Why Twilio Will Kill AT&T(soentrepreneurial.com)
soentrepreneurial.com
Why Twilio Will Kill AT&T
http://soentrepreneurial.com/2012/01/05/why-twilio-will-kill-att/
20 comments
Similar to my thoughts. Twilio will not kill AT&T, the startup that will compete with AT&T will be that startup that can provide competitive hardware to carry data. And I think it may be in the form of quality and reliable nationwide wi-fi. Clearwire is trying but this is a difficult task.
Are you referring to equipment manufacturers or data communications carriers?
There are successful equipment manufacturers; my favorite is Ubiquiti Networks. They're competing (directly) with Cisco's wifi business. Cisco's carrier-switch side is, in turn, competing with Alcatel-Lucent, the traditional supplier to AT&T.
As for carriers, the important pieces to the equation are bandwidth, distance, and coverage. In the United States you need all three, because we have a lot of people spread out over a lot of space. There are 400 million people in this country. Traditionally each of them is connected to a telephone central office, where the equipment lives.
You see all these little dots? http://en.wikipedia.org/wiki/File:Central_Office_Locations.p... Each one of those is a building with at least a few hundred (and sometimes up to a hundred thousand) subscribers connected to it. Each building is a data center of sorts, sitting on land that had to be bought, containing equipment that needs maintenance occasionally, and getting power bills that need to be paid on time.
Many of these dots, particularly the isolated ones, are served by only one carrier, AT&T, who then leases out bandwidth to their competitors because the federal government requires them to do so as a condition of the antitrust settlement in 1984.
Universal service means you're connecting every last one of these dots to each other dot, and with sufficient bandwidth to make that work. Wifi doesn't have that kind of bandwidth, and it's not efficient anyway. The best way we currently have to do this work is optical fiber, strung between poles or plowed into the ground.
I'm not saying it shouldn't be done. I'm just saying that any "startup" who goes at it will need to be well funded.
There are successful equipment manufacturers; my favorite is Ubiquiti Networks. They're competing (directly) with Cisco's wifi business. Cisco's carrier-switch side is, in turn, competing with Alcatel-Lucent, the traditional supplier to AT&T.
As for carriers, the important pieces to the equation are bandwidth, distance, and coverage. In the United States you need all three, because we have a lot of people spread out over a lot of space. There are 400 million people in this country. Traditionally each of them is connected to a telephone central office, where the equipment lives.
You see all these little dots? http://en.wikipedia.org/wiki/File:Central_Office_Locations.p... Each one of those is a building with at least a few hundred (and sometimes up to a hundred thousand) subscribers connected to it. Each building is a data center of sorts, sitting on land that had to be bought, containing equipment that needs maintenance occasionally, and getting power bills that need to be paid on time.
Many of these dots, particularly the isolated ones, are served by only one carrier, AT&T, who then leases out bandwidth to their competitors because the federal government requires them to do so as a condition of the antitrust settlement in 1984.
Universal service means you're connecting every last one of these dots to each other dot, and with sufficient bandwidth to make that work. Wifi doesn't have that kind of bandwidth, and it's not efficient anyway. The best way we currently have to do this work is optical fiber, strung between poles or plowed into the ground.
I'm not saying it shouldn't be done. I'm just saying that any "startup" who goes at it will need to be well funded.
Data communications carriers. I agree with you, yes Wifi alone is not enough, which is why companies like Clear/Clearwire partnered with Time Warner & Sprint: http://www.clear.com/about-us. So it's just one dot. But it's an interesting dot. Because there are literal hundreds of millions of wi-fi enable devices that can handle all kinds of communication with the right app. So we see the cable companies(with their optical fiber) partnering with upstart carriers(fiber or 4G connected wifi hubs) and more establish carries(more underground optical fiber or 4G) to make wifi ubiquitous in cities and bring more competitions to the giants like AT&T and Verizon. In NYC verizon is competing with Time Warner cable, so it won't surprise if time Time Warner get's more involved with mobile(i.e.: clear).
