

Why Twilio Will Kill AT&T - jnickhughes
http://soentrepreneurial.com/2012/01/05/why-twilio-will-kill-att/

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chronomex
This piece ignores a fundamental distinction between AT&T and Twilio.

Twilio doesn't actually move any data from here to there, physically. AT&T
will actually pick up your data _here_ and take it over _there_. They're the
ones who've done the work of laying fiber across the country and putting up
cell towers so that communications can actually happen. These things cost
money and can't happen overnight.

Twilio is a reseller. They may be a really good reseller, but they are
reselling service and a decent amount of the money paid for that service still
flows to AT&T (and the other carriers).

~~~
inkaudio
Similar to my thoughts. Twilio will not kill AT&T, the startup that will
compete with AT&T will be that startup that can provide competitive hardware
to carry data. And I think it may be in the form of quality and reliable
nationwide wi-fi. Clearwire is trying but this is a difficult task.

~~~
chronomex
Are you referring to equipment manufacturers or data communications carriers?

There are successful equipment manufacturers; my favorite is Ubiquiti
Networks. They're competing (directly) with Cisco's wifi business. Cisco's
carrier-switch side is, in turn, competing with Alcatel-Lucent, the
traditional supplier to AT&T.

As for carriers, the important pieces to the equation are bandwidth, distance,
and coverage. In the United States you need all three, because we have a lot
of people spread out over a lot of space. There are 400 million people in this
country. Traditionally each of them is connected to a telephone central
office, where the equipment lives.

You see all these little dots?
[http://en.wikipedia.org/wiki/File:Central_Office_Locations.p...](http://en.wikipedia.org/wiki/File:Central_Office_Locations.png)
Each one of those is a building with at least a few hundred (and sometimes up
to a hundred thousand) subscribers connected to it. Each building is a data
center of sorts, sitting on land that had to be bought, containing equipment
that needs maintenance occasionally, and getting power bills that need to be
paid on time.

Many of these dots, particularly the isolated ones, are served by only one
carrier, AT&T, who then leases out bandwidth to their competitors because the
federal government requires them to do so as a condition of the antitrust
settlement in 1984.

Universal service means you're connecting every last one of these dots to each
other dot, and with sufficient bandwidth to make that work. Wifi doesn't have
that kind of bandwidth, and it's not efficient anyway. The best way we
currently have to do this work is optical fiber, strung between poles or
plowed into the ground.

I'm not saying it shouldn't be done. I'm just saying that any "startup" who
goes at it will need to be well funded.

~~~
inkaudio
Data communications carriers. I agree with you, yes Wifi alone is not enough,
which is why companies like Clear/Clearwire partnered with Time Warner &
Sprint: <http://www.clear.com/about-us>. So it's just one dot. But it's an
interesting dot. Because there are literal hundreds of millions of wi-fi
enable devices that can handle all kinds of communication with the right app.
So we see the cable companies(with their optical fiber) partnering with
upstart carriers(fiber or 4G connected wifi hubs) and more establish
carries(more underground optical fiber or 4G) to make wifi ubiquitous in
cities and bring more competitions to the giants like AT&T and Verizon. In NYC
verizon is competing with Time Warner cable, so it won't surprise if time Time
Warner get's more involved with mobile(i.e.: clear).

~~~
jonah
_...to make wifi ubiquitous in cities_

As with everything it's the last 10% that takes 90% of the effort.

Or in this case the last 20-30% depending on how small you define "city".

The 2000 census found 58% of the US population living in "urbanized areas" of
over 200,000 people and and 69% in areas over 50,000. [1]

So, even if you have blanket coverage for every urban/suburban area over
50,000 population, you still have over 30% of the US population to cover. [2]

Even AT&T with its existing investment has to be compelled by law to provide
services in these areas where it is not economically viable to do so. The
"Universal Connectivity Fee" on your telephone bill helps compensate for the
losses. [3]

So, until either high-bandwidth long-range omni-directional wireless becomes
portable and energy efficient or the government requires/subsidizes universal
coverage, alternate technologies are not going to go beyond boutique
"alternatives" for urban folks.

[1]
[http://www.fhwa.dot.gov/planning/census_issues/metropolitan_...](http://www.fhwa.dot.gov/planning/census_issues/metropolitan_planning/cps2k.cfm)
[2] For example, Southwest Bell had to set a number of poles and string over a
mile of cable to my parent's house. We had friend where that run was over
seven miles for a single customer. [3]
[http://transition.fcc.gov/cgb/phonebills/samplePhonebill.htm...](http://transition.fcc.gov/cgb/phonebills/samplePhonebill.html#Universal%20Connectivity%20Fee%20\(Universal%20Service%20Fund\),%20Federal):

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breckinloggins
When I'm in bed at night dreaming of having a pony, I also dream about a world
where the AT&Ts, Verizons, and Comcasts of the world have been reduced to
"pipe providers". They just give you an IP address and try to give you the
fastest, most complete coverage they can. Then everyone else sits on top of
them and provides the devices, protocols and content in an a la carte fashion.

