we have cause to send an RFO, it won’t say “we turned it off and on again and that appeared to fix whatever it was.”
Finally, I hope that there is a lot of food for thought in this blog, however, the New Year is meant to be a time for optimism and hope for the months to come and I’d like to take a moment to focus on the positives coming in 2023 for our existing Carrier Services customers. We have just completed our coverage in all 50 US States; building out the equivalent of what we have in the UK stateside has been a long slog and we are finally at a stage where we are on a very short list of true domestic carriers in both markets. In my Christmas blog, I mentioned unconfirmed rumours about SimCon4. They remain unconfirmed, but I genuinely believe the time is right to all come together again for a sharing of ideas, respected guest speakers, awards (which you can neither buy nor nominate yourself for) and some bacon rolls! I’m hesitant to trail too much of the development roadmap before we put things out for testing, but looking at our development plans for the coming year, there’s some sexy stuff that will further differentiate ourselves from our “peers” too. I’m sure Frazer will be happy to drop some hints the next time he’s chatting to you, though.
I hope 2023 is a great one for your and your business.