She gave a two-minute summary of Telco history. “First it was all about voice,” she said. “Then the intertubes happened. Now you had data … then it went back to voice, the big push for wireless. Then of course wireless moved, so it’s not about voice any more, it’s about the data.”
She expects the next step to be “connected devices … the phone goes away, everything you do both data and voice happens on other devices.”
What does this mean for telcos? They have become commoditised, she said, suppliers of data plans. “It is a big commoditised business that has no real innovation.”
“In the future, the data plans dies,”, Merling says. “Think about it. How many devices have you got? Think about connecting all of those. You probably want the same data plan. But why pay for a data plan? How will telcos make money? You can’t just keep increasing the data plan.”
Instead, the money is going to come from the APIs and accessing the services.
Enter Twilio, a virtual telco. “I think of twilio as a craft telco”, said Merling, tying in with the beer theme that flowed through Monki Gras. “Do they sell hardware? No. They have software and APIs.” She says the Twilio business model scares the industry: it is based on transactions, not data plans. She also noted how old established vendors are buying up software-based providers, such as BT acquiring Ribbit and Microsoft acquiring Skype.
Tomorrow’s telco, says Merling, is a based on a software stack. “Antennas and towers are not going to go away, but the infrastructure becomes all software based … combining network services with cloud infrastructure.
“At Alcatel-Lucent we sell hardware. We sell big giant boxes. But this is where it is going.” She says the telcos are now aware of this, hence the title of her session “How telcos got API religion.”
Her final prediction? “Jeff Lawson becomes the CEO of AT&T. Why? Because the model has to change.”
It was a thought-provoking talk, though the unspoken question was whether in fact the telcos will successfully transition or whether they will simply become less important, continuing to maintain the pipes while others profit from what flows through them.
I interviewed Twilio CEO Jeff Lawson in October last year.