There was a fair amount of news yesterday in the world of legacy telecom vendors. Boingo was taken private. Twilio acquired a stake in Syniverse. And MobiTV filed for bankruptcy. Each of these stories merit a post on their own, but we found that the coincidence of all three breaking on the same day tells a bigger story.
Boingo is really a quasi cell tower company, providing site access for Wi-Fi and cellular base stations. The fact that everyone still thinks of them as the Airport Wi-Fi company should be a clue that they have not handled the transition to 5G (or 4G for that matter) particularly well. Syniverse provides networking services buried deep inside telecom , connecting all the world’s SMS messages. They were acquired by private equity close to a decade ago, and have struggled to alter course as the world now uses a million other methods to send messages. MobiTV provided a streaming video service which telecom operators brand as their own and pre-install on phones. Does that mean they compete with Netflix? Yes, which sums up their fate fairly well.
We have had professional relationships with all three companies. We were among the first covering analysts on Boingo’s IPO. We attempted and failed to be the same with MobiTV. And we have known Syniverse across a few avenues over the years.
At one point, all three companies offered incredibly advanced technology. Boingo rode the wave of early smartphone adoption. In the late 2000’s when everyone got a smartphone and entirely swamped the cellular networks, Boingo provided reliable coverage to a data hungry world. Syniverse literally connects about half the world’s text messages. Before all the apps, this was a huge amount of traffic, it is still does, but SMS is much smaller share of the total. The fact that (almost) no one ever complains about their text messages getting through is testimony to their networking skills. And MobiTV once pushed the boundaries on video compression, streaming pretty good video quality over 3G (and even 2G for that matter) networks.
But the world has moved on. Or more precisely, the way we build networks has changed. The era of purpose-built telecom gear and networks is fading. Most of the world uses the Internet now for most of its connections. This was not always the case. In many of our living memories, there was a time when TV broadcasts used one form of networks, banks another, big corporates their own flavors. The miracle of the Internet was that all the low-level, messy bits could all be handled by a common set of networking tools (e.g. HTTP, IP). And while the vestiges of the old networks still linger in pockets (looking at you Banks), in terms of large scale commercial networking, the only stand-alone industry left is telecom. The telco operators clung on to their purpose-built gear for some good reasons and a lot of inertia. Telecom gear tends to be much more reliable, none of this “best efforts” networking that run the Internet, and this gear still sets the bar for volume. But for the most, the Internet gear has caught up. Some of this gap was closed with Moore’s Law and faster networks, and some of it was closed by contorting networking protocols into some unnatural acts. The telecom equipment makers will likely stick around for a while, but will need to change a lot (looking at you Nokia and Ericsson).
We think of yesterday’s news as likely to be merely the opening salvo in a big transition for this corner of the network. These companies are not going away. Boingo has been acquired by a company more tightly focused on building out cell sites, especially small cells. Syniverse is not being entirely acquired. Twilio is likely one of its largest customers and likely acquired a minority stake to ensure the viability of a major supplier. The reports are that Syniverse will go public later this year, but we imagine there are more corporate changes in store as the company prepares for some new future. We do not know what will happen with MobiTV, there are probably some value assets left inside that others can make use of, not least its IP. So they will all live on in some form, but they are being force marched into the future. They will not be the lest telecom vendors to encounter this fate.