Publication Date: 05 Sep 2013 Product code: TE007-000702 Pauline Trotter
SUMMARY In a nutshell Truphone started out as a mobile VoIP player, but is mostly known as a specialist that has concentrated on helping multinational corporations (MNCs) reduce the cost of international roaming. It is now positioned more generally as a business mobile service provider, with its messaging built around its assertion that it provides a truly international service, whereas its mobile operator competitors deliver joined-up national services. Truphone has had some success in winning business with multinationals, and, although it has been slow to build up its operations in the past, it has survived in a market where many others have failed. It has recently expanded its international service to include 66 countries, and is also looking to launch a service integrating VoIP and cellular services. It has some interesting technology behind its products, and Ovum thinks its approach could have wider implications. Ovum view Truphone is a disruptive player in the corporate mobile market and a thorn in the side of the major mobile operator groups. It has focused on the single biggest mobility issue facing companies with significant international operations: the need to control the cost of mobile roaming. And its service offers good value to companies with substantial international business travel, particularly where their activities match its footprint. Recently, Truphone's strategy has evolved, and it is now positioned more generally as a business mobile service provider. This reflects the fact that its customers benefit from the ability to promote an international presence via the Truphone service rather than just save costs on roaming. Indeed, Truphone claims that many of its customers use its services domestically as well as internationally. The requirement for international mobile services is not going to go away, and roaming traffic will continue to grow with the proliferation of smartphones. However, spending patterns could well shift geographically. Truphone recognizes this trend and with the launch of Truphone World it is challenging the major European mobile operators. Not only is it providing immediate competition in what is left of the European roaming market, but it is also threatening to compete with them in the still-lucrative international roaming markets in the major business centers beyond Europe. Truphone has some good products and technology. Its future growth will depend on its ability to raise cash to fund its ambitious expansion plans, as well as its ability to forge MVNO agreements with mobile operators in new markets. It will need to continue to build its capability to support demanding customers in the MNC segment, and if it wishes to expand beyond MNCs it will also need to address channel issues. It would make sense for Truphone to partner more widely. It should consider bringing the VoIP-cellular integration technology behind Truphone+ to a major OTT voice provider. With the trend to BYOD in enterprises, this could be complemented by the addition of identity-management capabilities. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 2
RECOMMENDATIONS Why put Truphone on your radar? Truphone is best known for its international mobile services, which it has targeted at companies with significant international operations, particularly those looking to avoid high roaming charges when traveling and those looking to project their international presence. Truphone has some interesting technology in Truphone+ and it would not be a huge leap to deploy this in another context, for example with a major OTT voice player. Truphone is already taking steps to partner more widely beyond its MNO agreements. It is working with telecoms expense management (TEM) and wireless mobility management (WMM) providers and exploring relationships with mobile device management (MDM) vendors. However, there could be more traction in partnerships with major OTT voice providers and other technology vendors in the managed mobility market. EVALUATION Background Truphone was founded in the UK in 2006 by James Tagg (now Truphone CTO), who developed what is claimed to be the first VoIP application for mobile devices. Truphone has continued to support and develop the VoIP app, but its main product now is its SIM-based international business mobile service, which it has positioned against mobile operators' roaming offers for enterprises. With VC funding, including a 70m investment from Roman Abramovich's investment company, Truphone has expanded and now has operations in eight countries: the UK, the Netherlands, Germany, Australia, Hong Kong, Poland, Spain, and the US, although it offers services globally. It has survived in a global roaming market in which many other players have failed to make an impact. Truphone recently extended its mobile service to 66 markets, which it refers to as Truphone World; it also continues to develop its technologies, and plans to launch a new service, Truphone+. Truphone has grown rapidly in recent months, doubling its business in terms of connections in three successive quarters. It now has approximately 750 staff, including a sales capability of approximately 120, and plans to double in size before the end of 2014. The company has 14 offices across its footprint. It owns a network and partners with others for radio towers, and has MVNO agreements with local mobile operators in eight markets. Products and services Truphone offers what it describes as "the mobile network without country borders." In the past it focused on enabling businesses to manage the cost of international mobile by allowing business travelers to avoid roaming charges. Enterprises typically have one of two attitudes when it comes to staff use of mobile devices internationally. Some allow staff to behave as they do at home and just accept the high cost. Others attempt to change employee behavior by encouraging SIM swapping, using Wi-Fi hotspots, or using local prepaid SIMs, none of which are entirely successful, not least because they can result in "lost calls." Truphone's solution requires no behavior change from employees and allows them to carry one device with multiple international numbers. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 3
