28 August 2004

VC Business

Two great pieces from Always On (any you can't say that all the time). Mike Moritz, Eric Schmidt and Guy Kawasaki talk about staying awake and entrepreneurs, Part 1 and Part 2.
Vonage and VoIP

Vonage's latest infusion equity led to this first from Bill Burnham followed by this from Om Malik. As I know nothing about the online equity trading business I'll not add to sum of human wisdom being imparted in the similarities.

I had hoped that a comment that the company was cash flow positive before customer acquisition cost might inspire a Sage of Omaha type put down. Here's mine; my car costs nothing to run before petrol (gas), insurance, servicing and depreciation. If your business involves acquiring customers then stripping out the cost is at best duplicitous. Surely it is the job of the blogging community to point out such monstrous bullshit. Let the mainline press quote verbatim from press releases without thinking.

Anyway that was not the main point of the post. In my evolving thinking about sessions over IP my recent trip to Nizhny Novgorod, the centre of Russia's telecom technology industry, has taken me a step further. I am not smart enough to determine whether Vonage or Skype will be good investments. I am fairly sure that they won't be great companies.

This recent piece from the VON round up about BT becoming the European centre for VoIP interop testing would suggest that VoIP is not only not ready for prime time but that we have some time to wait before they are. The company that I was visiting in Nizhny's value proposition is building products that allow Nortel IP PBX's speak to Avaya etc. How can you expect to have an industry when there are no standards and no interoperability.

So I posit that there will be a crisis before we see the sessions over IP winners. If the owners of Skype and Vonage have cashed out before the crisis then great investments. I also posit that SIP will not spawn the winner; it's too large a signaling package and thinks like traditional telephony. Lets call this phase of the transition IP over TDM or new telephony like old telephony. The truly disruptive phase has not yet started and we don't yet know what it will look like - but keep reading Isenberg if you are looking for a clue.

27 August 2004

Fly Russia

The day after two Tupolev's, a Tu154 and a Tu134 were (allegedly) blown out of the air I found myself aboard a Yak 40 bound for Nizhny Novgorod. Two things struck me at the time; firstly nobody should ever have to pay money to get on to a Yak. Secondly that at the time I got on the plane I believed that the crashes had been caused by negligence or poor fuel. With a little rational thought it would have been clear that neither poor fuel nor negligence makes planes disappear from the radar screen. Nonetheless, my primary thought was negligence.

The FSB (successor to the KGB) was also hoping that it was negligence as they have told Putin that Chechen terrorism is under control.

Scanning the pages of the Komsomolskaya Pravda, a third rate producer of newsprint that does not justify the title newspaper, there was a picture of a sniffer dog at Domodeydovo Airport (the take off point for the two aircraft) with the caption "Sniffer dogs are better because they cannot be bought."

Entirely disabused of the negligence excuse, it struck me that the Chechen / fundamentalists will always be able to strike wherever and whenever they like because someone in uniform will always sell them a way around whatever security has been put in place to stop the terrorists - and will do so without any conscience.

19 August 2004

Sessions Over IP - Update

More on my previous post. Dan Dearing, VP Marketing at NexTone, another player in the border session controller space, believes that Carrier-to-residential (C2R) will amount to only 20% of the total revenue per port spend (from this article at Light Reading - Networking the Telecom Industry via Andy Abramson.

I sometimes get the feeling that conversations about the future of sessions-over-IP are held in two different planes. The "voice-will-be-free" crew are talking about residential voice. Those who see value in BSC's and feature servers in NGNs are more interested in enterprise sessions.
Telecom Quality / IT Ease of Use

It was cold, cold, cold in Moscow this weekend and dropped 22mm of rain on Saturday alone. The good news was that it allowed me to sit in a corner of my study and re-read a number of core think pieces including David Isenberg�s The Rise of the Stupid Network and his subsequent piece with David Weinberger, The Paradox of the Best Network. The end of the telecom company as we know them, as David Isenberg correctly identifies in this article for IEEE�s Spectrum Magazine The End of the Middle, is nigh. What comes next, and why, is significantly harder to fathom. Once you get beyond the �one sentence will cover it� CNN simplistic answers there remains substantial complexity. The good news is that in an industry undergoing significant tectonic shifts is the opportunity to invest in start ups that can become household names.

