Telephony Software
Niklas Zennstrom on the emerging realization that telephony is just software; a fact that anyone in the telephony world cottoned on to at least 5 years ago - its just taken the software world a while to catch up with the practice. Link via A VC. As with any recent convert they have a habit of skipping over inconvenient facts and making statements that are not based in reality. Or at least in any reality that we are likely to face in this investment cycle.
The main thesis of his argument is accurate, provided that we stick to fixed-line networks.
"One key factor is that when telephony becomes a software application, it will live on the edges of a network. There will be no centralized control. Telephony development cycles are still very long. But their carriers' services are very much commodities, and there isn't much differentiation.
When we can change telephony to an application, we'll be able to change the economics of it. That will increase software innovation, new products, services, features. And that will be in the hand of small, nimble, software development companies. There will be higher competition, and the services will live on the Internet."
Hoever, he overstates his case. In this generation of telephony software, JAIN SLEE-based advanced intelligent networking, it takes less than a month to build and deploy an enterprise VPN. It takes less than one day to build a SMS marketing app, or location-based service; i.e. if you are watching Euro 2004 / the Yankees etc live from their stadium then you can get free calls over such-and-such network. These services are available today with some mobile providers in Europe, none in the US (albeit one fixed-line provider could if it had a marketing department worthy of the name,) and increasingly across Asia. Becasue the mobile operator is capable of gathering information from its network they are able to provide considerably more intelligence in an application.
The Internet is the ultimate stupid network. Client-side software cannot completely replace IN and that "information from the network is needed to provide new applications. And its the new applications that are supposed to pay for giving voice (still the killer app) away for free. Without which Skype and the like remain disruptive tecchnologies and not disruptive business models. I continue to believe that network ownership provides the information that is required to provide really innovative applications.
The article goes down hill a little after that:
"There will also be increased robustness. If you have a switch go down or a gatekeeper, that's not a problem to the end user. They can go to the Internet and find another route of communication. That will not be a problem for a decentralized network."
Unless of course the switch / node etc happens to be the one to which you are connected. The quality of service difference between my ISP and my mobile provider is the difference in call completion between 80% (ISP) and mid-90's (Vimpelcom). Move that quality differential to Europe where Vodafone et al really does buy equipment with 99.999% relaibility and any piece of network software has to have the same reliability. He also continues to believe that existing networks are centralized - they are not as decentralized as the Internet - but intelligence is increasingly at the edge and controlled by the same software of which he talks.
He goes on to make some good points about the commoditization of voice. Which as an overall point even the FCC gets. However, to Skype, voice is just another form of data, albeit one that the "higher quality" Internet can cope with, whereas video is, as yet, not enterprise standard. I suspect his emphasis on the death of voice is poorly masked marketing. As is the plea not to be regulated. VoIP should not be regulated, not because its not a monopoly. His desire not to be regulated is because Skype, and others, do not want to have to guarantee connections for emergency calls. It's business model precludes it from taking responsibility, but it also won't take responsibility becasue their QoS is not good enough.
My bet stays with the cable companies, the telco's that are willing to innovate quickly and Vonage - in that order. And that's before we start talking about Skype security issues.
30 June 2004
Telephony Software
Niklas Zennstrom on the emerging realization that telephony is just software; a fact that anyone in the telephony world cottoned on to at least 5 years ago - its just taken the software world a while to catch up with the practice. Link via A VC. As with any recent convert they have a habit of skipping over inconvenient facts and making statements that are not based in reality. Or at least in any reality that we are likely to face in this investment cycle.
The main thesis of his argument is accurate, provided that we stick to fixed-line networks.
"One key factor is that when telephony becomes a software application, it will live on the edges of a network. There will be no centralized control. Telephony development cycles are still very long. But their carriers' services are very much commodities, and there isn't much differentiation.
When we can change telephony to an application, we'll be able to change the economics of it. That will increase software innovation, new products, services, features. And that will be in the hand of small, nimble, software development companies. There will be higher competition, and the services will live on the Internet."
Hoever, he overstates his case. In this generation of telephony software, JAIN SLEE-based advanced intelligent networking, it takes less than a month to build and deploy an enterprise VPN. It takes less than one day to build a SMS marketing app, or location-based service; i.e. if you are watching Euro 2004 / the Yankees etc live from their stadium then you can get free calls over such-and-such network. These services are available today with some mobile providers in Europe, none in the US (albeit one fixed-line provider could if it had a marketing department worthy of the name,) and increasingly across Asia. Becasue the mobile operator is capable of gathering information from its network they are able to provide considerably more intelligence in an application.
The Internet is the ultimate stupid network. Client-side software cannot completely replace IN and that "information from the network is needed to provide new applications. And its the new applications that are supposed to pay for giving voice (still the killer app) away for free. Without which Skype and the like remain disruptive tecchnologies and not disruptive business models. I continue to believe that network ownership provides the information that is required to provide really innovative applications.
The article goes down hill a little after that:
"There will also be increased robustness. If you have a switch go down or a gatekeeper, that's not a problem to the end user. They can go to the Internet and find another route of communication. That will not be a problem for a decentralized network."
Unless of course the switch / node etc happens to be the one to which you are connected. The quality of service difference between my ISP and my mobile provider is the difference in call completion between 80% (ISP) and mid-90's (Vimpelcom). Move that quality differential to Europe where Vodafone et al really does buy equipment with 99.999% relaibility and any piece of network software has to have the same reliability. He also continues to believe that existing networks are centralized - they are not as decentralized as the Internet - but intelligence is increasingly at the edge and controlled by the same software of which he talks.
He goes on to make some good points about the commoditization of voice. Which as an overall point even the FCC gets. However, to Skype, voice is just another form of data, albeit one that the "higher quality" Internet can cope with, whereas video is, as yet, not enterprise standard. I suspect his emphasis on the death of voice is poorly masked marketing. As is the plea not to be regulated. VoIP should not be regulated, not because its not a monopoly. His desire not to be regulated is because Skype, and others, do not want to have to guarantee connections for emergency calls. It's business model precludes it from taking responsibility, but it also won't take responsibility becasue their QoS is not good enough.
My bet stays with the cable companies, the telco's that are willing to innovate quickly and Vonage - in that order. And that's before we start talking about Skype security issues.
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