Caller-ID: The Video Rental Store of Telecom?

by Cindy5/16/2016 12:35:00 PM

Caller-ID: The Video Rental Store of Telecom? By Scott Rice

Every industry goes through cycles of creation and growth, eventually followed by commoditization and stagnation.  This last stage can either lead to a flurry of mergers and acquisitions as the old guard tries to cut costs and wring out the last few drops of revenue or to a phoenix-like rebirth as technology disrupts old models with new methods.   And so as Blockbuster foundered, Netflix flourished; as the entire travel agent business collapsed… companies like Expedia and AirBNB arose from the ashes.   These are the same market forces that recently converted uber from an adjective to both a verb and a noun.

Technology will continue to disrupt the old ways of doing things.  We think caller-id/CNAM services have recently passed this kind of tipping point.  There has been a flurry of M&A activity as one company has been quietly buying up its competitors.  In the meantime the carriers that rely on these services to support subscriber demand for caller-id have some tough decisions to make.  One option is to bring their caller-id service in house.   But that would mean negotiating contracts, investing in technology and training customer service.   Not something most carriers want to do especially when CNAM revenue has been dropping off for years.  

At this point in the Caller-ID business, we think it’s important for each carrier, MNO and VoIP service provider to consider where it believes their outsourcing service falls in the cycle of creation, growth, commoditization and stagnation.  In full-disclosure, this is not just a philosophical point I’m making.  PacificEast’s IDICIA division just this week launched a new Carrier Data Hosting solution to give carriers and MNOs who want to outsource some of these services another choice.   We’ve developed a hybrid solution that combines the carrier-grade robustness of the old model, with a new take on customer service (we thought carriers might actually like some), increased revenue shares and additional ways of monetizing carrier subscriber data.  

Back in the early days of big computer systems there was a saying: “no one ever got fired for selecting IBM”.   But let’s use a more applicable example.  Today, Netflix has revenue of about what Blockbuster Video had in 2004. But back then Netflix had 1/12 the revenue of Blockbuster Video.  In other words, in 12 years, Netflix and Blockbuster changed places and all six billion dollars in Blockbuster revenue wasn’t able to prevent it.   In 2004 Netflix wouldn’t have been the odds on favorite to survive the decade but today Blockbuster is gone.   Size isn’t always a determining factor in success, especially during times when technology is disrupting old methods and models.   In choosing how to move forward with outsourcing CNAM, LIDB and Verification services, carriers now have another choice: As with the dinosaurs, size is much less of a determining factor in survival and success than being smart, fast and adaptable.  

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