VoIP for early adopters has been viewed overly simplistically. It works pretty much all the time, it�s free as long as you don�t need to talk via a telephony network. So if it�s not working no great hassle, and pretty much all of us have a back up of some kind, even if we have junked our PSTN line. However, Vonage has had a couple of outages in the last two weeks that have caused some angst. Om Malik�s suggestion that this is The End of the Honeymoon seems to me right on the money. Someone, somewhere commented that he could remember the number of times that his (switched) phone system went down. On the flip side; whilst his telecom network never went down, his video conferencing never went up. Mercer Management Consulting forecasts (via The Register) that consumers will be happy to move to VoIP � provided that the quality is as good as their telephone line. It would be a good assumption that enterprise requirements are more demanding than those of consumers.

We backed a start-up in 2002 jNETx who built a next generation intelligent networking platform, or Open Convergent Feature Server based around a JAIN SLEE and OSA/Parlay that bridges the evolution from 2G to 3G mobile, and of course fixed platforms. Ensuring that the OCFS is a carrier grade product has required all the brilliance that a large room full of maths and science PhD�s can offer. Douglas Tait from Sun and the founder of the JAIN initiative posts here on the complexity of writing SS7/Voice signaling-to-IP gateways. (For more on the Service Delivery Platforms, JAIN SLEE�s etc I encourage you to read this 512 page, 16MB report from the Moriana Group. This link takes you to the download.)

Niklas Zennstrom CEO of Skype, a DFJ investment, has recently blazed a trail for the freeness of VoIP. Emphasizing the fact that Telephony is Just Software, which I blogged here. Rohan Mahy�s response covered here in The Register, has a go at the proprietary solutions such as Skype and begins to explain why SIP is a better solution � in the long term. Albeit that SIP has some issues that IAX may handle better.

In my immediate pipeline at the moment are two companies in the border session controller space and one in CPE / soft phone space. Both of them sit in so much of the pie covered by soft switches that definitions becomes difficult, if not meaningless. So this is not just an issue of connecting legacy networks to IP networks. To my mind the issue is ensuring that the mission critical data application otherwise known as voice is always available. One of the BSC companies spent considerable time educating me as to the very considerable issues running enterprise-quality voice over the Internet. I�m not there yet � let�s just say the problem won�t be solved tomorrow.

So what was the point of this link fest? I think that the point was to say;

  • The end of fixed line switched copper-based telephony is upon us � that much is clear.
  • It�s not a given that you can jump from there to free calls/sessions. Let me be specific; voice may be free but that does not mean that you won�t be paying for it somewhere, especially if you require quality of service. Video conferencing will not be a bundled all you can consume package for [10] years.
  • There will never be a global utility called The Internet.
  • Building networks and intelligence to provide enterprise quality mission critical applications requires significant tinkering with the Internet � it won�t come for free.
  • What the meaningful difference between soft switches, border session controllers, feature servers will be is unclear. It should mean the death of stovepipe applications but we are not there yet.
  • IBM GS is a more likely winner than Ericsson Services (or whatever they call themselves) because of their enterprise knowledge.
  • And don�t even begin to bring mobility in to this until we have clear answers to all of the above.
That�ll do for now.

18 August 2004

VC Skills

One post below is Bill Burnham on the skills needed to make a VC. His argument synthesized; if a VC is deep in a company they have made a bad investment. A good investment is getting all the parts right up front. Fred Wilson posts in my same assault on NewsGator about the value that a VC brings to the board, and the resulting discount in the next deal The Discount and the Work.

