ITALK2U Final Now Available?

John Jarvis sends news that ITALK2U, the P2P VoIP Skype competitor, is now out of beta and available with "...all of its features..." -- However the link he sends still has the test version. So I assume he will be updating soon... when available I will download and post my experiences.

IP Inferno

I have been working on a new project, IP Inferno in which I attempt a new approach to the blog editorial model. Blogs seem to fall into two broad categories, either (a) regurgitated, if idiosyncratic, news feed or (b) the personal voice of the blogger (as interesting as that might be). With IP Inferno I am trying something new -- attempting a roundup of the news and comment on a particular topic, albeit with an editorial slant. I was inspired by a publication called The Week which describes itself this way:

The Week is a witty, informative, important, and completely indispensable digest of the best reporting and writing from the U.S. and international press. In just 40 pages, it will bring you up to date on what’s happening at home and abroad, and what the experts are saying about it.

With IP Inferno I aspire to this formula but with the narrow topic of advanced IP applications such as VoIP, Wi-Fi, and Wi-Max. Why "IP Inferno" as a title? IP is the inferno that is burning down the traditional telecommunications industry... Enjoy!

V oWLAN With an emphasis on the OW!

As in OW! Why are you hurting me with these terrible acronyms? Om Malik's V oWLAN coming on strong is the first time I have seen the acronym in use... stands for Voice over Wireless Local Area Network... This is a very important technology and deserves a better acronym. A google search turns up only 3 references to "V oWLAN" so it is NOT TOO LATE... VoIP is bad enough but we are stuck with that one. Here are my suggested alternatives:

• VoWIP (Voice over wireless IP - at least its close to VoIP)
  
• VoWiFi (Voice over wireless fidelity -- more consumers will understand)
  
• VWN (Voice wireless networking -- pronounce v-win)
  

More suggestions welcome -- lets just try to stop this new acronym before it gets any further...

How high can ARPU go?

ARPU or Average Revenue Per User is the way that mobile operators judge how well they are doing in mining expansion opportunities within their current customer base. This is especially important in western markets where mobile phone use is virtually ubiquitous so no new growth will come from expansion of the customer base. It looks as if the news is good for operators who have bet on next generation services, if you believe the results of a JD Power and Associates survey reported on the BBC. "It is quite amazing really that people are spending more on their mobile than on gas or electricity bills," Gunda Lapskim, a JD Power director, is quoted as having said. Much of this spending is on services beyond voice. But how much will people pay for communication services even if entertainment is included? How high can ARPU go?

According to the survey, the average monthly bill rose by 14% since 2003 -- an average of 534 British pounds per year. If the annual increase continued at 14% for the next 10 years, ARPU would grow to almost 2000 pounds per year. Even allowing for inflation, this still suggests that people would be willing to spend as much on their mobile bill as they would for a new desktop computer... every year.

Here is the full JD Power press release in which the rankings of UK operators are also disclosed -- Virgin is number one amongst pre-pay customers and Vodafone is number one amongst contract customers. "Image" competes closely with "Call Quality/Coverage" as the most important factor...

The issue is not about how cool the phone looks

Martin Geddes blogs Finland, Finland, Finland offering opposing views on whether Nokia can get its cool back (not to mention growth, profitability, etc). What I find interesting about this discussion is that here (and elsewhere - Techdirt and BusinessWeek) the debate is about industrial design -- do Nokia phones look and feel cool? But in my opinion this is not at all what the next evolution of the device is all about...

Nokia made a really smart move -- they jumped on the digital bandwagon early, when a lot of their competitors (and leader Motorola) stuck with analog. The question in my mind is whether or not Nokia will make the next jump from phone to computer.

The handset industry has approached the problem of increasing features in handsets from a consumer electronics perspective -- pack the electronics tighter, pre-wire the features, and focus the device on a particular demographic.

Two years ago I was at the Nokia Mobile Internet Conference and heard Jorma Ollila's keynote speech in which he said that in the future every phone would be unique. That is, you would have a phone that suited your needs, I would have one that suited mine, and 500 million other people would have their own idiosyncratic versions of the "perfect" phone.

The only path to this vision is by making the leap from thinking of the phone as a consumer device to thinking of it as a computing platform -- infinitely programmable to provide whatever feature set a given user wants -- even different feature sets at different times of the day (work vs evening).