...to make wifi ubiquitous in cities
As with everything it's the last 10% that takes 90% of the effort.
Or in this case the last 20-30% depending on how small you define "city".
The 2000 census found 58% of the US population living in "urbanized areas" of over 200,000 people and and 69% in areas over 50,000. [1]
So, even if you have blanket coverage for every urban/suburban area over 50,000 population, you still have over 30% of the US population to cover. [2]
Even AT&T with its existing investment has to be compelled by law to provide services in these areas where it is not economically viable to do so. The "Universal Connectivity Fee" on your telephone bill helps compensate for the losses. [3]
So, until either high-bandwidth long-range omni-directional wireless becomes portable and energy efficient or the government requires/subsidizes universal coverage, alternate technologies are not going to go beyond boutique "alternatives" for urban folks.
[1] http://www.fhwa.dot.gov/planning/census_issues/metropolitan_... [2] For example, Southwest Bell had to set a number of poles and string over a mile of cable to my parent's house. We had friend where that run was over seven miles for a single customer. [3] http://transition.fcc.gov/cgb/phonebills/samplePhonebill.htm...:
As with everything it's the last 10% that takes 90% of the effort.
Or in this case the last 20-30% depending on how small you define "city".
The 2000 census found 58% of the US population living in "urbanized areas" of over 200,000 people and and 69% in areas over 50,000. [1]
So, even if you have blanket coverage for every urban/suburban area over 50,000 population, you still have over 30% of the US population to cover. [2]
Even AT&T with its existing investment has to be compelled by law to provide services in these areas where it is not economically viable to do so. The "Universal Connectivity Fee" on your telephone bill helps compensate for the losses. [3]
So, until either high-bandwidth long-range omni-directional wireless becomes portable and energy efficient or the government requires/subsidizes universal coverage, alternate technologies are not going to go beyond boutique "alternatives" for urban folks.
[1] http://www.fhwa.dot.gov/planning/census_issues/metropolitan_... [2] For example, Southwest Bell had to set a number of poles and string over a mile of cable to my parent's house. We had friend where that run was over seven miles for a single customer. [3] http://transition.fcc.gov/cgb/phonebills/samplePhonebill.htm...:
Even then, AT&T is a Tier 1 internet backbone provider, giving them a substantial advantage in bandwidth costs compared to any startup.
It's about margins. If a business got rid of their land line, and moved all their communications to the cloud (using tools powered by twilio), ATT would capture just a tiny fraction of what they would if they were just billing the business monthly for phone service.
Who provides the bandwidth and hardware for the cloud?
Hint: It's not twilio. It's companies like AT&T, Level 3, Amazon, MS, etc.
Hint: It's not twilio. It's companies like AT&T, Level 3, Amazon, MS, etc.
He who controls OSI Layer 1 controls the profits.
He who controls the bits ... controls the Internet!
The cloud still requires a phone line.
Since when? I haven't had a phone line for 10 years. Yet I'm here.
Really? I'll elucidate. There hasn't been a national copper interconnect (POTS) for a long time now. You might, have copper to the house but after that it's fiber all the way down. AT&T and all the large carriers leverage this to carry your voice traffic as data and on top of that can carry 'internet data' and whatever else.
With AT&T goes the data, even if you haven't had a 'phone line' in a long time.
With AT&T goes the data, even if you haven't had a 'phone line' in a long time.
No one says ATT doesn't still get some money. But wouldn't you rather be the one sending the final customer a bill for 50/mo?
There's a reason wireless companies have been fighting vigorously to avoid becoming dumb pipes.
There's a reason wireless companies have been fighting vigorously to avoid becoming dumb pipes.
Are you serious?
That's like saying you it's better to own a website, rather then own Amazon EC2 or <insert any datacenter here>.
That's like saying you it's better to own a website, rather then own Amazon EC2 or <insert any datacenter here>.
Yeah, I'm serious. I'd rather own Facebook than the servers it operates on.