My take is the difference is one of emphasis not of substance. Getting involved beyond reading board papers is clearly massively important; but it should be at the strategic level. And management should be able to distill the advice - some good some bad, and act on it.
Operator vs Finance

Bill Burnham on what makes the The Perfect VC: Operator or Investor?

There's not much to argue with here, though I tend to believe that a good mix of skills across a Partnership is as important as the right skills in anyone person.

13 August 2004

VOIP Sub-Critical Dependency

This from Om Malik was going to be just another VoIP's not quite ready for prime time story's and was about to enter file 13 when I picked a comment from Andy Abramson "Outages like Vonage is having are to be expected, but not appreciated. With growth comes growing pains. Experience in a carrier is what one needs to look for, and a network that is fully redundant, fault tolerant. One has to ask, does your voip carrier have that?"

Andy then blogsOm's post w/o his comment. The post is not wrong, a very Russian way of putting things, but the comment is more correct. If, as Om says, he wants a form of communication that works all the time then VoIP's not there because the carrier network was designed to be best efforts only. To get fault tolerant VoIP we will have to pay a carrier who will give our voice carrying data packages QoS preference over the porn surfers. And that will carry a cost.

Whilst I believe in disruptive technologies and business models, it's part of the DFJ faith, fully fault tolerant VoIP is not as cheap and "free" as currently touted. Yes its an order of magnitude cheaper than circuit switched calls but it's not free. Free as a marketing trick in Russia does not work. Russians don't believe that something that's free is worth having - it's a communism thing. Now a shed load of Russians use cheap VoIP calling cards etc to call Israel and the US, but they expect the QoS that they get.

Bottom line; enterprise-VoIP will save companies a lot of cash - it won't be for free.

06 August 2004

Mmmmm

I want one of these, no camera, just a phone with Blackberry software. Siemens touts Blackberry-based business phone | The Register
Stupid Network; Intelligent Client; Stupid User

I believe in the first statement. The rise of the Stupid Network has happened and is happening. As processor power improves more and more intelligence is being moved to the client. The question is how much, and how much does it rely on an intelligent user. The early adopters are mostly intelligent enough to work through the issues. The mass market won't happen until the how the f*** do I make this work issues are ironed out.

So, my question for now; how much intelligence ends up in the client and how much stays at the edge?

Russia

Yesterday in the FT (subscription required) was a very good piece on the path that is being taken by Russia. Among the people heavily quoted is Al Breach, Brunswick UBS' (a leading investment bank) economist and a big Russia bull. The other, respected, huge Russia bull eating his words is Eric Kraus in this piece The Summer of Our Discontent. You may struggle to hear the munching as the words are masticated - I assure you that they are there.

The long and short of the pieces is that the Silovki (people of power - i.e. the ex-KGB and Putin's friends) have taken control of the economy. Their underlying reasoning is correct What happened during Yeltsin's time was mayhem - it was fun, but it was mayhem. They want in a strong state and a lack of mayhem - oh and substantial bank accounts (their own.) However, as they have taken control of the reigns of power the country has moved from an imperfect quasi-liberal economy to a corrupt natural resource economy. And it has done so in less than a year. KGB school seemingly teaches control for controls sake and fails to go on to explain consequences.

Lets consider the right of the Silovki (ex-KGB) to run Russia. Since the death of Brezhnev in the mid-80's the head of the Central Committee of the Communist Party were two septuagenarian ex-heads of the KGB, followed rapidly by Gorbachev. The septuagenarians died pretty rapidly - they were pretty-much figure heads anyway. As an aside, Gorbachev is revered in the West for his reformist tendencies that lead to the end of the Cold War. Actually he did not have a clue what he was doing - it all happened without his input. Crucially though, it was the hard liners in the Politburo - the Silovki - who hastened the collapse through their complete lack of understanding of what was happening in country that they believed that they ruled and controlled. The actual event was the 1992 coup. My take on the legacy of the Soviet Union after the death of Stalin and the removal of Kruschev is that it was a state run by the KGB. Brezhnev was allowed to stay in power long after he was officially useless because he was a puppet of the guys who thought that they ran the country - the KGB. They replaced him with two of their own; only for them to die. Gorbachev was the chosen successor because he was deemed to be controllable (southern town hick without a power base.)

