The big, dirty secret in the interconnect voice industry.

So, our industry is a little crazy isn’t it?  If you have been in the “game” as long as we have, you’ve seen it all.  Great fortunes made and lost, sweeping/disruptive technological advances, regulatory constraints removed, introduced or modified, …you name it, we’ve seen it in the industry.  It’s a great industry in that regard. It has a lot of technology but also has a lot of basic commodity industry like attributes, such as, arbitrageurs that own very little to no network, sales guys that can garner high compensation, industry consolidation, emphasis on scale, speed, and automation.

But there is still a secret that few talk about openly. It’s considered impolite in some circles.  And that secret is this, the number of people working in the industry needs to dramatically shrink, and that means job elimination. Why? Because carriers overhead costs associated with interconnect voice are disproportionate relative to the margin it generates. Think about the number of people involved in a carriers interconnect voice operation. 20 years ago you needed a lot of people to run the business but today, it’s different. You only need probably 1/3 as many people. But, that means two thirds of the people involved are just adding cost to the marketplace or the carrier. The only way to correct this is through job elimination.

Our ICP platform is, in many  respects, a workforce-automation tool. It automates many of the functions and tasks that are traditionally handled by multiple people in a carrier’s back-office operation. There is no need to have a dedicated routing team. There is no need to have dedicated interconnect voice quality management. There is no need for dedicated collections people or contract administrators, or pricing teams. With platforms like ours (and our competitors too), these are just functions or roles that one, two or three people can play. The interconnect voice systems of today are purposely built to house all of the basic functions and some of the more sophisticated functions and processes of interconnect voice. That means the involvement of people in the business continues to lessen. We have had customers with 7 people in their entire company running significant volumes of traffic.   

Compare that to many legacy carriers who have dozens of people in their back-office interconnect voice operations. They are redundant and not needed. This leads to inefficient marketplace functions and inflated costs. Over the next 5 years we believe you will see an acceleration in the reduction of people involved in the interconnect voice business, particularly amongst tier 2 and tier 1 carriers. It’s the natural progression of things. It can’t be stopped and everyone knows it.  We just don’t like to talk about it openly.

What do you think?  How do you see the industry evolving?  Do you talk internally about reducing overhead?  And how disruptive that will be both culturally and functionally?

Andrea RonaComment