Truphone's service is based on dividing the world into three: the eight countries of the Truphone Zone (Australia, the UK, the Netherlands, Hong Kong, Germany, Poland, Spain, and the US), 58 additional countries within Truphone World, and everywhere else. Within the Truphone Zone all communication is considered local; Truphone has direct relationships with local mobile operators and customers can have a local number and local rates in one or all of the eight countries, as required. Users' services are extended to the additional countries within Truphone World through various tiers of agreements with different partners. These include MVNO relationships in the Truphone Zone, bilateral roaming agreements in other key countries, and sponsored roaming (indirect), which covers many countries in one agreement. What this means is that the 58 countries of Truphone World and the eight Truphone Zone countries are "in-bundle" in terms of pricing. Outside the 66 named countries, Truphone provides services, with standard roaming tariffs, to more than 220 countries and territories in total. There are three main products in Truphone s portfolio: Truphone SIM, a GSM-based product that uses standards-based SS7, a dedicated core network with points of presence around the world, Camel signaling, and SIM toolkit applications to optimize routing, thereby saving on costs and providing better quality for roaming users. Truphone App, a VoIP-based downloadable application that provides IP telephony over the top via SIP, and that works on both GSM and Wi-Fi. Truphone Mobile Recording, an additional service provided to Truphone SIM users that captures electronic communication in a secure location; this is predominantly used by banks for compliance purposes. Truphone App was the company s first product. It allows users to make app-to-app calls and calls to telephone numbers over any bearer network, in the same way that Skype does, but using SIP rather than proprietary protocols. It is available for all major mobile and desktop platforms. Truphone reports over 2 million downloads of its VoIP app, although large download numbers do not always offer an accurate indication of real market penetration. The signaling and SIM-based product, Truphone SIM, involves more infrastructure. It is now Truphone s core offering, and uses a number of different standards-based elements to create a feature-rich proposition for enterprise customers. Truphone has its own core network, with six super nodes in London, Amsterdam, Los Angeles, New York, Hong Kong, and Sydney that provide the main core network functions, registration, and call and data routing. There are also micro nodes that act as global points of presence for the routing of voice calls. In addition, the company operates a physical network with licensed spectrum using GSM technology. It enters into GSM roaming agreements and routes, and interconnects and bills as a standard GSMA member Truphone provides local numbers via a multi-imsi SIM, which enables multiple local identities and offers the best rates and quality of service to the customer through a process known as least-cost roaming. Roaming cost reduction remains an important focus for Truphone, but it is now only part of its strategy. An increasing number of its customers use its services to project an international presence by providing a local number to their contacts and customers in overseas markets. And its uses are not just international Truphone claims that many customers also use its service as their primary domestic SIM. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 4
Truphone also provides network-based mobile recording to enable financial institutions to comply with UK and US regulatory requirements. It does so using technology that it obtained through its acquisition of Obsidian Wireless in 2012. The company plans to launch a service called Truphone+, which combines some of the functionality of the two existing products. Full SIP functionality will be maintained, allowing Truphone to address the entire enterprise telephony market, including desk phones and softphones. Truphone+ will allow users to control how their caller line identification (CLI) is presented. It will also allow users of the VoIP app to be called via one of their conventional telephone numbers, and will use intelligent routing to automatically choose whether to carry a user s call over a GSM or Wi-Fi connection. Truphone s own rating engine will control the billing of calls, so it can decide how it wants to charge users for the different options, independently of what kind of bearer is used. (For example, it could follow the principle that Telefonica