Nokia's purchase of Symbian solidifies their intent to own this new phase, but will they understand enough about this alien world and will they understand it fast enough? Microsoft is moving quickly, and we could wake up one day with Windows ubiquitious in our pockets the way it already is on our desktops.

Wi-Fi -- just like Bathrooms and Napkins...

In the continuing saga of the Cometa Networks shutdown, eWeek reports that Cometa customers are scrambling to find alternatives. In the article, Peter Hoedemaker, vice president of retail at Tully's Coffee,is quoted as saying

"Everybody is still trying to figure out the economics of [Wi-Fi]."

Note to Peter -- the economics are in selling coffee.

Perhaps he should go check out this post at Wi-Fi Networking News, outlining Wayport's new pricing plan. Wayport is converting from the common Wi-Fi model of sharing variable revenue and cost with their location partners to a flat fixed fee, allowing the partner to decide how much (if anything) to charge.

In a clear swipe at T-Mobile’s arrangement with Starbucks, Borders, and Kinko’s, in which, according to many sources, the cell company bears the cost of the network and operations and shares revenue with its venues, Wayport’s CEO Dave Vucina said, that a retail partnership “shouldn’t be about how much they can get for free from the provider but should be more about their core business and driving enormous traffic for their core business.”

So Peter -- think about it this way -- you provide a bathroom in Tulley's and that costs you something every month, even though not all of your patrons use it. You provide napkins, even though not everyone takes one. Why not build Wi-Fi into the base cost of operating a Tully's outlet and offer patrons free access just as you do with bathrooms and napkins?

Will Telephony go to Zero (dollars)?

A reader of this blog anonymously posted a comment to one of my earlier posts, How Cheap Can It Get?, asking if the price to make a phone call might one day drop to zero. The answer is YES and that day is already here.

How can you make a free phone call? Download Skype, go to a coffeeshop with free Wi-Fi access, and dial anyone else who has a Skype phone.

While we are still a few years away from ubiquitous free calling (and free Internet access for that matter) this day is likely to come sooner than later

Jeff Jarvis has a report on an article by Eli Noam, a Columbia professor, in which he argues that:

the entire information sector - from music to newspapers to telecoms to internet to semiconductors and anything in-between - has become subject to a gigantic market failure in slow motion. A market failure exists when market prices cannot reach a self-sustaining equilibrium. The market failure of the entire information sector is one of the fundamental trends of our time, with far-reaching long-term effects, and it is happening right in front of our eyes.

Eli seems to take this as a negative, while I tend to think in terms of Joseph Schumpeter's concept of Creative Destruction -- the deconstruction of these industries is enabling an entirely new generation of technologies an industries to evolve.

In the future we will pay for certain aspects of connectivity -- reliability, security, and performance. Like drinking water, in the western world basic access will be ubiquitous (it may just taste funny) and you will pay for the higher quality bottled stuff. Telephony will become just "...a voice application, completely indistinguishable from any other kind of application that can run on an IP network..." (Michael Powell, Chairman of the FCC)

Should I Stay or Should I Go?

The provocative title of a recent Crain's Chicago Business article is Should Moto sell its cell phone biz? Now may be best time to hit the exit though the article goes on to state what most analysts believe -- that Motorola needs an Asian partner to take over manufacturing while continuing to be a design center:

No Motorola business needs bold action as badly as its largest, the $11-billion cell phone manufacturing unit. Now a distant second in a business it once dominated, Motorola has operating profit margins less than half those of its biggest rivals. Cell phone manufacturing is migrating to low-cost Asian producers able to churn out cheap phones for the mass market. Cell phones themselves are morphing from a sophisticated technology into a household product subject to shifting consumer tastes and falling prices.
...
Decisive action on the cell phone business could take one of two forms: an outright sale of the business, or a deal with an Asian manufacturer to take over Motorola's handset production while Motorola continues to develop and license the technology and its brand name. A pair of big European cell phone makers have cut such deals in the past month.

But does this make sense? The interesting problem for all of the handset manufacturers is that virtually ALL of the growth in this market (60 million units) will be in China. According to China View (Xinhua online)Lucky Goldstar has already surpassed Motorola in the worldwide CDMA handset business and is also number one in the critical Chinese market. And they have there eyes set firmly on the GSM prize.

