Buyer's Recourse

It's the kind of meeting with a carrier organization that vendor executives dream about — all of the decision-makers from every division of a network operator gathered in one room at the same time with the single-minded purpose to learn about your products and sign purchase agreements for them.

Vernon Irvin hasn't had that kind of meeting yet, but he has a feeling he soon will. Irvin, executive VP of VeriSign's telecommunications business unit for the last 11 months, felt that notion most strongly at the CTIA Wireless 2004 trade show in Atlanta earlier this year, but not because he had such a rollicking time working VeriSign's booth or walking around the show floor.

He was actually locked in a hotel room the entire week (figuratively speaking, of course) talking to executives from different mobile carriers about VeriSign's various wireless offerings and the Mountain View, Calif., vendor's new strategy to supply solutions that bridge the thematic boundaries of communications, content and commerce.

To his delight, Irvin also learned more about what these carriers would like to buy from VeriSign.

“Carriers and enterprises are ready to make decisions about a lot of things,” Irvin said. “We might support prepaid for somebody, but that week they were telling us they wanted more from us — security, content settlement, billing and payments, all these things. And they said that if we come to them with this across-the-board kind of approach, they would change their procurement processes for us.”

It was music to Irvin's ears, because that's exactly what VeriSign has been trying to do in the last several months: integrate many different acquisitions and product lines into a supply chain that could support carriers' needs in multiple areas, including billing and payments, transaction authentication, roaming services, content, messaging and security.

However, until Irvin started hearing otherwise from carriers, all of the product integration in the world could only go so far once the first sales sit-down with a carrier organization began.

“That was a logjam before, because they never integrated the purchasers and purchases,” Irvin said. “You had to reach out to different people, and there were different requirements and priorities. Now, we believe the carriers are willing to put all of those people in the same room if they can get all this stuff from us.”

Prior to Irvin's arrival last year, VeriSign also was a company that, like its carrier customers, tended to heed its own operational and product-line boundaries.

For several years after VeriSign was founded in 1995, it was a company known for one particular core competency, albeit a huge one: In the dot-com boom of the late 1990s, VeriSign rapidly became the most trusted name in security and authentication for online merchants' e-commerce transactions.

However, as the dot-com era deflated, the company saw opportunities to support large corporations and telecom service providers by performing a fairly similar function to what it had done for online businesses: managing transactions.

Over the course of several years, VeriSign acquired more than two dozen different companies that were operating and selling products in market segments that were somewhat related to its original mission. One of its most significant telecom-related buys was Illuminet, the nationwide SS7 and IP data network operator to which hundreds of carriers' private network operators outsourced critical call set-up and routing functions.

By managing billions of connections and transactions on a daily basis, Illuminet was doing something in the service provider sector that was similar in concept and scope to the way VeriSign traditionally had served the online community: It was doing the inter-network grunt work that no one noticed, but without which none of these networks could sufficiently address users' broadest needs.

The Illuminet acquisition came during what may have the telecom industry's lowest point economically: just two weeks after the Sept. 11, 2001, terrorist attacks.

At the time, wireless carriers were just beginning to cap expenses and aggressively trying to eliminate costs and functions that weren't core to their efforts to create more revenue. One of the ways carriers eliminated costs internally was to outsource, and VeriSign saw its future as a company to which they could outsource almost anything.

That vision also made sense for VeriSign's own operational structure. “It was easy to figure out how to make it all across the board rather than maintaining walls between five or six different product areas,” Irvin said. “Our wireless billing, roaming services and wireline product lines all had separate managers going in their own way, but now they all report to me.”

The result is a product and technology breadth that few companies competing with VeriSign can match, according to Irvin, because most of those competitors only offer point solutions — they might offer the billing and payments piece, but not security, or roaming services but nothing else.

“Our brethren in the point-solution arena have been struggling while we have grown,” Irvin said. “Now that we have integrated everything we bought, we are really set to grow.”