The Soviet Union had some fantastic achievements during its 70-odd years of existence. It also had some fairly miserable failures. You can directly attribute the failures to the KGB. In particular Brezhnev's era is best remembered for it's economic stagnation. Almost complete control, almost complete stagnation. This legacy of success is what qualifies them to run Russia.

Fourteen years later, the successors to that legacy of failure have emerged from the hole that they had to hide in after the 1992 coup. Since their re-emergence Russia has suffered the Yukos crisis, a manufactured banking crisis, the return of capital flight (hint - buy real estate in desirable and warm places. Russians are exporting their money from Russia again and they believe in real estate, and football clubs) a stalling of reform and a very badly bungled withdrawal of social security from pensioners and veterans whilst increasing them for bureaucrats. It would appear that during their 10+ years in the wilderness they failed to read any Adam Smith.

What next? There is no opposition, the Silovki can fix elections, so there is no one to provide an alternative view of the facts. I previously believed that Putin would step down at the end of his second term to preserve his place in history. His place in history will be as the President who undid all that was working in Russia - so not stepping down pretty much cements that position.

It's also increasingly clear that he is not in charge. I have previously written that he is primus inter pares of a group of like-minded people. It would appear that he no longer holds that position. German Gref, the reformist Minister of the Economy, has made a number of very critical remarks recently. Putin will be loathe to fire him. It removes the pretence that he is trying to undertake liberal reforms. Loyalty to the party line is pretty much Silovki 1.01 so I would expect that he will be taking a long holiday somewhere warm this winter.

So after that bout of happiness I am heading to my dacha to enjoy Russia's summer and swim in the Moscow river.

Update; even previously loyal members of the Duma are speaking out.

04 August 2004

Vonage Outed or IT & Telecom Converges

Andy Abramson blogs Vonage's Outage which may or may not have been caused by Global Crossing. In an attempt to get through some 1,000 unread blog's courtesy of much loved NewsGator sitting in the inbox I skim read, deleted and then brought it back and started writing here;

We have an investment in a next generation IN / feature sever play jNETx which is putting in a replacement IN system in to an Irish mobile provider - when the system was launched with a new HLR and various other bits and pieces the whole system went down for 3 hours. I'm pleased to say it was not jNETx that caused it but it was A BIG DEAL with as many expletives as you want to add.

I am not saying that Vonage's outage was or is the cause of calling the end of VoIP - it's not; Vonage et al will continue to take business from PSTN's. However, service includes being available nearly all the time. Is that 99.999 or some lesser number - no idea. What seems logical is that enterprises will demand the same service levels from a full VoIP sytem as they got from the PSTN's, and that is built around 99.999% availability. So whilst Vonage is principally a retail / SoHo play a few hours spent at the beach is OK. To go mainstream it's not.

Whilst I am here a link to a previous post Go South Young VoIP'ers. Yesterday I was in a meeting with a company that claims to have solved the feature issues caused by SIP passing through IPPBX's passing through border session controllers (my middle name is esoteric.)

Andy makes the point that the S. American governments are trying to protect their local PSTN's by regulating out VoIP providers. Same thing happened here in Russia. In an attempt to get the highest price for Svyazinvest, the all controlling super-telco, they force all long-distance to pass through Rostelecom - the long distance carrier. Thus a number of local enterprise CLEC's wanted to move their clients on to full VoIP systems however, they found that when a VoIP call was made via SIP that passed through a BSC and then via an IP PBX (100% of legitimate enterprise VoIP traffic) they lost the features of the call when the IP PBX diverted the call / session to an internal "number". The call went through it just lost any "intelligence" - call forwarding, voicemail (?). Thus the Russian government's desire to protect revenues caused a Russian technology company to overcome a global problem. The law of unintended consequences strikes again.