Motorola could hollow out their handset division, handing over manufacturing to China the way they have handed over software to Microsoft. But what is left? The Motorola brand name? Dell would have more success managing this kind of business. If Motorola truly can't figure out how to manufacture mobile phones cost effectively at an $11 billion annual run rate, maybe they should exit the business.

Firefly.. softphone and network but not P2P

A reader anonymously wrote in to suggest that I give Freshtel's Firefly a test drive. While it looks like another nice option, competing with FWD and others, it doesn't appear to be P2P... am I missing something? I believe that there is an important distinction between the VoIP providers with centralized arhchitectures and a P2P architecture. The three providers I have found so far in the later category are Skype, ITALK2U, and Peerio -- anyone know of others? Of course each of these has drawbacks starting with the reasonable argument that Skype shouldn't be considered P2P at all... (see earlier post on Why Skype is No Different...)

Review of ITALK2U

Alec Saunders sent email with a link to his review of ITALK2U and a comparison to Skype. Thanks Alec! In part he writes:

iTalk doesn't yet support conference calling, or encrypted calling, and doesn't have the Skype missed calls list, but other than that appears to be a functional clone of Skype. It's also a bit more standards based, in that it supports H.323, rather than a proprietary signalling protocol, but it uses a proprietary codec, which makes that somewhat moot. Voice quality is similar to Skype, which is to say very good, but I don't know how well it will handle dial-up. The codec seems to be some kind of a learning codec, in that quality improved over the duration of the call. MSN messenger is the same way.

Click on over to Alec's blog for the rest of his rundown and screenshots.

Another Skype competitor

Here is another competitor to Skype in the peer to peer VoIP world -- called Peerio it appears to have a number of advantages over Skype... with a few caveats though. First of all it is open source, second it has a developer API which will easily allow others to build Peerio compatible applications, third it claims to be entirely serverless (as opposed to the directory architecture required by Skype) and fourth it is based on H.323 and SIP standards.

Now for a few caveats... their web site definitely leaves a lot to be desired with lots of holes to be filled (although the promise is there). More problematic is the half-hearted approach to open source. On the site they write:

Despite our efforts, there are two necessary exceptions to the open source principle:

1) The source codes for the Peerio444™ core will not be released.
2) Peerio444™ will not function in embedded systems and is limited to standard PC use (x86 and PowerPC).

Why is that?
The source codes for the Peerio444™ core will be kept proprietary so that we can avoid spawning hundreds of proprietary commercial systems (see Linux) that could jeopardize our ability to maintain a Forever Free platform. To be Forever Free we must protect the system from profiteers. Support and maintenance of the Peerio 444™ core will be limited to our research and development team.

This is like saying that you can do any work on the car except for modifying the engine -- we have welded the hood shut to prevent you from making modifications to anything inside that compartment.

This flies in the face of good open source policy for a whole bunch of reasons but I'll just mention a few here:

• At anytime Peerio can change the definition of what is inside the core and what is outside the core, endangering other projects that have been built on Peerio.
  
• The argument that this protects the system from "profiteers" is spurious -- by contrast placing assets in the open source community creates a level playing field
  
• Most importantly, Peerio will defeat its own strategy by holding back this key element of the product -- open source only works as a viral means of distribution when it is truly open.

Part of the point of open source is that by using it, a developer is no longer dependent upon the whims of a given company for the future of their development project -- The developer knows that the core building blocks will always (Forever?) be available. By holding back this key element as proprietary property Peerio eliminates that key advantage of open source and will significantly reduce the number of companies and individuals willing to invest in the future of the project.

On another front, I have been meaning to test the beta of ITALK2U which has been out for awhile from Endoreal/LitFiber. I downloaded one version and couldn't get it to work, but have been meaning to download a newer version. If anyone out there has had any success, please let me know.

How cheap can it get?

Already it is significantly cheaper to use VoIP providers like Vonage for your telephony needs, but now there is a price war between the low cost providers! According to this NetworkingPipeline story, Vonage Cuts Prices for Internet Calling

The company insisted it was not launching a price war in a market that is just starting, saying that the price cut reflected its decreasing costs in doing business.

Right. And as the article goes on to point out, AT&T announced their CallVantage plan just 6 weeks ago with an introductory price of $19.99 a month for the first six months. I am guessing that would have slowed Vonage's customer acquisition rate.

More time to blog...

After almost 7 months of work and a considerable financial investment, Fred Ball and I along with the founding partners have decided to turn out the lights at CallTrex.

