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June 2017

Bankai’s Wholesale Twist: We Don’t Sell Routes to India; We Sell India Vodafone, Reliance, Airtel and Tata

Bankai’s Wholesale Twist: We Don’t Sell Routes to India; We Sell India Vodafone, Reliance, Airtel and Tata

With hundreds of small- to mid-size carriers coming into the business in the past decade, international wholesale has become a tough “survival of the fittest” market where volumes are exploding but margins are thinning.

And yet, a successful network entrepreneur can never be truly cornered as long as he or she keeps an ear to the ground, engages with customers, and constantly tests ideas that might move the business in a more profitable direction.

In fact, a slight twist in the business can make all the difference:

In the 1960s, E.  Joseph Cossman made a fortune selling hundreds of mail order items.  One of his hits was a $1 package of 14 balloons, and he ended up selling over a million sets of those balloons.

How did he do it?  Through a bit of marketing genius.  He did not sell the balloons per se; he sold “circus animals” that the customers created themselves by blowing up the balloons and then twisting/combining them into colorful shapes.  The kit came with fully printed instructions.  The advertising was so effective that one lady called up to say: “Tell me when the ‘big animals’ will arrive, so I can be sure to be home.”

So then, how can an international carrier twist its business model to create a strong competitive advantage?

Well, at this year’s ITW show in Chicago, I met a man whose mission is exactly that.  He’s Bankim Brahmbhatt, CEO and President of the Bankai Group, a $440 million revenue-per-year wholesaler based out of New York.

Being a 27+ year veteran of telecom, Bankim has fitted Bankai with an array of handy assets and tools.  Bankai sells traditional wholesale voice; it owns class 4 and class 5 switches; it has a technology vertical offering a mobile finance solution; it even sells a billing solution that competes with the likes of Telarix.

But the ingenious “twist” Bankim is now nurturing is something called BridgeVoice, an online wholesaler’s marketplace and portal enabling operators to select and start doing business with famous brand retail operators across the world.

In my interview with Bankim, he provides his insightful analysis on: 1) the forces shaping the wholesale business; 2) the challenges faced by smaller operators/OTTs; 3) the Bankai Group plan for winning their trust; and 4) value-added products being added to BridgeVoice such as unified communications and bank credit lines to ease the pain of doing wholesale deals.

Dan Baker, Editor, Top Operator: Bankim, maybe a good place to start would be to hear your perspective on the wholesale market and how BridgeVoice fits into your future as an international carrier.

Bankim Brahmbhatt: Sure, Dan.  Let me start from a bit of Bankai’s history.  We first started our international carrier business with iBasis in 1999.  Before that time, I was doing domestic business in India: manufacturing telephones and rolling out small exchange projects in a distant part of India.

And when I first diversified into the international carrier business, though we enjoyed a good 20% margin, our volumes were very thin.  Twenty years ago we carried 11 to 15 cents per minute on a traffic volume of 150 million minutes a month.  Fast forward to today: the rate has now gone down to 1 cent per minute on 8 billion minutes a month.  So this is a global trend in the carrier market: margins are shrinking, but volumes are increasing dramatically.

Now throughout the world there are thousands of operators, and the vast majority of them started believing — like me — that they would focus on domestic business in their own countries rather than becoming an international carrier.

But because the margins in the domestic business shrunk, a lot of operators moved into wholesale.  So when you look back to 1999, there were only 10 carriers doing international traffic to India.  However today that list has expanded to about 300 carriers — and that’s in India alone.

And even with the flood of international carriers, there’s one segment that’s not being adequately served, namely the smaller operators and OTTs in the marketplace: the VoIP players, enterprise provider, calling card companies, and ISPs.

Today the small VOIP companies are paying the large international carriers on weekly terms, sometimes pre-payments, and the carriers are using that cash for another part of their business and not paying the operators on time.

Now the mid-sized carriers know that it’s not good business to delay payment, but at least 20%-to-30% of them feel they have no real choice.  They are in a tight cash bind because they are making only 2% margins and when they receive traffic from the operators, they have to give credit of 60 days to the operators sending them traffic.

Right, so you recognized that the current way of serving small operators and OTTs was not being adequately addressed by wholesalers.

Yes, it was that challenge that led us to launch our BridgeVoice platform in 2005.  Our initial idea was to send payment to operators for their calls within 24 hours of call completion.

Now getting that cash right away is extremely valuable to the operators because one call is traveling across, say, 5 carriers before the B operator is reached.  Meanwhile these 5 carriers in the middle are making only 3% to 5% margin.  So even though the originating operator and terminating operator are making money, there’s practically nothing available for the carriers in the middle.