28 August 2004

VC Business

Two great pieces from Always On (any you can't say that all the time). Mike Moritz, Eric Schmidt and Guy Kawasaki talk about staying awake and entrepreneurs, Part 1 and Part 2.

Vonage and VoIP

Vonage's latest infusion equity led to this first from Bill Burnham followed by this from Om Malik. As I know nothing about the online equity trading business I'll not add to sum of human wisdom being imparted in the similarities.

I had hoped that a comment that the company was cash flow positive before customer acquisition cost might inspire a Sage of Omaha type put down. Here's mine; my car costs nothing to run before petrol (gas), insurance, servicing and depreciation. If your business involves acquiring customers then stripping out the cost is at best duplicitous. Surely it is the job of the blogging community to point out such monstrous bullshit. Let the mainline press quote verbatim from press releases without thinking.

Anyway that was not the main point of the post. In my evolving thinking about sessions over IP my recent trip to Nizhny Novgorod, the centre of Russia's telecom technology industry, has taken me a step further. I am not smart enough to determine whether Vonage or Skype will be good investments. I am fairly sure that they won't be great companies.

This recent piece from the VON round up about BT becoming the European centre for VoIP interop testing would suggest that VoIP is not only not ready for prime time but that we have some time to wait before they are. The company that I was visiting in Nizhny's value proposition is building products that allow Nortel IP PBX's speak to Avaya etc. How can you expect to have an industry when there are no standards and no interoperability.

So I posit that there will be a crisis before we see the sessions over IP winners. If the owners of Skype and Vonage have cashed out before the crisis then great investments. I also posit that SIP will not spawn the winner; it's too large a signaling package and thinks like traditional telephony. Lets call this phase of the transition IP over TDM or new telephony like old telephony. The truly disruptive phase has not yet started and we don't yet know what it will look like - but keep reading Isenberg if you are looking for a clue.

27 August 2004

Fly Russia

The day after two Tupolev's, a Tu154 and a Tu134 were (allegedly) blown out of the air I found myself aboard a Yak 40 bound for Nizhny Novgorod. Two things struck me at the time; firstly nobody should ever have to pay money to get on to a Yak. Secondly that at the time I got on the plane I believed that the crashes had been caused by negligence or poor fuel. With a little rational thought it would have been clear that neither poor fuel nor negligence makes planes disappear from the radar screen. Nonetheless, my primary thought was negligence.

The FSB (successor to the KGB) was also hoping that it was negligence as they have told Putin that Chechen terrorism is under control.

Scanning the pages of the Komsomolskaya Pravda, a third rate producer of newsprint that does not justify the title newspaper, there was a picture of a sniffer dog at Domodeydovo Airport (the take off point for the two aircraft) with the caption "Sniffer dogs are better because they cannot be bought."

Entirely disabused of the negligence excuse, it struck me that the Chechen / fundamentalists will always be able to strike wherever and whenever they like because someone in uniform will always sell them a way around whatever security has been put in place to stop the terrorists - and will do so without any conscience.

19 August 2004

Sessions Over IP - Update

More on my previous post. Dan Dearing, VP Marketing at NexTone, another player in the border session controller space, believes that Carrier-to-residential (C2R) will amount to only 20% of the total revenue per port spend (from this article at Light Reading - Networking the Telecom Industry via Andy Abramson.

I sometimes get the feeling that conversations about the future of sessions-over-IP are held in two different planes. The "voice-will-be-free" crew are talking about residential voice. Those who see value in BSC's and feature servers in NGNs are more interested in enterprise sessions.

Telecom Quality / IT Ease of Use

It was cold, cold, cold in Moscow this weekend and dropped 22mm of rain on Saturday alone. The good news was that it allowed me to sit in a corner of my study and re-read a number of core think pieces including David Isenberg�s The Rise of the Stupid Network and his subsequent piece with David Weinberger, The Paradox of the Best Network. The end of the telecom company as we know them, as David Isenberg correctly identifies in this article for IEEE�s Spectrum Magazine The End of the Middle, is nigh. What comes next, and why, is significantly harder to fathom. Once you get beyond the �one sentence will cover it� CNN simplistic answers there remains substantial complexity. The good news is that in an industry undergoing significant tectonic shifts is the opportunity to invest in start ups that can become household names.