The immediate cause of death was our inability to close follow on financing to help grow the company. A call center model only works at a significant scale of operations. Below a certain threshold, fixed costs represent too large a part of the financial model and it is impossible to make money. We were operating at about one-third of the scale that we needed to be to start generating top line profit. At least another $300,000 was needed to arrive at this first milestone. A number of angel investors moved in the direction of funding the business but pulled back at the last minute. Others simply moved too slowly. In the end, the Board of Directors expressed a lack of confidence that we would close this angel financing round in time and approved a plan to shut down operations.

As in so many cases, there were a set of underlying causes of death that led up to this end point. A large number of people had warned that selling to the small and medium business market was fraught with peril -- this certainly proved to be the case. Customer acquisition was slow and expensive and we never reached a scale where a larger distribution partnership made sense. In addition we suffered from technology problems which could have been solved with more resources, but we found ourselves spending money to fund the call center operations and starving the technical team. Technology problems sometimes meant the loss of customers which further slowed our growth rate.

Despite all of these challenges, CallTrex had a unique value to offer the marketplace, with an innovative system for connecting our customers to their remote staff and allowing that remote staff to provide a great service to our customer's callers. It is sad to see it go. As we have notified our customers that the service will be turned off, we have received some terrific praise on how great our service was.

I will be taking some time off and thinking about what I want to do next. Definitely spending more time with my daughter -- 7 months old and doing great!

Asterisk Use Accelerates...

The adoption of a technology outside the initial core group of visionaries is an important milestone on the path to greatness or abandonment. Recently a number of folks have pointed out that Pulver's "Free World Dialup" now supports Asterisk -- you can read about it here on -- Pulver's own blog . A comment over in North American Bandwidth news:

Soon, protocols will be irrelevant since all VoIP devices will support all of them.

An interesting point -- though it misses a key issue. Translation can replace standards as long as the standards are transparent and processor speed is cheap and plentiful. This is true for all open protocols -- think currencies, human language translation... But not so for closed, proprietary protocols. As an open-source VoIP offering, Asterisk makes it easy for anyone to support since their protocol is published. Translation for Skype, on the other hand, might prove much more difficult.

On another front, I spoke to someone who was told by Global Crossing that they are now doing tests to certify Asterisk. If they decide to formally support Asterisk, this will be an even stronger indication that we are on the road to wide adoption rather than oblivion...

COMMENT 5/8/2004 1:40:50 AM Roland Tanglao (www) said:

Hi Ted:

Yes, it can be difficult to translate and emulate a closed protocol like Skype, but it's not impossible.

If Skype doesn't interoperate and coexist with other VoIP protocols but in spite of this still becomes popular with the mass market, somebody will reverse engineer it!

Corporate Cockroaches

One should never underestimate the lowly cockroach. If any creature could survive a nuclear holocaust, it would likely be cockroaches. They have a capacity for survival that surely puts them in the Darwinian All-Stars. A few days ago a friend of mine (who works for a very large company) and I were talking about the people that somehow survive layoff after layoff inside his company. "They are cockroaches!" he exclaimed. A kind of corporate cockroach. Through a combination of hoarding information, avoiding accountability and spending their work time on building a network of relationships these individuals find cozy cracks and crevices to survive the reduction in force bombs that explode on a regular basis.

One can't entirely blame the cockroach, however. If corporations made their employees feel a little more secure in their positions, perhaps they wouldn't feel the need to spend their intellectual energy on how to protect themselves instead of on how to get their jobs done. Or is society to blame because we learn to attach our own sense of self-worth to the work we do, so losing a job can be a more terrible blow to self-confidence than virtually anything else?

Whoever is to blame, a manager's task is clear -- take out the RAID can and exterminate the beasts. Watch for those three signal events -- hoarding information, avoiding accountability, and inordinate amounts of time "networking." Businesses have to be able to have "roles" and not "faces" as another of my friends recently stated. We each play a role within or organization. Part of our job should be making sure that someone else can play that role if we move on. And we should look to our teams as people playing roles as well. The moment you believe that a particular person is essential, rather than a role being essential, you should recognize that you have a problem.

Will VoIP kill the telco star?

A nod to pop music group the Buggles* in the title of this Red Herring website post on VoIP -- Will VoIP kill the telco star the latest article pointing out how mainstream telephony is fumbling the opportunity to emerge as winners in the new IP based world that is rapidly emerging...

