A force to be reckoned with

By Isabelle Paradis
President, HOT TELECOM
April 2015

Vodafone is one of the more recent additions to the wholesale world, but not one to be underestimated: with a pool of 400+ million mobile customers, it has one of the largest global network footprints that carries over 10% of the international voice traffic. It is definitely a force to be reckoned with, which is likely to trigger a significant power shift in the wholesale market in coming years. I had the opportunity to discuss Vodafone’s wholesale strategy and plans with Brian Fitzpatrick, CEO at Vodafone Carrier Services, as well as what makes this new wholesaler so different.


Vodafone Carrier Services (VCS) is a new player in the wholesale market. How do you differentiate from others and how do you see your role within the Vodafone Group?
Vodafone Carrier Services (VCS) exists for a different reason than the majority of the other players in the market. One cannot lose sight of the genesis of our beginning. Basically, we exist because Vodafone has 400+ million customers around the world and we need to provide these customers with the most innovative and competitive international services available in the market.

It is therefore extremely important for us to manage the scale and reach from the physical infrastructure that we already have. This is a significant challenge in itself and we need to make sure we get this right first before we expand our wholesale offering outside of the Vodafone Group.

Consequently, our thinking and strategy is impacted by this differentiator. When we look at innovation for example, our primary focus is about creating new services and applications for Vodafone’s customers on all continents.

If we are able to do this successfully, we will automatically be in a strong position to offer leading edge wholesale services to customers outside of the Vodafone Group as well. Our business drivers are therefore different than the pure wholesale players who pour a lot of money into what will be the next great wholesale product offering.

Additionally, because of the assets we have acquired over the years through our different M&A activities, we are in a very privileged position and will be able to become a formidable carrier. We are the largest aggregator of international voice in the world right now, with over 55 billion minutes of international traffic when you add the traffic from all our Operating Companies.

In addition, through the Cable&Wireless Worldwide subsea cable capacity we acquired, we are in the top five in the world in terms of global connectivity and reach. When it comes to local access, we are either the second or third largest provider of local access fibre in 11 countries.

Finally, in terms of data, when we aggregate our 400+ million mobile subscribers data traffic under the Vodafone global Internet backbone (AS1273), this should put us in the the top 5 IP companies. So we feel confident that we will prosper, not only because of our scale, but also because we can play in all of these segments and have succeeded in creating a broad portfolio of wholesale solutions in a very short time span.


What are VCS’ expansion plans in the next year and how does it see its role in the wholesale environment evolving?
As mentioned earlier, we exist for the delivery of international services to our customers and this is what we will focus on in the coming year. Therefore, one of the things we have been working on is to support Vodafone’s expansion into the Americas, partly through our MVNO, supporting Multi-National customers, scheduled to launch late fall of 2015.

Product-wise, we will be focusing primarily in three areas. The first one is intelligent routing. We will aim to develop a global intelligent routing platform which will take the aggregated voice traffic from our 26 Operating Companies to manage it through the platform as one. This will give our customers a single point of entry to Vodafone’s voice traffic and destinations.

The second one is SMS, which can be broken down into what we call Vodafone SMS Firewall and Vodafone SMS Hubbing. Our SMS Firewall will protect Vodafone from fraud, and enable us to provide a high quality service for A2P (Application to Person) SMS traffic.

Furthermore, our Vodafone SMS Hub will ensure that we can commercialise an SMS transit product, making it available for mobile operators and to other SMS providers, as a single route into Vodafone. These two initiatives should be operational by the end of Q1 2015.

The last one is our Vodafone IPX, which we are deploying on a global level. It is operational today, but we are targeting to expand it to connect 100 LTE operators, preferably directly, by the end of Q1 2015.


What in your opinion are the key trends and challenges which wholesalers will face going forward?
I think that in the near future one of the key trends will be the consolidation of medium-size wholesalers, as they are under financial pressure today more than ever. Most of their portfolios are heavily focused on only one or two pipelines and niches (often voice) and they therefore have few avenues to weather the storm. Also, organisations like ours entering the market is causing disruption.

When we look at the challenges, I think the constant diversity that is taking place in the market is a great challenge. There will be hundreds of new companies that will present themselves in our space this year and we need to adapt and ask ourselves how we can serve these companies. I am a firm believer in running towards the new disruptive business ideas and technologies, versus trying to defend against them. They will force us to adapt and that constant change is pretty exhilarating.

On the other hand, you should not provide services only because they are sexy or cutting edge. You need to follow the cash, and for some time to come, this will mean to be able to balance the old with the new, for example supporting traditional voice while launching more innovative IP data services.

Read full portfolio of CEO interviews - The new wholesale market: Shaken and Stirred»

About the Author:

Isabelle Paradis

Isabelle Paradis, President of HOT TELECOM is an international telecoms expert, with over 20 years working experience in the Americas, Europe, Asia and Africa.

HOT TELECOM has been serving global operators, governments, equipment vendors and telecom investors for over 10 years, providing leading edge market research and consulting services to industry leaders around the globe.

For more information on our HOT INTERVIEWS program, please contact Isabelle Paradis at: paradis@hottelecom.com or at +1 514 270 1636