VoIP for early adopters has been viewed overly simplistically. It works pretty much all the time, it�s free as long as you don�t need to talk via a telephony network. So if it�s not working no great hassle, and pretty much all of us have a back up of some kind, even if we have junked our PSTN line. However, Vonage has had a couple of outages in the last two weeks that have caused some angst. Om Malik�s suggestion that this is The End of the Honeymoon seems to me right on the money. Someone, somewhere commented that he could remember the number of times that his (switched) phone system went down. On the flip side; whilst his telecom network never went down, his video conferencing never went up. Mercer Management Consulting forecasts (via The Register) that consumers will be happy to move to VoIP � provided that the quality is as good as their telephone line. It would be a good assumption that enterprise requirements are more demanding than those of consumers.

We backed a start-up in 2002 jNETx who built a next generation intelligent networking platform, or Open Convergent Feature Server based around a JAIN SLEE and OSA/Parlay that bridges the evolution from 2G to 3G mobile, and of course fixed platforms. Ensuring that the OCFS is a carrier grade product has required all the brilliance that a large room full of maths and science PhD�s can offer. Douglas Tait from Sun and the founder of the JAIN initiative posts here on the complexity of writing SS7/Voice signaling-to-IP gateways. (For more on the Service Delivery Platforms, JAIN SLEE�s etc I encourage you to read this 512 page, 16MB report from the Moriana Group. This link takes you to the download.)

Niklas Zennstrom CEO of Skype, a DFJ investment, has recently blazed a trail for the freeness of VoIP. Emphasizing the fact that Telephony is Just Software, which I blogged here. Rohan Mahy�s response covered here in The Register, has a go at the proprietary solutions such as Skype and begins to explain why SIP is a better solution � in the long term. Albeit that SIP has some issues that IAX may handle better.

In my immediate pipeline at the moment are two companies in the border session controller space and one in CPE / soft phone space. Both of them sit in so much of the pie covered by soft switches that definitions becomes difficult, if not meaningless. So this is not just an issue of connecting legacy networks to IP networks. To my mind the issue is ensuring that the mission critical data application otherwise known as voice is always available. One of the BSC companies spent considerable time educating me as to the very considerable issues running enterprise-quality voice over the Internet. I�m not there yet � let�s just say the problem won�t be solved tomorrow.

So what was the point of this link fest? I think that the point was to say;

  • The end of fixed line switched copper-based telephony is upon us � that much is clear.
  • It�s not a given that you can jump from there to free calls/sessions. Let me be specific; voice may be free but that does not mean that you won�t be paying for it somewhere, especially if you require quality of service. Video conferencing will not be a bundled all you can consume package for [10] years.
  • There will never be a global utility called The Internet.
  • Building networks and intelligence to provide enterprise quality mission critical applications requires significant tinkering with the Internet � it won�t come for free.
  • What the meaningful difference between soft switches, border session controllers, feature servers will be is unclear. It should mean the death of stovepipe applications but we are not there yet.
  • IBM GS is a more likely winner than Ericsson Services (or whatever they call themselves) because of their enterprise knowledge.
  • And don�t even begin to bring mobility in to this until we have clear answers to all of the above.
That�ll do for now.

18 August 2004

VC Skills

One post below is Bill Burnham on the skills needed to make a VC. His argument synthesized; if a VC is deep in a company they have made a bad investment. A good investment is getting all the parts right up front. Fred Wilson posts in my same assault on NewsGator about the value that a VC brings to the board, and the resulting discount in the next deal The Discount and the Work.

My take is the difference is one of emphasis not of substance. Getting involved beyond reading board papers is clearly massively important; but it should be at the strategic level. And management should be able to distill the advice - some good some bad, and act on it.