When I'm in bed at night dreaming of having a pony, I also dream about a world where the AT&Ts, Verizons, and Comcasts of the world have been reduced to "pipe providers". They just give you an IP address and try to give you the fastest, most complete coverage they can. Then everyone else sits on top of them and provides the devices, protocols and content in an a la carte fashion.
I still don't have my pony, but a man can dream.
I still don't have my pony, but a man can dream.
It'll happen someday. Those companies will fight tooth and nail along the way, but it'll happen eventually. (or so I tell myself to feel better)
This is kind of embarrassingly wrong.
Twilio has a great team and a great product.
Trying to compare Twilio to AT&T can only hurt Twilio. Let's applaud them for what they are- the best example of a telco api out there.
If you think AT&T is just a bigger version of a messaging/telephony api, you need to do more homework. Really.
W/r/t the innovation comments, again- naive. http://www.att.com/Common/merger/files/pdf/IMS_Convergence_F...
I'm sure the other carriers are out there doing similar things.
Twilio's api solves a pretty interesting set of problems, but the 180 billion dollar market cap for AT&T is not based on the problems Twilio is working on.
Twilio has a great team and a great product.
Trying to compare Twilio to AT&T can only hurt Twilio. Let's applaud them for what they are- the best example of a telco api out there.
If you think AT&T is just a bigger version of a messaging/telephony api, you need to do more homework. Really.
W/r/t the innovation comments, again- naive. http://www.att.com/Common/merger/files/pdf/IMS_Convergence_F...
I'm sure the other carriers are out there doing similar things.
Twilio's api solves a pretty interesting set of problems, but the 180 billion dollar market cap for AT&T is not based on the problems Twilio is working on.
I spilled my beer while reading this article. As someone who worked in the "Death Star"(TM), I can tell you what the other commenters in this thread have already stated, but I'd rather make some vague generalizations. Firstly, at&t is huge and have a large number of businesses operating under the at&t umbrella. Secondly, the advances in providing everyone wireless access to phone and data (i.e. pipe), at even today's choked (v)DSL speeds are not even close to being achievable in today's radio technology _theory_, much less experimental implementations. Thirdly, Twilio can and will be reproduced by someone else, and even at&t business solutions. Can Twilio bundle pipe, hosting, cellphone, and advanced app solutions for business into 1 bill like at&t? No.
Don't get me wrong, Twilio is cool, heck we even use it at my company.
Question: Who is the back-end carrier providing the VoIP services necessary to make this work? Bandwidth.com or similar? If so, hate to break it to you guys, but the only thing that Twilio is providing is a wonderful API which sits on top of a VoIP network that sits on top of AT&T and Verizon (GTE). How exactly are they going to 'kill' AT&T now?
As an aside... I do know of what I speak. I have implemented several thousand numbers via Bandwidth.com and similar services, which as a further aside is who Google uses for many of their services for Google Voice...
You just need ILECs or CLECs willing to terminate SIP connections onto an SS7 switch; doing so is trivial for an organization that is getting into a Twilio-like business, but non-trivial for a typical web developer doing it just for a couple hundred of minutes or sms messages a month.
AT&T owns physical pipe. Twilio owns a domain name.
Huge difference.
Huge difference.
I hope we've done a bit more than that. But Twilio.com is just $4.99/year, so... good margin there :)
Heh, I'm sure that's the case. Not trying to minimize Twilio, just to highlight the difference between virtual and physical presence.
Love the service, BTW.
Love the service, BTW.
IF Twilio comes even anywhere near really threatening AT&T I'm sure AT&T would 'just' buy them. They are the same AT&T that offered > 35Billion for another telco.
I find Twilio's calls to be very expensive. If you're serious about keeping costs down(and writing an app that is primarily voice), a better solution is Asterisk in the cloud with say, Adhearsion (https://github.com/adhearsion/adhearsion).
I don't think Twilio is a serious threat to the old telecom companies. But I am a huge fan of cutting out intermediaries.
I don't think Twilio is a serious threat to the old telecom companies. But I am a huge fan of cutting out intermediaries.