I still don't have my pony, but a man can dream.

~~~
forrestthewoods
It'll happen someday. Those companies will fight tooth and nail along the way,
but it'll happen eventually. (or so I tell myself to feel better)

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Droopy
This is kind of embarrassingly wrong.

Twilio has a great team and a great product.

Trying to compare Twilio to AT&T can only hurt Twilio. Let's applaud them for
what they are- the best example of a telco api out there.

If you think AT&T is just a bigger version of a messaging/telephony api, you
need to do more homework. Really.

W/r/t the innovation comments, again- naive.
[http://www.att.com/Common/merger/files/pdf/IMS_Convergence_F...](http://www.att.com/Common/merger/files/pdf/IMS_Convergence_FS.pdf)

I'm sure the other carriers are out there doing similar things.

Twilio's api solves a pretty interesting set of problems, but the 180 billion
dollar market cap for AT&T is not based on the problems Twilio is working on.

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prpatel
I spilled my beer while reading this article. As someone who worked in the
"Death Star"(TM), I can tell you what the other commenters in this thread have
already stated, but I'd rather make some vague generalizations. Firstly, at&t
is huge and have a large number of businesses operating under the at&t
umbrella. Secondly, the advances in providing everyone wireless access to
phone and data (i.e. pipe), at even today's choked (v)DSL speeds are not even
close to being achievable in today's radio technology _theory_, much less
experimental implementations. Thirdly, Twilio can and will be reproduced by
someone else, and even at&t business solutions. Can Twilio bundle pipe,
hosting, cellphone, and advanced app solutions for business into 1 bill like
at&t? No. Don't get me wrong, Twilio is cool, heck we even use it at my
company.

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druiid
Question: Who is the back-end carrier providing the VoIP services necessary to
make this work? Bandwidth.com or similar? If so, hate to break it to you guys,
but the only thing that Twilio is providing is a wonderful API which sits on
top of a VoIP network that sits on top of AT&T and Verizon (GTE). How exactly
are they going to 'kill' AT&T now?

~~~
druiid
As an aside... I do know of what I speak. I have implemented several thousand
numbers via Bandwidth.com and similar services, which as a further aside is
who Google uses for many of their services for Google Voice...

~~~
toomuchtodo
You just need ILECs or CLECs willing to terminate SIP connections onto an SS7
switch; doing so is trivial for an organization that is getting into a Twilio-
like business, but non-trivial for a typical web developer doing it just for a
couple hundred of minutes or sms messages a month.

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jroseattle
AT&T owns physical pipe. Twilio owns a domain name.

Huge difference.

~~~
dmor
I hope we've done a bit more than that. But Twilio.com is just $4.99/year,
so... good margin there :)

~~~
jroseattle
Heh, I'm sure that's the case. Not trying to minimize Twilio, just to
highlight the difference between virtual and physical presence.

Love the service, BTW.

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PanMan
IF Twilio comes even anywhere near really threatening AT&T I'm sure AT&T would
'just' buy them. They are the same AT&T that offered > 35Billion for another
telco.

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loopdoend
I find Twilio's calls to be very expensive. If you're serious about keeping
costs down(and writing an app that is primarily voice), a better solution is
Asterisk in the cloud with say, Adhearsion
(<https://github.com/adhearsion/adhearsion>).

I don't think Twilio is a serious threat to the old telecom companies. But I
am a huge fan of cutting out intermediaries.

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psylence519
Why Hyperbole Generates Pageviews

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gee_totes
If Twilio come close to killing AT&T, I'll bet legislation comes up in
congress making Twilio illegal.

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JumpCrisscross
There is a supreme irony in criticising AT&T for not being a platform while
predicting that it will be killed by a company that uses it and similar
wholesalers as platforms.

There is a difference between Twilio, a telephony retailer, and AT&T, a
telephony retailer an distributor. Twilio and the like may hack you away from
the retail arms of the telcos' retail arms, but it does nothing against the
distribution businesses. The latter can survive without the former; the
inverse does not hold true.

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patrickod
While I'm a huge fan of Twilio as a service there are certain use-cases that
they do not fit. It would be ill-advised to build a call-center operation
based on Twilio, but it would be less so to use AT&T for the same. Twilio are
a reseller based on networks larger than themselves, one of which I would
assume is AT&T. I don't see them killing AT&T off in the near future.

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leak
Why would Twilio kill AT&T before Skype does?

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rebel19
Twillio also isn't the only game in town......Whereas AT&T quite often is a
regulated monopoly depending on the market.

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kd1220
The article would make more sense if it were titled: "Why AT&T should acquire
Twilio."

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Swannie
Link Bait... and I got Baited.

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nir
HN really needs a way to downvote a submission.

~~~
stanleydrew
It's the flag link next to the submission.

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jsavimbi
Twilio, a small but great company with some very talented (and smart) and
hardworking (yet nice) people behind it, provides an API-based service to
people interested in building web apps with integrated voice and text.

AT&T is a global communications conglomerate that provides multi-tiered voice,
data, video, internet and products and services to any retail, business,
military or gummint customer.

It's like saying the vegan sandwich truck is going to put McDonalds out of
business. Yes, the folks down at the truck are nice and conscientious about
their ingredients, but McD's is all-pervasive.

~~~
laserhase
It's sillier than that even. The vegan truck would have to be making their
sandwiches by buying McDonald's burgers and removing the meat.

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webwanderings
I don't know about Twilio (and I have not read the linked article yet), but
Magic Jack will kill AT&T's old business of landlines for sure. I switched
mine to their newer no-computer-required device and cancelled my land line in
few days. I was paying $50 per month for unlimited versus $30 per year
unlimited. How in the world could you compete with that? But I bet AT&T does
not care at this point about old fashioned landlines for their residential
customers.

~~~
JumpCrisscross
This still ignores the fact that Twilio or MagicJack or I'm On Crack all run
on a physical backbone. You can't connect to the internet through the cloud -
not sober, anyways.

There is a difference between Twilio, a telephony retailer, and AT&T, a
telephony retailer an distributor. These services may hack you away from the
retail arms of the telcos' retail arms, but it does nothing against the
distribution businesses.

~~~
webwanderings
Thanks for your comment, you at least didn't down-voted without adding your
take.

I don't really know how Magic Jack or crack jack, work. I was just merely
sharing the difference and how AT&T could have a leaking hole in their boat
and not even know about it.