Operator vs Finance

Bill Burnham on what makes the The Perfect VC: Operator or Investor?

There's not much to argue with here, though I tend to believe that a good mix of skills across a Partnership is as important as the right skills in anyone person.

13 August 2004

VOIP Sub-Critical Dependency

This from Om Malik was going to be just another VoIP's not quite ready for prime time story's and was about to enter file 13 when I picked a comment from Andy Abramson "Outages like Vonage is having are to be expected, but not appreciated. With growth comes growing pains. Experience in a carrier is what one needs to look for, and a network that is fully redundant, fault tolerant. One has to ask, does your voip carrier have that?"

Andy then blogsOm's post w/o his comment. The post is not wrong, a very Russian way of putting things, but the comment is more correct. If, as Om says, he wants a form of communication that works all the time then VoIP's not there because the carrier network was designed to be best efforts only. To get fault tolerant VoIP we will have to pay a carrier who will give our voice carrying data packages QoS preference over the porn surfers. And that will carry a cost.

Whilst I believe in disruptive technologies and business models, it's part of the DFJ faith, fully fault tolerant VoIP is not as cheap and "free" as currently touted. Yes its an order of magnitude cheaper than circuit switched calls but it's not free. Free as a marketing trick in Russia does not work. Russians don't believe that something that's free is worth having - it's a communism thing. Now a shed load of Russians use cheap VoIP calling cards etc to call Israel and the US, but they expect the QoS that they get.

Bottom line; enterprise-VoIP will save companies a lot of cash - it won't be for free.

06 August 2004

Mmmmm

I want one of these, no camera, just a phone with Blackberry software. Siemens touts Blackberry-based business phone | The Register

Stupid Network; Intelligent Client; Stupid User

I believe in the first statement. The rise of the Stupid Network has happened and is happening. As processor power improves more and more intelligence is being moved to the client. The question is how much, and how much does it rely on an intelligent user. The early adopters are mostly intelligent enough to work through the issues. The mass market won't happen until the how the f*** do I make this work issues are ironed out.

So, my question for now; how much intelligence ends up in the client and how much stays at the edge?

Russia

Yesterday in the FT (subscription required) was a very good piece on the path that is being taken by Russia. Among the people heavily quoted is Al Breach, Brunswick UBS' (a leading investment bank) economist and a big Russia bull. The other, respected, huge Russia bull eating his words is Eric Kraus in this piece The Summer of Our Discontent. You may struggle to hear the munching as the words are masticated - I assure you that they are there.

The long and short of the pieces is that the Silovki (people of power - i.e. the ex-KGB and Putin's friends) have taken control of the economy. Their underlying reasoning is correct What happened during Yeltsin's time was mayhem - it was fun, but it was mayhem. They want in a strong state and a lack of mayhem - oh and substantial bank accounts (their own.) However, as they have taken control of the reigns of power the country has moved from an imperfect quasi-liberal economy to a corrupt natural resource economy. And it has done so in less than a year. KGB school seemingly teaches control for controls sake and fails to go on to explain consequences.

Lets consider the right of the Silovki (ex-KGB) to run Russia. Since the death of Brezhnev in the mid-80's the head of the Central Committee of the Communist Party were two septuagenarian ex-heads of the KGB, followed rapidly by Gorbachev. The septuagenarians died pretty rapidly - they were pretty-much figure heads anyway. As an aside, Gorbachev is revered in the West for his reformist tendencies that lead to the end of the Cold War. Actually he did not have a clue what he was doing - it all happened without his input. Crucially though, it was the hard liners in the Politburo - the Silovki - who hastened the collapse through their complete lack of understanding of what was happening in country that they believed that they ruled and controlled. The actual event was the 1992 coup. My take on the legacy of the Soviet Union after the death of Stalin and the removal of Kruschev is that it was a state run by the KGB. Brezhnev was allowed to stay in power long after he was officially useless because he was a puppet of the guys who thought that they ran the country - the KGB. They replaced him with two of their own; only for them to die. Gorbachev was the chosen successor because he was deemed to be controllable (southern town hick without a power base.)

