A Cure for Performance Anxiety

Most consultancies simply provide data about what's going wrong in a network. Telephia is arming wireless carriers with competitive market data that can make networks work better.

Like most Californians, Mick Mullagh arrived circuitously. Not that it would be wise these days, but Mullagh says he can carry three passports. His life's journey began in England, and he got his advanced education in Ireland and Canada. He went to San Francisco — the place Chicago Tribune columnist Mike Royko once called the land of flakes and oddballs — to restore a little reality, coast-to-coast.

Mullagh's reality restoration effort starts with wireless carriers and their customers. “The number one reason customers move from Carrier X to Carrier Y is the perception, not the reality, that Carrier Y has a better network,” said Mullagh. “That's why we think this business has relevance in the industry.”

The business is Telephia, a 4-year-old wireless market analysis firm where Mullagh is CEO. Telephia has evolved from a consultancy focused on bringing competitive intelligence to the wireless industry to one bent on improving the performance of the industry itself, expanding into a comprehensive intelligence service that combines network performance testing of both voice and data networks with market intelligence. That market intelligence data ranges from market share and churn to pricing plans and media spin. The goal is to correlate data from individual operators with overall industry metrics to provide what Telephia calls “syndicated industry intelligence.”

“Other companies do drive testing. We are the only company that helps carriers understand why they are performing in the marketplace in either a superior or less-than-superior fashion,” said Mullagh. “That helps them figure out where they should be spending their dollars.”

That's no small task, especially in an industry that closely guards its performance quality secrets. But investors such as AEA Investors and Centennial Ventures, which provided the bulk of Telephia's $38 million round of Series D funding last November, are betting the company can do it.

Mullagh, a former president of Rogers AT&T Wireless and former CEO of Whisper Communications, joined Telephia in September and helped close the funding round. He was followed by longtime associate Liam Mahoney, now executive vice president and general manager of Telephia's network performance division. The two industry insiders also signed on with Tom Frangione, co-founder and now executive vice president and general manager of Telephia.

“The fundamental reason I was attracted to this company goes back to when Liam and I used to work together,” Mullagh said. “We were fanatics about customer service measurements, customer perception and measuring network performance. To get it all in an independent third party like Telephia, with no question of bias, was a very powerful idea.”

According to Mullagh and several other analysts, wireless carrier's dollars should be spent on plugging holes in coverage and improving overall network quality. During what will one day be its golden age — say, between 1994 and 2000 — the mobile market was so hot that it succeeded in spite of itself and despite the limited reliability and poor voishhh qual-al-al-ality. Today, there is a new reality in town.

“Businesses are aware that there are differences among network providers, both market by market and nationally in terms of quality, and it is becoming a competitive issue,” said Scott Ellison, program director, wireless and mobile communications for IDC.

This national and competitive comparison approach may be what separates Telephia from its competitors, but analysts say getting the data required for that edge could take some time and a great deal of schmoozing.

“Carriers do internal performance monitoring and benchmarking, but I have never seen anyone release the actual metrics they use to measure themselves,” Ellison said.

David Berndt, director of wireless mobile technologies at The Yankee Group, agreed. “Operators are very skittish,” he said. “I don't know how much in-depth information [Telephia] will be able to get on an ongoing basis.”

Mullagh pointed to a company report recently cited in Consumer Reports that used data aggregated across many cities and identified which operator had better customer service as a sign that skittishness is retreating. “We use a standardized methodology that is invariant across carriers and across geographies,” he said. “That's another reason carriers are starting to go more to third parties. It's not just to reduce costs, but to get that independent third-party view.”

Because most wireless carriers have both a national and a regional or “market” presence, it has become cost-prohibitive to drive test their own networks. But analysts agree that the third-party perspective on a national — and, one day, a global — scale is necessary to properly evaluate the quality of the service delivered on a network.

“The third-party route probably will be the most effective way to drive toward service level agreements and acceptable performance levels,” said Elisabeth Rainge, program manager for network service research for IDC.

The third-party perspective eliminates the “emperor's new clothes” syndrome for wireless operators that are understandably skeptical of internal performance measurements. “There is a natural tendency to make things look positive when you are talking to the boss,” Mullagh said.

Politics and butt-kissing aside, it takes tools and technology to make sense of network performance data, particularly as it relates to other business metrics. And it takes a breadth of knowledge to provide it for both voice and data networks. Whereas testing the voice network requires a great deal of drive testing, Telephia's Wireless DNA (for data network and application) Performance service uses strategically placed nodes — servers with a series of attached radios — in fixed locations to take data and application measurements for various wireless data services.

“We find locations with good RF so that we aren't testing the RF, but the network elements and data applications that are running over it,” Frangione said. “And we do it without any input from our customers to make sure the data is clean and unbiased.”

Those customers are primarily network operators that, according to Mahoney, “aren't in as much denial as they were years ago [about their networks]. Especially in the higher echelons of the companies we deal with, there is a genuine need to know this information.”

Telephia retains the rights to the data it gathers and can sell it to whomever it wants, although it is wisely judicious about that so far.

Where is Telephia's competition? Companies like Herndon, Va.-based Scoreboard and others do performance testing, but even with all the fancy technology, algorithms and methodology in these collective companies, the biggest competition is probably sitting in the next cubicle or washing a car in the driveway next door.

“Word-of-mouth is still very powerful because people trust their neighbors and people they work with. That will have much more sway over the general mass of potential wireless subscribers, at least for the next few years,” Yankee Group's Berndt said.

Word-of-mouth is also important in the investment community. Mullagh says Wall Street has been hammering the wireless industry undeservedly and that the industry in general has not done a good job getting the right word out. “We think we can help tell that story,” Mullagh said.

Telephia's most recent numbers show that net adds in the fourth quarter were up by 5% to 10% over expectation. He points to a 20% to 25% growth rate fueled by increased minutes-of-use, substitution of land-line phones, new consumer segments and improvements in his company's area of expertise — network performance — as positive industry trends that are not getting the attention they deserve.

“The more the industry publicizes that, the better off it will be from a public and financial markets perspective,” Mullagh said.

Telephia's trick will be to tell that story without biting the hand that feeds it. “We are careful to maintain walls between what we do with one carrier or another,” Frangione said. And what we have done we think will continue to add value.”