Interview with Todd Simpson, CEO, Ditech Networks
What specific challenges will you address as the new CEO of Ditech Networks? What will be the thrust areas?
The biggest challenge we have is to achieve wide deployment of our technology within the tier 1 networks. We already have a lot of traction with the tier 1 service providers. The challenge is to achieve wider deployments, particularly with the tier 1 mobile providers.
What products and geographies will you be pushing more?
For us, the mobile market place is significantly larger than VoIP marketplace. So our primary focus is to sell voice quality solutions into the mobile networks. And we do that worldwide. We do have traction in the area of VoIP but it is a smaller piece of our overall business, and we are for now targeting the North American market for that product line.
VoIP industry has been talking about better-than-TDM voice quality for over a decade now. Why do we still have quality issues with VoIP? What is it that service providers are not doing right?
I agree that VoIP has potential to become a much better alternative to TDM in terms of voice quality. But we all underestimated the chaotic nature of the IP networks even though we provision our networks for quality of service and dedicated bandwidth. The network is just so complex that it is very difficult to achieve consistent QoS end to end. So while you could a great job at the core but when you get to access links it is very hard to control QoS to the end point. The other issue is that a lot of impairments to voice quality come from outside the network. So they are there even before the call hits the end point. Those are things like noise, acoustic echo, etc.
The industry has to look at quality holistically. Provisioning your networks as much as you can and then dynamically managing your network as issues arise, and at the same time acknowledging that some of the quality issues come from outside your network and therefore you still have to account for those factors.
Can you perhaps explain a couple of enhancements your solution enables?
Let me give you an example on the mobile side and one on the VoIP side. On the mobile side, more and more people are starting to use handsfree feature, along with Bluetooth headset with their phones. Some of these headsets do a good job with managing noise and canceling acoustic echo. But some of them are really bad. Our product recognizes and eliminates both the level of noise from the surrounding environment and acoustic echo caused by feedback between your Bluetooth headset and the handset. Out algorithms to do that are far advanced and efficient than what our competitors are able to offer.
Within VoIP space we have technology that can compensate for delay, jitter, and dropped packets in the IP network. With our solution even if there is up to 10% packet loss, we can intelligently re-insert audio from dropped packets in a call and the user will not notice. It does not just replace dropped packets with the same packet but it is smart enough to realize what should have been in there.
What is your official company position using off the shelf hardware such as ATCA instead of proprietary hardware?
We very much support using technology like ATCA when we can. Our PVP is built around an ATCA platform. Where we build custom hardware specifically is where we need to dedicate more horse power to the problems.
QoS enhancement product is not perceived as the core piece of equipment in the telecom network. It is more of a luxury than need. Does that make it hard to sell such products?
We try to focus on service providers that are trying to differentiate their services in terms of quality. That does limit the number of service providers you can target. What we find though is that as industry matures differentiation moves toward quality. There are also markets such as conferencing and call center applications where quality is important upfront.
If we look at the competitive carriers, their priorities are to replicate the incumbent’s offering. And in order to differentiate their services they either have an option to add new services or to deploy a solution such as yours. What is your experience in terms of what these service providers would rather do?
Our experience is that there is a mix. If they are going after the enterprise market where the level of quality is demanded then they would be looking seriously at the voice quality solution. There is also a cost attached to sub-standard voice quality and that is churn. For a startup it is more economical to invest in voice quality solution and retain the customers than to let the customer churn due to quality issues.
Is line reduction of the incumbents therefore one of the main market drivers for your technology?
Yes. And those who cancel their landlines typically subscribe to mobile services. They have higher quality expectations. It is therefore important for mobile carriers to invest in the voice quality technology. So there is a snowball effect there and line reduction in general is a big driver for our technology.
Your business model is selling direct to service providers and you sell systems rather then card level technology. Have you ever explored the OEM type model going down from system level to card level?
Historically we have not addressed that market. But we will be doing more of that in the future. We are starting to explore other channels such as OEM right now.
Would that be for both voice quality and session border controller solutions?
Yes, both. We are early in looking for that kind of channel development.
Couple of questions related to session border controller market. You must have noticed a bit of slowdown in that market over the past year. Could it be due to the general slowdown in VoIP market right now or could we also attribute it to the fact that switch makers like Nortel and Sonus have their own embedded SBC solutions now?
It is probably a combination of both. The access VoIP deployments have not grown as much as we had expected five years ago although it is still accelerating. Obviously Acme Packet has done a great job penetrating at the top. And as you said Sonus and Cisco are coming in with their own embedded SBC. So both factors are contributing to shaping the standalone SBC equipment market, and this market will be looking a lot different a couple of years from now as a result.
There is a general slowdown in the telecom market especially in North America. What sort of factors are keeping it from picking up?
I think there is still a lot of confusion around the access technologies, WiMAX, WiFi, FMC, 4G technologies. It is going to take a while to decide on the primary path. That exploratory work as opposed to deployment work is what is contributing to the apparent slowdown right now. There has also been some M&A in the industry and the companies are settling down with their new product strategies.
