Interview with Leigh Smith, Managing Director, World Technology Labs

As an early player in the market, how do you view the pace of VoIP market development globally over the last ten years?

In the late nineties, VoIP was used inside carrier networks for trunking. So it was in a way hidden from the consumers. The consumer is now getting aware of the technology through Voice-over-Broadband type applications. So that is one major development. As an early player in this market, we expected the market to develop fast. It did not. But our expectations meant that we were ahead of the game.

Larger vendors have bulk of VoIP business. What can new and emerging startups learn from your experience in order to compete with legacy vendors like Nortel and Alcatel?

The startups need to carefully identify the specific initial requirements of the particular market they are going after. They need to stay close to the customers. The advantage smaller startups have is that they can be more responsive. They can make their product match  customer requirements perhaps a bit better than the bigger companies. You need to be listening a lot to pick up things. That is how you can differentiate yourself from the big companies. And as you are smaller in size you can probably meet requirements faster than the larger vendors.

Chinese vendors like Huawei and ZTE are giving a tough time to established telecom vendors. How do you see these Chinese vendors competing in the future?

I am sure they will continue to compete. They are unlikely to disappear. Because of their home market they can come up with some aggressive pricing. However, I don’t think that is the whole story. We find an enormous level of service element that carriers are interested in. Those are the areas of differentiation.

All the first generation VoIP vendors such as Clarent, Vocaltec, Neura and others have been acquired. Why have we not seen a first generation VoIP startup emerging in this space?

Yes Clarent went bankrupt and Vocaltec was liquidated into some partner in Israel. Nuera, I would not call them a VoIP startup. They were in Voice over satellite and Frame Relay type of business before they entered VoIP. I think there are some VoIP vendors from that period who have prospered. Quintum and Sysmaster are some examples. With any new technology wave you see startups coming in. Some of them will strengthen their roots. They will grow and they will thrive. Some of them are perfectly happy to be acquired and if you are an established company in telecoms area one of the quickest way for you to get some VoIP products may be to go out and acquire.

With every new wave of technology, companies that are already there sometimes take the shortcut of buying the new companies instead of building the new product line in-house. However to answer your question as to why not many first generation VoIP companied did not establish itself, I think the Internet bubble has a lot to do with that. The over-investment and the subsequent financial trouble inside these startups contributed a great deal in the lack of startups establishing themselves through the downturn.

What niche have you carved out for yourself within VoIP market where we can say that WTL is actually a leader?

We have an extremely good VoIP-TDM switch and an all-in-one box solution which is quiet unique in the market place. We have a completely flexible architecture. It really doesn’t matter if your traffic is all TDM today and all VoIP tomorrow or any combination in between. We can cater for carriers who are in a migration phase. That phase has being going on for 5 years and it will go on for probably ten more. So carriers need to be positioned with equipment that can be totally flexible to reflect that. Another area where we feel that we have a competitive edge is that our VoIP solution works extremely well as a satellite.

In terms of geography, where do you do most of your business?

The company was originally formed to cash the opportunity created by liberalization of the Western European telecom market. That is where we started the business. That is the main market where we have been operating in. We have also spread out into North Africa and other African countries. And we are also exploring opportunities in Turkey, Middle East, and the Central European region as well. These are basically the areas that we are focusing on today.

Why these areas in particular?

The reason that we focus on these areas is that these countries are also in the process of being liberalized. United Arab Emirates is probably going to be liberalized this year. Within the next two years most of the countries in the Middle East will be liberalized. We are also seeing the same thing happening in different African countries. We have got business in countries like Tunisia, and Algeria. Morocco has not been liberalized yet but there are reports that it is going to happen in the near future.

How important is VoIP in your overall telecom solutions business?

It is absolutely an integral part of what we do. I don’t think we sell any product these days which comes without a VoIP element in it. Some times it is completely 100% VoIP; sometimes it is just an element.

Can you brief us about your VoIP over Wi-Fi deployments in Africa and the subscriber take up there?

That has been a very interesting area for us and we have a number of projects in that area. VoIP over Wi-Fi has been implemented there in areas like University campuses, mining compounds, government areas and even residential areas. Other thing we have done is VoIP over Fixed Wireless. That is a very interesting application because it gives you the opportunity to provide coverage to large areas very quickly and very cost effectively. We did a project in one of the cities in Eastern Nigeria. This project enables the service providers there to get a reasonable coverage for residential and business customers who need to get the exchange and the full service for a quarter of million dollars, which is significantly cheaper than they have been able to do any other way. It is, therefore, a great solution for dealing with the problem of low teledensity in Africa and other places, much quicker and cheaper to deploy as well if you don’t have to put cable in every residential place.