While studying this problem, I wondered if we could create some technology to ease the pain of small operators and small wholesalers.

I knew, for instance, if there are 800 billion international minutes of termination, then at least 200 million of that is coming from smaller operators and OTTs.  And although all those companies want to terminate on Tier 1 retail operators in each country they go to, there’s no incentive for those large operators to help them, in fact, the large retailer is already loaded up with international partners.

So that’s when I landed on the idea of creating an automated ecosystem and portal enabling Bankai to manage the relationship and transactions so that the smaller players could directly access the big retail operators in a country.

And beauty of the system is that we let the small operator make the decision themselves.  We say: “I’m not going to send the India route to you.  Rather, I’m going to sell you the specific Indian operator you want.  If you buy access to India from Bankai, we can take you directly to India Vodafone, India Reliance, India Airtel, and/or India Tata.  Choose whoever you want and whatever rate those operators give us, we’ll simply add our margin onto that.

It’s a simple but ingenious business model.  And while you’ve explained it in easy-to-understand terms, I’m sure there are a great number of details to manage under the covers.  Now, tell me, are you focused on the India market only or is it broader?

It’s all countries.  India was just as an example.  There are 230 countries and about 1,150 operators, we are focusing on.  They will no longer need to deal with tier 2 or tier 3 carriers but they can still grab retail traffic from them through BridgeVoice.

We already have 15 operators on the BridgeVoice platform and a total of 105 operators we work with separately.  Very soon we will add another 85 operators to BridgeVoice.

So what does the operator or wholesaler get from the BridgeVoice platform today?  And where are you taking it in the future?

Well, Dan, it’s being rolled out in phases.  This year we are in phase 1 of our plan where we are spending a lot of time getting more and more carriers and operators to sign onto BridgeVoice.

In phase 2, we are going to launch Unified Communications as a service.  Now because most carriers are struggling, we are sitting in a flexible position to help them.  So if you are a carrier in Bahrain and you use the BridgeVoice platform, we will partition our platform so you can launch enterprise VoIP services in Bahrain.

The beauty here is that they don’t have to spend money on technology.  We will create the platform as well as customized product for them.  They just have to bring their DID numbers.

And this will be a big help to the wholesale carriers we work with.  They can add a retail business in their region as a value-added offering for their customers.  Another value addition will be done when we add SMS.

There are other benefits as well.  Sometimes tier 2 carriers are offered special deals with the Tier 1 retail operators.  For instance, if we enjoy a special rate with Filipino operators, we can turn around and offer our customers an even cheaper rate than they can get by connecting with a Filipino operator directly.

And how about the better financial terms you mentioned earlier — getting a carrier or operator paid within 24 hours of call completion.

Well, though we no longer offer that as part of the BridgeVoice service, we are eager to solve the financial credit and cash flow problem in a different way.  We have now rolled out an online platform called "BridgeVoice Pluto" for trading and settlement of wholesale interconnect voice and SMS services.  This one-stop platform allows carriers to access a range of alternative network providers and carriers to meet the capacity demand with quality assurance.  We aim to secure our vendors with quick-pay services and settlement option, based on their product offering.

The secret, I think, is to have a bank or finance company offering credit against the receivables of the operator.  This is my ultimate goal.

Suppose you are sitting in Bahrain doing carrier business and an operator in Latin America wants to exchange traffic with you.

Well, the trouble is, the Latin American operator would not be willing to give you credit.  But let’s say you have been living in Bahrain since your birth and you have some credibility with the local banker.  Well, you can get a working capital loan from that bank and that credit limit can be applied to the Latin American operator.  So both sides will have to have such a carrier bank account.

The day we achieve that — and it may take 3 years to get there — money will be secured on both sides of the relationship, and BridgeVoice intends to facilitate this.

Thank you, Bankim.  You’ve shown BridgeVoice is much more than a portal.  In fact, it could become the new way operators connect with tier 1 retailers.

Copyright 2017 Top Operator Journal

 

About the Expert

Bankim Brahmbhatt

Bankim Brahmbhatt

Mr.  Bankim Brahmbhatt, the President & CEO of one of the renowned leaders in the telecom industry, the Bankai Group,  has experience of more than 27 years in the Information Communication Technology (ICT) and services sector.

His business acumen, foresight and leadership has enabled the Group to come up with several telecom & technology companies like Broadband Telecom Inc., BridgeVoice Inc., CallnRoam Inc., and Panamax Inc.

He specializes in quickly assimilating potential business opportunities, working closely with multi-functional teams, launching new products and gaining leadership positions in fast-growing segments of communications systems and  software industry.   Contact Bankim via

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