Even last year, some carriers already saw VeriSign emerging as a go-to company with broad skills. Rural mobile operator Midwest Wireless hired VeriSign to build a customer-care solution and a prepaid billing engine, but also to help the company acquire new property for its CDMA 1X RTT network expansion.

“VeriSign was the first company we were going to turn to because we thought if they could do these things, it would be the easiest way to get them done,” said Mark Allen, chief information officer at Midwest Wireless. “They mainly helped with their responsiveness to the tasks at hand.”

The conversations Irvin had with carrier executives away from the CTIA show floor lead him to believe that more deals like the Midwest Wireless business lie just around the corner. Moreover, the market's improving financial realities provide evidence that those carriers' stated intentions are more than just well-meaning.

“One, carriers have the money now, and two, the business case is there now for mobile data,” Irvin said. “If there's a third thing, it's that customers also have more disposable income now.”

The telecom business unit Irvin directs sees a 50/50 revenue split between wireline and wireless opportunities, but the wireless opportunity is growing, broadening and changing at a more rapid pace that will test VeriSign's cohesion.

Irvin recalled an episode that happened when he was attending a recent VeriSign corporate leadership meeting that underlined the challenge for him. Typical of management retreats, the epiphany came after the meetings were over.

“All of our managers at the meeting were outside this hotel on this bluff, a great place to watch the sun going down,” he said “Everybody's got their camera phones out. I had my [PDA] with an [integrated] camera, and took a photo, and one of our guys from Japan was there with a camera phone. His photo had so much better resolution that I immediately wanted that phone.”

Irvin's point was that devices, services and content are advancing so rapidly that they require nimble transaction support and content mediation. “As handset technology and data and content services make their way from east to west, we'll see different services and pricing schemes develop here,” Irvin said. “We'll see people gravitate to content adoption in a way we haven't seen yet.”

In wireless, VeriSign currently sees its biggest business in billing and payment services, followed by roaming and clearinghouse services. The company also offers roaming review and monitoring to ensure roaming quality of service.

More recently, the advance toward further data and content adoption carried VeriSign's service breadth into the relatively new area of content mediation. That's what inspired VeriSign to make its most recent acquisition, the 33rd in its history, during the same week that Irvin was in that Atlanta hotel in March.

Unimobile, the acquired company, has a content mediation engine and also operates a cross-carrier messaging service for multinational enterprises so they don't have to sign separate messaging with different carriers around the world, said Mahi DeSilva, senior vice president of Versign's wireless division. “Carriers used to think they could get all the bulk messaging business from distributed enterprises, but that doesn't even make sense domestically — no one has network coverage everywhere,” DeSilva said.

The Unimobile deal “brings us a messaging network that has relationships with 300 different carrier network connections and peering points,” DeSilva said. “Another reason we bought them is they allow us to deliver content to carrier SMSCs for new kinds of enterprise applications.”

Unimobile's content mediation engine already supports a prepaid content service offered by Virgin Mobile, and aligns well with VeriSign's existing offerings. “We already do billing and payment services for 70 U.S. carriers, so the next natural step is into content mediation,” DeSilva said. (Just as this story went to press, VeriSign announced another content mediation acquisition — German vendor Jamba!)

In addition to carrier relationships, VeriSign also wants to work with more content distributors and developers. “There are 3000 digital content merchants out there. 1700 of them have some mobile focus, and we want to work with them,” DeSilva said.

DeSilva has been with VeriSign for eight years and helped build the security side of the business that was VeriSign's hallmark. After less than a year with the service provider unit, he said the company has the core wireless assets it needs to do the same thing in m-commerce that it originally did in e-commerce.

Irvin feels the same, but sees VeriSign as being a completely different company that is targeting a fairly similar market.

“You can't call VeriSign a start-up, but it's like a new company looking at new opportunities,” Irvin said. “Customers have seen our heritage, and now with the Unimobile deal and everything else we've done, they are seeing our magnitude.”