The Soviet Union had some fantastic achievements during its 70-odd years of existence. It also had some fairly miserable failures. You can directly attribute the failures to the KGB. In particular Brezhnev's era is best remembered for it's economic stagnation. Almost complete control, almost complete stagnation. This legacy of success is what qualifies them to run Russia.

Fourteen years later, the successors to that legacy of failure have emerged from the hole that they had to hide in after the 1992 coup. Since their re-emergence Russia has suffered the Yukos crisis, a manufactured banking crisis, the return of capital flight (hint - buy real estate in desirable and warm places. Russians are exporting their money from Russia again and they believe in real estate, and football clubs) a stalling of reform and a very badly bungled withdrawal of social security from pensioners and veterans whilst increasing them for bureaucrats. It would appear that during their 10+ years in the wilderness they failed to read any Adam Smith.

What next? There is no opposition, the Silovki can fix elections, so there is no one to provide an alternative view of the facts. I previously believed that Putin would step down at the end of his second term to preserve his place in history. His place in history will be as the President who undid all that was working in Russia - so not stepping down pretty much cements that position.

It's also increasingly clear that he is not in charge. I have previously written that he is primus inter pares of a group of like-minded people. It would appear that he no longer holds that position. German Gref, the reformist Minister of the Economy, has made a number of very critical remarks recently. Putin will be loathe to fire him. It removes the pretence that he is trying to undertake liberal reforms. Loyalty to the party line is pretty much Silovki 1.01 so I would expect that he will be taking a long holiday somewhere warm this winter.

So after that bout of happiness I am heading to my dacha to enjoy Russia's summer and swim in the Moscow river.

Update; even previously loyal members of the Duma are speaking out.

04 August 2004

Vonage Outed or IT & Telecom Converges

Andy Abramson blogs Vonage's Outage which may or may not have been caused by Global Crossing. In an attempt to get through some 1,000 unread blog's courtesy of much loved NewsGator sitting in the inbox I skim read, deleted and then brought it back and started writing here;

We have an investment in a next generation IN / feature sever play jNETx which is putting in a replacement IN system in to an Irish mobile provider - when the system was launched with a new HLR and various other bits and pieces the whole system went down for 3 hours. I'm pleased to say it was not jNETx that caused it but it was A BIG DEAL with as many expletives as you want to add.

I am not saying that Vonage's outage was or is the cause of calling the end of VoIP - it's not; Vonage et al will continue to take business from PSTN's. However, service includes being available nearly all the time. Is that 99.999 or some lesser number - no idea. What seems logical is that enterprises will demand the same service levels from a full VoIP sytem as they got from the PSTN's, and that is built around 99.999% availability. So whilst Vonage is principally a retail / SoHo play a few hours spent at the beach is OK. To go mainstream it's not.

Whilst I am here a link to a previous post Go South Young VoIP'ers. Yesterday I was in a meeting with a company that claims to have solved the feature issues caused by SIP passing through IPPBX's passing through border session controllers (my middle name is esoteric.)

Andy makes the point that the S. American governments are trying to protect their local PSTN's by regulating out VoIP providers. Same thing happened here in Russia. In an attempt to get the highest price for Svyazinvest, the all controlling super-telco, they force all long-distance to pass through Rostelecom - the long distance carrier. Thus a number of local enterprise CLEC's wanted to move their clients on to full VoIP systems however, they found that when a VoIP call was made via SIP that passed through a BSC and then via an IP PBX (100% of legitimate enterprise VoIP traffic) they lost the features of the call when the IP PBX diverted the call / session to an internal "number". The call went through it just lost any "intelligence" - call forwarding, voicemail (?). Thus the Russian government's desire to protect revenues caused a Russian technology company to overcome a global problem. The law of unintended consequences strikes again.