In terms of the number of subscribers, we have typically tens of thousands of subscribers using these systems rather than millions. I know the operators we have supplied are typically serving tens of thousands of subscribers.

Can you brief us about your VoIP over Satellite solution?

We have a patented technology for carrying multiple VoIP calls. The more calls you carry the more efficient it becomes. It can be used where the bandwidth is expensive or limited which is the case with satellite communications. Through cost savings, we can make a return on investment in 3 to 6 months normally. It is obviously valuable for all sorts of operators who are using significant satellite capacity in their network and that normally means Middle East, Africa, sometimes Pakistan, India, Sri Lanka and some other parts of Asia.

Can you tell us a bit about your patented technology and how this can save bandwidth for a service provider?

The principle of NOP, our patented technology, is to more efficiently carry multiple VoIP calls, saving bandwidth without loosing quality. In a standard VoIP stream, whether it is H.323 or SIP, every voice sample is carried in its own IP packet. That leads to an awful lot of unnecessary overhead. We take the simultaneous voice sample from many different calls - 20, 50, even 100 different calls - that are going on at the same time on the same route. Since the voice sample is actually very tiny in terms of data, we pack all those voice samples into a single super packet and that means we save - 20, or 50 or a 100 -unnecessary IP packetisation overhead. That leads to enormous efficiency savings. At the remote end we reinsert them for onward transmission. We just strip the full headers and replace them with micro headers.

WTL has been a diversified player offering several telecom products. Why have you chosen that business model rather than focusing on a particular solution within VoIP?

An element of our product architecture comes from a time before there was the present fragmentation of VoIP functionalities. When we started out there was no such thing as a separate media gateway and signaling gateway. We designed products that fitted a need of the time and our strategy. Our philosophy was to be a one-stop supplier therefore we included these functions within the same product range, and in some cases within the same physical product.

Now as the industry has moved on people have started to deconstruct that model. I think the business model is dictated by where we started from and also the fact that most of our customers don’t want to go buying six different products to create a solution. They want to go to one place and know that it will all work together with no integration headache.

You do not have an access product offering, whereas most of the market today is about Voice-over-Broadband services.

We decided 2 or 3 years ago that we were not going to implement Class 5 features on our product. We get requests for that. It is a natural direction for some of our customers to add Class 5 features to their current service offerings. That is one area that we have decided not to address directly. The way we are addressing it is to partner with companies that specialise in that area.

Can you share with us the project details of cases where you are doing some thing truly unique and cutting edge?

Yes, one example I can give you is the project we are working on with the European Space Agency. This is to make NOP, our bandwidth saving technology, particularly tuned to work with DVB, RCF satellite services. The DVB-RCS standard is a byproduct of the broadcasting industry. DVB (Digital Video Broadcast) equipment is readily available at low cost and it has been used as a satellite broadband service as well, which again addresses the need in many countries where they don’t have a very well established physical cable network. We will add the VoIP element here which will be used in a very cost effective way. And you can deploy VoIP services very quickly.

We are done with phase 1 of this development and we are working now on the phase 2. When we complete the project and we have the DVB-RCS compliance, we will be the only recognized vendor within the European Space Agency group to be able to offer VoIP service to satellite operators.

Another unique example is our resilient SS7 solution where we are able to bring distributed MTP3 (DMPT3) and this is a capability which you don’t find in products at this level of capacity and scale.

Can you share with us cases where have you secured business while you were competing with an established vendor?

We had a recent case of winning a significant switch contract with an operator in London. We were competing against Marconi and Cisco. We were able to offer real carrier class solution at a much lower price point. We have another example of business we won with Cable and Wireless where again we were competing with Cisco, ECI and others. Our key benefit there was voice quality, SS7 support and also our NOP.

Where do you see WTL five years from now?

I think we will be an established vendor with products of choice in the SS7-to-IP area. Another scenario is that we become much more prominent in the satellite side of telecom business. VoIP over satellite area is one where we have significant technical advantages and we will see that go from strength to strength.

Overall, VoIP has an enormous part to play in addressing teledensity problems around the world. So I can see WTL helping in that regard and therefore being present in more and more parts of the world. Just looking at New York, London and Brussels is not looking at the world. You must look further than that and that is one of the things that we will be doing.