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The Rise of the NUVOs

If you’ve never heard of a NUVO (pronounced “new-vo”), don’t worry — it’s a new term that I’ve coined, after several drafts and many options.  NUVO stands for  Network Unaffiliated Virtual Operator.    NUVOs are service providers, in a way, similar to MVNOs (Mobile Virtual Network Operators), except that MVNOs provide services on specific mobile operators’ networks.  Examples of USA MVNOs include Virgin Mobile (operates on Sprint’s network), 7-Eleven Speak Out (operators on AT&T and Sprint’s networks), or Boost Mobile (operates on Sprint’s former Nextel iDEN network).  

NUVOs are different in that they are not affiliated (e.g. Unaffiliated) with any specific operator; instead, they provide basic services such as Voice, SMS, MMS, as well as various other services over any network — mobile or fixed.   If you’ve kept up with this industry, you probably know where I’m going with this.   NUVOs are service providers like Skype, Google Voice, Casabi, and many others.   Each of these provide some of the equivalent of basic mobile operator services, but with a network portability that enables them to provide these services, via IP, on a mobile operator’s data network, a local WiFi hotspot, or really, any fixed broadband network, through any IP-enabled device (PC, mobile phone, gaming console, set-top box, DVR, tablet, etc).   One of the common attributes of the NUVOs is that their services requires a new E.164 style phone number.  For example, Skype, can provide numbers in over 25 countries (called an “Online Number” or SkypeIn™).  Many others, have only recently launched and provide phone numbers in just one country, but it is likely that almost  all are planning to expand beyond their home country.   The ITU now supports +882 and +883 as a catch-all for telephone services not dedicated to a single country.  Some allow subscribers to map their own mobile phone number to support such services as SMS (e.g. Skype), while others support messaging with the new phone number – an additional messaging-enabled origination/destination.

While many of NUVOs provide Person to Person (voice and messaging) communications over IP, others, like Casabi are providing more cloud-like services that focus on specific target markets, but use messaging to communicate to a shared phone number.

Casabi’s CasaBlast™ “provides a complete suite of family messaging and management features that are accessible to all family members from any web connected PC, mobile phone or smartphone. CasaBlast™’s features include family messaging, a shared family calendar, family task lists and shopping lists, visual voicemail and a shared network address book.”  It also enables family members to send/receive messages from a PC or mobile device and will send out alerts to members as well.   For this to work, CasaBlast subscribers are assigned a new “family phone number” that will enable members to send and receive FamilyBlast™s, and receive voicemails alerts and calendar reminders.

Many of the incumbent mobile operators have expressed concern about the NUVO model and whether or not such service providers will cannabalize their existing voice and messaging traffic.  My answer is “it depends.”   Certainly, companies such as Skype have long been complained about by the operator community; however, in recent months, many mobile operators have partnered with Skype and find it to their advantage.   The real answer that I am seeing is that these new service providers actually expand the universe of available destinations and originations for P2P traffic — especially messaging.   While it is certainly possible to replace an incumbent voice or messaging service with some NUVO services, the reality today, is that more users are using both incumbent services (e.g. via their mobile number) and the NUVO service with their new phone number.   Still for messaging, this does remain a worry for many operators.   Should the incumbent operator simply allow a service provider who can provide SMS to cannabalize his own SMS traffic?   It’s not for me to say, but I will note that messaging technology itself is evolving and “traditional” operators, both mobile and fixed, do have an advantage over the NUVOs.   They do own the network itself and with that, their advantage is that they have the ability to provide more network-specific details such as presence as well as geo-location.   Rather than compete with the NUVO, the incumbent network provider could partner with them to further enhance their overall offering, or offer a mix a services, that would be difficult to disengage from the underlying network.   Additionally, many NUVO messaging (and voice) services today are free or close to free.   This business model can’t last forever — NUVOs do have costs and must monetize these services; otherwise, they will not last long.

I believe that NUVOs have become a new class of operators across the globe.  Many of them, like Skype, are multi-national.   The future for all communications services will probably further evolve into network providers and service providers.  The NUVOs will certainly play a central role, if not a disruptive role, in this evolution.  But, how this plays out is certainly not clear.  Any cannabalization seen by incumbent network operators of various services can certainly offset by increased IP data usage and exclusive partnerships with the NUVOs to provide new services.  One would also expect to see a new cycle of many NUVO startups, followed by consolidation and acquisitions.  In fact, the cycle has already begun.   Again, refer to Skype, Google Voice (created by the Google acquisition of GrandCentral), with much more likely to come.  I wouldn’t be a bit surprised to see Apple create a NUVO type ecosystem, going forward.   There is certainly no rule to say that a NUVO can’t also have its own devices.

This a new world in telecommunications.  The NUVO ecosystem is expanding and while this gives many more choices to the consumer, it will also generate a ton of questions and debate for the industry as a whole.  Overall, my view is that NUVOs will be good for the industry.  They will spur innovation, competition and investment and the industry as a whole should be the better for it.   At minimum, it should make for an interesting decade.

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