Why Hyperbole Generates Pageviews
If Twilio come close to killing AT&T, I'll bet legislation comes up in congress making Twilio illegal.
There is a supreme irony in criticising AT&T for not being a platform while predicting that it will be killed by a company that uses it and similar wholesalers as platforms.
There is a difference between Twilio, a telephony retailer, and AT&T, a telephony retailer an distributor. Twilio and the like may hack you away from the retail arms of the telcos' retail arms, but it does nothing against the distribution businesses. The latter can survive without the former; the inverse does not hold true.
There is a difference between Twilio, a telephony retailer, and AT&T, a telephony retailer an distributor. Twilio and the like may hack you away from the retail arms of the telcos' retail arms, but it does nothing against the distribution businesses. The latter can survive without the former; the inverse does not hold true.
While I'm a huge fan of Twilio as a service there are certain use-cases that they do not fit. It would be ill-advised to build a call-center operation based on Twilio, but it would be less so to use AT&T for the same. Twilio are a reseller based on networks larger than themselves, one of which I would assume is AT&T. I don't see them killing AT&T off in the near future.
Why would Twilio kill AT&T before Skype does?
Twillio also isn't the only game in town......Whereas AT&T quite often is a regulated monopoly depending on the market.
The article would make more sense if it were titled: "Why AT&T should acquire Twilio."
Link Bait... and I got Baited.
HN really needs a way to downvote a submission.
It's the flag link next to the submission.
Twilio, a small but great company with some very talented (and smart) and hardworking (yet nice) people behind it, provides an API-based service to people interested in building web apps with integrated voice and text.
AT&T is a global communications conglomerate that provides multi-tiered voice, data, video, internet and products and services to any retail, business, military or gummint customer.
It's like saying the vegan sandwich truck is going to put McDonalds out of business. Yes, the folks down at the truck are nice and conscientious about their ingredients, but McD's is all-pervasive.
AT&T is a global communications conglomerate that provides multi-tiered voice, data, video, internet and products and services to any retail, business, military or gummint customer.
It's like saying the vegan sandwich truck is going to put McDonalds out of business. Yes, the folks down at the truck are nice and conscientious about their ingredients, but McD's is all-pervasive.
It's sillier than that even. The vegan truck would have to be making their sandwiches by buying McDonald's burgers and removing the meat.
[deleted]
I don't know about Twilio (and I have not read the linked article yet), but Magic Jack will kill AT&T's old business of landlines for sure. I switched mine to their newer no-computer-required device and cancelled my land line in few days. I was paying $50 per month for unlimited versus $30 per year unlimited. How in the world could you compete with that? But I bet AT&T does not care at this point about old fashioned landlines for their residential customers.
This still ignores the fact that Twilio or MagicJack or I'm On Crack all run on a physical backbone. You can't connect to the internet through the cloud - not sober, anyways.
There is a difference between Twilio, a telephony retailer, and AT&T, a telephony retailer an distributor. These services may hack you away from the retail arms of the telcos' retail arms, but it does nothing against the distribution businesses.
There is a difference between Twilio, a telephony retailer, and AT&T, a telephony retailer an distributor. These services may hack you away from the retail arms of the telcos' retail arms, but it does nothing against the distribution businesses.
Thanks for your comment, you at least didn't down-voted without adding your take.
I don't really know how Magic Jack or crack jack, work. I was just merely sharing the difference and how AT&T could have a leaking hole in their boat and not even know about it.
I don't really know how Magic Jack or crack jack, work. I was just merely sharing the difference and how AT&T could have a leaking hole in their boat and not even know about it.
Twilio doesn't actually move any data from here to there, physically. AT&T will actually pick up your data here and take it over there. They're the ones who've done the work of laying fiber across the country and putting up cell towers so that communications can actually happen. These things cost money and can't happen overnight.
Twilio is a reseller. They may be a really good reseller, but they are reselling service and a decent amount of the money paid for that service still flows to AT&T (and the other carriers).