Truphone MVNO deal with Vodafone starts roaming challenge for operators
Geraldine Wilson: We’ve always wanted to be a
phone provider in our own right. The first two countries
are the UK and the US, but others are on her target list
How much are you paying for international phone calls? This is a question that could be asked of most people, from backpacking students to global business leaders — unless the businesses they lead are making money from mobile roaming.
If you’re in the mobile business, and making good sums from people roaming onto your network, you need to know about Geraldine Wilson, CEO of venture capital-backed Truphone. It’s her mission to slash mobile roaming charges.
“We’re completely focused on people with international lifestyles,” says Wilson, a former executive with Vodafone and Yahoo!, who joined Truphone in October 2008. “People use us for free or low-cost international calls.”
The company is backed by a number of VC investors, including Eden Ventures, which funded Apertio in 2002 and sold it to Nokia Siemens Networks for £242 million in 2008. Previous successes of partners in Eden include Cramer Systems, bought by Amdocs in 2006 for $425 million. Truphone’s backers have provided around £39 million over the past four years, says Wilson.
The company started by providing an application that allowed people to make voice over IP calls over wifi from suitably equipped phones, cutting out normal mobile call costs, particularly when roaming internationally.
“The application can be downloaded onto a number of smartphones, including the iPhone, the BlackBerry and Android phones. We were the first VoIP provider on the Nexus One phone from Google.”
Customers in 140 countries
This business has expanded as wifi becomes more and more common on mobile phones. “We now have customers in 140 countries,” adds Wilson, who joined the company after a spell as the general manager of Yahoo! Mobile Europe.
But the company has now built an all-mobile platform, and it is on the way to becoming an international mobile virtual network operator.
This new service, called Truphone Local Anywhere, has started off with an MVNO agreement in the UK with Vodafone. But Wilson’s aim is to be more than an infrastructure-free MVNO.
“We’ve always wanted to be a phone provider in our own right,” says Wilson. “Now we’ve built a single platform.” That includes its own home location register, supplied by NSN. “We have everything except the radio network. The magic source is how we put them all together.”
But what does it actually do? The idea of Truphone Local Anywhere is that it will provide consumers with a range of local numbers in different countries — and access to local rates for calls, texts and data on a single SIM card.
“The first two countries we’re operating in are the UK and the US,” says Wilson. “So an American living in London can have a US number and a UK number on their SIM card.” And so colleagues, friends and relatives in the US can call at national US rates, not international rates.
That implies Truphone also has an MVNO deal with a US carrier. Yes, says Wilson. “We haven’t revealed who, yet. We’ll do that in a couple of months. It’s part of a bigger story. We’re doing something else as well. We’re not your normal MVNO: we have a bigger play in the US.”
Apart from the mysterious US connection — which has to be with a GSM player, because of the importance of the SIM card. That means AT&T or T-Mobile are the likeliest partners, as Sprint and Verizon are both SIM-free CDMA operators, but Wilson would give no hint.
After that, Truphone has identified “more than 20 countries around the world” as targets for further MVNO deals. “We can manage all these multiple identities, so when you travel to any Truphone country you can enjoy local rates.”
Customers are not automatically provided with a range of international numbers. “When you get off the plane in the US you get a text message asking if you want a local number and local rates,” says Wilson. “You can also choose a US number before you leave.”
Other countries on her target list include Australia and Hong Kong, “and South Africa for the World Cup”, which implies that something may happen before the football championships start on June 11 2010. “We’re very close to signing some deals, and some are signed but not announced.”
Places include “obvious financial centres, plus holiday and travel destinations”. Truphone will be making a pitch at people with holiday homes. “I have one in Spain,” so she has a Spanish pay-as-you-go mobile for her trips there. “I am motivated to get a deal in Spain, but we have not signed any yet.”
Truphone’s rate card says that calls to Spanish landline numbers from the UK are £0.08 a minute, compared with the normal mobile rate of around £0.35. Calls to Spanish mobiles are £0.20 from Truphone. Receiving calls is free — while regular operators charge £0.18 a minute.
The model “is as much about convenience as anything else”, Wilson notes. When you’re in a foreign country you may be willing to make calls to local numbers “but other people there will not want to call international mobile numbers”. Give them a national mobile number to call, and they’ll be happier.
Truphone will be pitching its services at six target market segments, from students and other leisure travellers, to small and large business users, and “people who travel on assignment, such as people in fashion and music, and consultants”.
She’s looking for “people who are spending thousands a month” in business or expatriates “who are spending up to £100 a month”, she adds. “They are the high spenders.”
At first, based on the two existing MVNO deals, “we’re targeting multinational companies in the UK and the US”, she says. She thinks the proposition will be attractive for “the top 20% of users in the UK and the top 10% in the US”.
The offer includes the full range of services, including voice, SMS and data. “Data is a very big part of the proposition,” says Wilson. Truphone charges £0.50 a megabyte for data, compared with £1.50 charged by regular mobile companies.
But, unlike the earlier version of the Truphone service, which required wifi-equipped smartphones, the Local Anywhere service can be operated from any unlocked GSM phone, “right down to a standard 2G Nokia”, she says.
“All of the clever stuff is in the cloud. We pretty much have a number for every country on the planet. We can manage your profile in the cloud.”
Has Truphone lined up partnerships with operators around the world? “We’re open for business for partnerships with operators,” she says. “We’re on a mission to cover 25 countries this year and next.
The next deal to be announced will be “in a major territory with a major operator”, says Wilson. At the moment Truphone appears to be talking to individual national companies, because MVNO deals are quicker to do on a national basis. “We are talking to some regional groups, but speed is of the essence,” Wilson says. “We’ve designed the whole system to be scalable — we like to go into a country and meet all the available operators. The approach differs country by country.”
It’s complex, though, because Truphone needs complex technology to achieve its goal. “The deals we’ve not announced yet all fit the technical solution — and they’re pretty light touch for the operators.”
The company was ready to sign one deal — again, no details — but decided against because the technical interface was too complex. “The operator took another look and can now do it with our technical solution.”
It’s clearly early days for Truphone, and it’s impossible to say how the company will perform until it starts building up an international portfolio of MVNO partners and starts gathering customers in significant numbers.
It has a sizeable technical team — with more than 140 staff in all, across a number of countries, including Australia, Portugal and Singapore.
One concern must be that global operators, such as Orange, Telefónica or Vodafone, could respond quickly to an international competitive challenge by slashing their roaming rates — by offering, for example, something close to Zain’s One Network, which means most of its customers in Africa and the Middle East pay a standard rate for making and receiving calls, even when they’re travelling.
But Wilson is optimistic. “We have the chance to be something really exciting,” she says: “the chance to be the first global mobile operator. I can’t think of any more exciting job on the planet.” GTB