A particularly interesting point made in the article -- a report of one individual's experience in switching over to VoIP -- the phone company did nothing to try and keep this business:

Qwest did not handle the transaction well, failing to complete the hand-off of my old telephone number and cutting me off from the world for several days. Rather than competing for my business – there was no call asking if they could find a way to keep my business after I requested the number be moved – they made it difficult for me to stay connected.

I love the comment from the Qwest customer service person as well when the reasons were explained for the switch:

Wow, that's a lot of savings every month.

The author reports savings of 87% on his total phone bill.


*(Video killed the Radio Star on their Age of Plastic album)

Too late to close the barn door...

Great blogging of the VON show by industry pundit Paul Kapustka. I like his post today in particular about the strength in numbers approach to the regulatory questions being asked of the VoIP industry. When VoIP was a flash in the pan with a few startups playing, the ancient telecom companies might have been able to deal the industry a fatal blow with some heavy regulatory action. But now that there is real momentum and many large players getting together to create a political lobbying power, it is reasonable to believe that the cow is long gone from this barn...

Why Skype is No Different

Great link found on Lance Tracey's Blog on why Skype is no different from other VoIP services. A thoughtful analysis by Aswath Rao on what Skype really is and is not, and how its technical architecture embodies faults that undermine the P2P marketing message. Excerpt:

Some have expressed reservation because Skype is proprietary. There have been previous instances where proprietary consumer items have found wide adoption without incurring huge collective cost. VCR is one of the examples that come to mind. But in this case there are some differences:

• Alternatives, based on standards are available
  
  
• Skype uses mostly well-known and open technologies; only the protocol semantics is proprietary
  
  
• Even though Skype (for that matter VoIP) is naturally a “product” and not a “service”, Skype views it as service. For example, they do not allow an enterprise to use their own GIS, instead of the global one, even if communication will be restricted to internal use alone.
  
  
• As I am told, there is no way to directly address another client, even if the IP address is known. Windows Messenger from Microsoft has the same limitation, whereas NetMeeting allowed direct communication.

In this respect also, they are just like other VoIP providers. It is disheartening to see that even those whose middle name should be P2P, think like this.

Competition for Skype

It was bound to happen. The model is just too darn attractive. Other companies were going to enter the p2p VoIP business, it was just a matter of time.

I just finished talking with the founder of one such company about his company and product -- John Jarvis of LitFiber told me that they are just a few weeks away from a beta release of their new p2p VoIP product iTALK 2U.

John claims that the sound quality in their product is significantly better than what Skype can achieve due to a significantly better codec that his team has built from the ground up. Even more interesting is the way he is approaching the market though -- he has built his product to be H.323 compliant.

Compliance with VoIP standards means that users of his product should be able to connect to any other VoIP infrastructure that supports the standard. This is a terrific competitive advantage over Skype's current closed architecture approach and should really transform the game. With this product, any of the companies that have made VoIP investments will be able to leverage the p2p VoIP phenomenon using LitFiber's product.

I eagerly await the release of the download...

Anyone in their garage can now be a telephone company...

Jim Kohlenberger blogs on VoIP
Excerpt:

VoIP has decoupled voice from the physical infrastructure itself. Now it can go independent of who your physical provider is. Of course, this challenged incumbent interests in that regard. Because of this decoupling it has allowed many new things. Microsoft build SIP (the protocol) just like HTML (http) and FTP, SIP is a protocol. Anyone in their garage can now be a telephone company for the entire planet. In shopping e-commerce you can get a voice rep. You can do online voice conferences. Included in game boxes and game consoles where kids use VoIP to communicate. Used in instant messaging. Star-trek type communicators are now used in Hospitals (Wi-fi based). All sorts of other things. Skype. Free World Dialup. Metcalf’s law: value of Internet goes up as you can talk to more people. New companies are broadband VoIP providers. Vonage, 8x8, etc. Plug in a regular phone to IP network and make calls. All types of new services are possible. Right now they look like regular telephones because that is what we expect. Many things are possible in the future. Question is how do we get there? How do we allow them to flourish so these new services can be made possible?

COMMENT:
On : 3/25/2004 7:27:06 AM Joshua Ruihley (www) said:

The "Jim Kohlenberger" post on Smart Cog isn't actually a blog posting by Jim. The post is of my notes from his presentation at the Internet Commons Congress yesterday.