In search of the Uber for Telcos

28 Sep 2016

The telecoms industry is in an incredible state of flux – that is a given.

Revenues are down, traditional carriers are re-inventing themselves as technology companies while technology companies go OTT and are encroaching more and more on traditional telecoms revenues.

We’ve all got used to, and probably sick of, talk about disruption and disruptors.

Any new company entering the market which looks for any attention at all will instruct its public relations spinners to tout them as the latest disruptor on the block.

Please people – disruption is so 2013 or 2014!

The other description, which has rapidly become a platitude, is that this or that company is the “Uber” of the telecoms industry.

This would appear to be a difficult status to achieve, but I have to confess that I am more than a little interested in the latest company touted as the telecoms equivalent of the ride sharing juggernaut.

The origins are humble enough, but Australian start-up Velvet has come to the market with a device it calls a “hotshot,” which sits on top of existing routers with owners able to decide how much data capacity they want to share each month.

Velvet was founded in Brisbane by a young tech entrepreneur who, you guessed it, calls his company “Uber for telcos” but in this case the claim, conceptually at least, can be justified.

The company, called Velvet because its founders want to deliver a smooth experience to users, has only received one round of startup funding from the Queensland University of Technology’s BlueBox fund.

The idea is that retail customers who install the hotshot box, and who have any surplus data in their plans, can onsell that to other people. A home user can effectively create their own network, and become their own mini provider.

Just like an Uber driver turns his or her car into a taxi, so the Velvet user becomes a mini neighbourhood telco.

It is a similar concept to some solar industry start-ups, where people who have solar panels installed on their homes are able to sell their surplus electricity not back to the utility grid, but to their neighbours.

Just think about another classic disruptor AirBnB. It is not just individual home owners who are using it, the platform has spawned a new generation of property management start-ups around the world.

For Velvet, there are a few hoops to jump through, not least of all navigating the terms and conditions of the provider delivering the original internet service.

Some contracts state that technical support is not available to those who share their network, while there may also be issues around responsibility for security.

Despite this, Velvet says there has been a lot of interest. The hotspot devices are manufactured overseas and then imported back into Australia, where they will sell for around $50, which seems incredibly cheap.

The company hopes to have 500 of them up and running by the end of the year.

This, of course, is not a lot but if the concept works it could take on fast, and could have a significant impact.

The last thing telcos need right now is their own customers re-selling or gifting their bandwidth to other potential customers.

It might be a great model for the sharing economy, but it would be yet another disruption – and potentially a real one – for established telcos already under pressure.

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