uses for TuGo, and deduct minutes used over Wi-Fi from bundled minutes.) Users are provided with one additional number for any country within the Truphone Zone; it is linked to a single voicemail and delivered on a single bill. They can also get an additional number for any country in the zone for an incremental fee, at very short notice. Truphone introduced shared plans in 2013, where large bundles of voice, SMS, and data can be shared between users within a company and across multiple Truphone countries. Truphone describes these schemes as "bundles without borders." Pricing is tiered, with each tier requiring a minimum number of users; there is an additional monthly charge per user. Again, home country only shared plans are available at a reduced rate, and customers can purchase add-ons of voice, SMS, and data. Shared data plans are also available. With the launch of Truphone World, the company introduced a range of much bigger bundles, anticipating greater demand with its expanded coverage. These include voice/sms/data plans for a minimum of 100, 25, or 500 users; shared data plans for a maximum of 50,100, 150, or 200 users; and new individual data plans. Truphone provides 24/7, multi-language user support in the UK, Australia, and the Philippines; all of its support is carried out in-house. The Truphone Operations Centre is based in Portugal, and houses approximately 100 engineers who proactively test, monitor, and improve network performance using patent-protected technology. The company also provides a service promise to customers, including delivery of replacement devices within two hours within the Truphone Zone. The two-hour response time is not an SLA, but it reflects Truphone's aim and its performance so far. Truphone measures the effectiveness of its customer support services and claims a Net Promoter Score (NPS) of approximately 65%. No doubt driven by anticipated growth in demand with the launch of Truphone World, the company is investing in the customer experience with a new cloud contact center solution that supports services in six languages. Truphone holds patents for a number of the enabling technologies underlying its service. These include the seamless handover from VoIP to cellular, its "co-operative" network, mobile recording, the multi-imsi SIM, presence, device provisioning, and proactive monitoring of network locations. It also works with a number of technology partners. Business model and commercial strategy Truphone targets companies with significant international operations, primarily MNCs, but also mid-sized corporates and SMEs. Its sweet spot is companies with 50% or more of their operations 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 5
within the Truphone Zone, although its secondary targets include companies with a presence in at least two of the Truphone Zone markets, increasing the potential market substantially. It does not currently target companies without operations within the Zone. Truphone has had most success in the MNC market, and counts a number of FTSE 100 and Fortune 500 companies among its customers, including three of the top five banks globally. Its approach varies somewhat by market, but it primarily uses direct sales, with the sales team of 120 split into two sub-teams: one that focuses on large companies (defined as those with more than 1,000 employees) and one that focuses on smaller companies. Truphone does not have a strongly vertical approach other than in financial services, where it often leads on its mobile recording solution. However, it does also have tailored messaging and pricing for verticals such as manufacturing, oil and gas, professional services, and transport and travel. In the US, Truphone's go-to-market approach includes partnering with TEM and WMM companies that already have relationships with large corporates and MNCs. It recently signed a distribution agreement with enterprise managed-mobility provider WidePoint Corporation, and has an agreement with BT Global Services to provide network-based mobile voice recording services for its US-based customers, mostly in the financial services segment. Truphone continues to explore relationships with other potential partners, including MDM vendors, that its sees as providing complementary services For smaller corporates Truphone tends to work with consultancies as well as smaller TEM companies, including members of the Telecoms Expense Management Industry Association (TEMIA), of which it is a member. Truphone does not currently have indirect channels to SMEs in Europe, although it does in Australia, and plans to use SME channel partners in the US. APPENDIX "On the Radar" Ovum s "On the Radar" series highlights up-and-coming companies bringing potentially disruptive ideas, products, or business models to their markets. "On the Radar" companies bear watching for their potential impact on the market for the current or future services of telcos and their suppliers. Further reading The Present and Future of Roaming Regulation in the EU, TE009-001025 (November 2013) The Regulatory Status of International Roaming, TE009-000870 (August 2012) The Future of Voice, TE011-001145 (July 2012) "The EC's roaming proposals may not be so harmful to operators," TE009-001004 (September 2013) Author Pauline Trotter, Principal Analyst, Enterprise pauline.trotter@ovum.com Jeremy Green, Principal Analyst 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 6
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