Double Interview: Nexmo Bandwidth Talk Strategy in an API-Driven World

Greg Bates
Jun. 20 2013, 08:00AM EDT

Bandwidth's SMPP-based SMS will be used to seamlessly connect with carriers in the U.S. According to the press release, Nexmo has become a new wholesale SMS customer using using short message peer-to-peer (SMPP) protocol. In separate email interviews I talked about this with Steve Leonard, EVP and GM at Bandwidth, and then with Nexmo's CEO and co-founder Tony Jamous. First, the interview with Bandwidth.

[caption id="attachment_55770" align="aligncenter" width="600" caption="Part of an info graphic from Bandwidth"][/caption]

What prompted you to support SMPP?

Steve Leonard, EVP and GM at Bandwidth: As a wholesale VoIP provider, we grew up on SIP because that's what our customers required.  Now as the lines between wireline, VoIP and wireless continue to blur, a growing percentage of our customers come to us from more of a wireless background.  When thinking about texting solutions an helping customers cross the wireless to wireline divide, our support of SMPP was an obvious extension for our SMS portfolio.  Now customers like Nexmo that rely on SMPP and are not interested in building out SIP infrastructure can more readily bridge the gap.

Strategically, what opportunities are available to you now that you offer SMPP support?

SL: Over the top (OTT) messaging services are on the rise.  Wireless carriers looking to leverage their text messaging experience and customer base to expand into the OTT space represent a segment we are very interested in pursuing.  This move gives us the ability to present them a solution that is easy for them to consume and fits in well to their existing procedures and infrastructure.

I'm curious to hear who you see as your direct competitors? Is SMPP support a differentiator or a necessary step to stay competitive?

SL: Part of the strength of the Bandwidth SMS Service is that is part of a much broader set of communication products.  Our messaging customers might only participate in our SMS service--or they might also use of for voice calling and 9-1-1.  Our breath of product and massive footprint give use solid footing from which to compete.  There really only are a handful of nationwide wholesale providers.  The addition of SMPP opens our doors to another set of potential customers that may have been stuck with an offering that had fewer options and room for expansion.

You're now working with Nexmo. APIs are offering Nexmo and Bandwidth a business opportunity that likely could not have existed in the past. I'd be curious to hear not only about the technical side of the equation, but what is the business strategy that came into play due to the API?

SL: Recently we conducted a survey of wholesale telecom buyers and were very interested to learn that they, as a group—and we are talking a good number of traditional telecom providers here—cited access to APIs as a table stakes component they expect to get from their wholesale provider.  If a certain wholesale provider does not offer APIs customers indicated they would look elsewhere.  The fact is, they are very easy to work with and let our customers stay out of the telecom weeds so they can focus on their end users.  APIs are the new normal and we think we can be very competitive in an API-driven telecom world.

First, we made a strategic decision that all of our interfaces in our new portal are via API, even our internal support teams access via API.  This ensures that we will develop to APIs as our first platform.

This method also brings customers deeper into the development process as collaborators, increasing the velocity and effectiveness of development.  Even better, APIs bring us into our customer’s supply chain in a way that enables us to become frictionless.

All of these things combine to continue to drive interaction costs down.  As we can push interaction costs towards zero we build substantial advantages over the competition.

I see a list of your other clients--my own daughter turned her iPod into a cell phone using Pinger, for example. How is Nexmo a fit with your stable--and a challenge for you?

Nexmo is really a poster child example of the kind of customers we work with.  They are looking to bring innovation into the telecom industry, frustrated with available alternatives and un-interested in getting into telecom's weeds.  They represent a new breed of service provider who, when they see a telephone number, the see much, much more than simply the ability to sell dial tone.  Bandwidth is a telecom company that thinks like a software developer.  We bring our base of experience to hammer telecom functionality into readily usable APIs so our customers can focus on their end user's experience.  Far from being a challenge, we welcome the ability to work with anyone looking to do something new in the telecom space.

Some of your customers compete directly with each other. Nexmo looks set to take on Twilio, for example. Bandwidth looks like a necessary weapon in their arsenals. How does it help them compete?

Recently, a customer of our said to us, "We realized all roads end with Bandwidth so we figured we better start talking with you from now."  All joking aside, we have a massive footprint and are working with well-known providers across the industry, covering traditional telecom all the way through to innovators like Nexmo and Pinger.  These customers come to us because we help take the complexity of out telecom so they can focus on more revenue generating activities.  That's how we become a necessary weapon in their arsenal.

Thanks, Steve.

Now to our interview with Nexmo:

What's the business strategy that working with Bandwidth gives you?

Tony Jamous, CEO and Co-Founder at Nexmo: Bandwidth is a carrier in the US. They help us fill some reach gaps in the market.

What type of business are your clients and how do they use your API? Take Air BnB--most readers are familiar with it. How do they use you?

TJ: Our clients range from large e-commerce businesses such as Airbnb, who use it for two-way communication with host and guest, to major messaging apps such as Line, Viber, ICQ...but we also supply the wholesale markets and most aggregators and reseller have traffic with us.

I see you compete with Twilio. What do you offer that they don't and how can you win?

TJ: We are lower in the value chain, as close as possible to carriers around the world. Our APIs (we don't do voice) are very similar and are as easy as Twilio. But our model is more suited for large volume applications. That being said, developers are welcome to have some fun with the real thing.We also have the largest inbound SMS reach in the world (25 countries) whereas Twilio only has 3.

Tell me more about the Bandwidth partnership; it allows you to deliver SMS without building out SMPP infrastructure. Without Bandwidth, would your move into the US market even be possible?

TJ: We are the SMPP experts, we have 100's of binds running on SMPP around the world. We connect 2 per week. Bandwidth did not support SMPP and wanted us to connect via SIP, which is a hack with regards to international messaging protocols. SMPP is the standard way within the carrier space and it is unlikely to change soon.

What's the biggest opportunity you are focused on right now?

TJ:

- Deploying more carrier connections around the world

- Adding more inbound countries for SMS

- Our USSD API in beta is changing the way two way messaging applications run globally. You can learn more on labs.nexmo.com

Thanks, Tony.

Greg Bates A writer for Programmableweb since 2012, Greg is a freelance writer and a maniacal editor of dissertations and term papers. - Follow me on Google+

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