Today's Buzz:

Friday, August 26, 2005

Update on E911 Deadline

The Mercury News has done their usual workmanlike job of reporting on this story, and now we have some rough numbers with respect to just how many users could lose their VoIP service.

Vonage: As many as 32,000 users. The company says it has 96+ percent compliance on their 800,000 users.

8x8, Inc.: Somewhere between 4,500 and 9,000 users. The company has a userbase of nearly 90,000, and said it has reached between 90-95 percent, and cut off those who have not responded.

AT&T's CallVantage: Not reporting.

Now for some back of the envelope estimates.

Given a conservative estimate of some 1.5 million VoIP users as the Merc reports, and a charitable compliance rate of between 90-95 percent, that's between 75,000 and 150,000 users facing service termination, for an average of 112,500, or the population of a small American city, like my hometown of Salinas, Calif.

The ultimate question is whether this shedding of customers is likely to take down any of the industry players.

AT&T, nope. Vonage, cash flush from the VC market, and likely to be headed into IPO or acquisition, nope again. 8x8, Inc. (EGHT) is still rated as a buy by stock analysts despite some hiccups, and appears to be on the upturn. It continues to add new products and services, and is reportedly going great guns with its videophone sales and services. And at 150 employees, it's nimble enough to respond to market changes aggressively.

Now 4,500-9,000 users at $19.95/month (an assumption that they're residential users) works out to between about $90,000 - $180,000, or $135,000/month on average, or about $1.6m/annum, for a company that made $6m in the last quarter. On balance, that loss will sting like crazy, but the company should still remain buoyant. Who knows? It may even have a tonic effect on the company's other operations.

To put all this user-shedding talk in perspective, I always think of America Online, which had something on the order of a 30 percent churn rate for most of its early history. Which is partly why the company added more and more hours of free service with all those CDs with which it continues to bludgeon the market. AOL may have gotten two big for its britches, but it's still around, and Time Warner finally seems to be done digesting it.

posted by Sean Wolfe at 7:45 AM 0 comments

Thursday, August 25, 2005

Live and dangerous: a Q&A with 8x8, Inc. CEO Bryan Martin



Who: Bryan Martin

Age: 37

Title: Chairman & CEO, 8x8, Inc.

Where: Santa Clara, Calif.

Biggest Hit: The Packet8 broadband voice over Internet protocol (VoIP) and video communications service which lets broadband Internet users add digital voice and video communications services to their high-speed Internet connection. Videophone users now account for almost 5 percent of Packet8’s 74,000 lines, and are one of several drivers in the company's quarterly growth, up 54 percent in the most period to $6 million in revenue.

Next Big Thing: The company has been on a tear recently of adding new services aimed at enhancing its core market. On August 18, 8x8 announced the launch of interactive online community designed to create a forum for Packet8 subscribers and prospective VoIP users to share, communicate and learn from one another. More recently, the company announced a new Virtual Attendant service to its line of small business VoIP-hosted telecommunications solutions.

Live and dangerous
By Sean Wolfe
Special to IPInferno

It's a common perception when one mentions blogging to the greater proportion of people who don't blog: Visions of jobless wretches pounding away at the keys while waiting for their unemployment checks, and monomaniacal "enthusiasts" posting endlessly on their favorite things. In short, blogger today (for many) is little more than an updated definition of slacker.

It's also a common perception that company CEOs rarely diverge from the script mandated by their PR departments, and try like the dickens to avoid stirring up any controversy, because, after all, there is no god before shareholder value.

Bryan Martin, CEO of Packet 8 (and whom we've written before, and discussed in our Podcast series) defies both these descriptions. An engineer by training (he holds B.S. and M.S. degrees in Electrical Engineering from Stanford), he's inclined to speak and write plainly. Early in his executive career, he was also inspired by Micron founder Joe Parkinson who was famous for telling it like it was, and letting the chips -- no pun intended -- fall where they may.

There's a convergence here: Martin's firm has launched a blogging service for its users and resellers, and Martin, true to the leadership adage of leading by example, has his own blog where he holds forth on the issues confronting the VoIP space.

In our Podcast between IPInferno publisher Ted Shelton, and VOIP Magazine editor Bryan Richards, the pair wondered where the value was in setting up such a service. After all, with blogs now largely a commodity service, why launch a blog service of your own?

Martin responded to this and other questions in a telephone interview, and his answers may surprise.

SW: So the big question is why launch a blog service for your users. Where's the value in it for your users, and for your company?

BM: The original seed of this idea was that we sell these video phones as part of our Packet8 service. They're very popular, and our video phones are just flying off the shelves of our Web store.

Ken Pyle runs a newsletter about using these phones to do sit-down Q&As with other users; some people are using them as security devices, to do surveillance from their home. So we decided to open our site up as a general forum for a number of our users who are passionate mavens.

The impetus was to create a space where these users could meet other people who are video phone users, and meet folks who play with these new phones they bought. We saw a lot of interest in these users sharing best practices among themselves.

SW: But it's not just for power users, right?

BM: No. Some of the people using the site are resellers who find this a very cost-effective way to generate sales. I sympathize with that. Considering we run a retail channel, and retail has the worst economics I've ever seen, I think it's a very effective marketing tool. For us, it's just a further development in pushing marketing dollars into the Internet channel, which frankly, is where our customer is.

SW: To my thinking, that must give your PR people some sleepless moments. I mean, you have all these users, resellers, and so on. From a PR perspective, what's to keep the company's site on-message?

BM: Our PR folks are pretty forward-thinking. The fact is, the site is really designed for Packet 8 subscribers. It's a useful tool for them. And while it is moderated, we're not heavy-handed about it. If you come on and have a negative experience, we want that posted as well. Because another motivation for the site is to reduce costs of customer service.

SW: In what way, exactly?

BM: Of our SG&A [Selling, General and Administrative Expenses] budget, a quarter of it is dedicated to customer service. If there's a forum we can make available in a cost-effective way to solve these problems before they have to call us, and cost us money that way -- or worse, disconnect us, then everybody wins.

With the site, there's more two-way communication, and the users can feel like these guys are going out of their way to treat me well.

SW: That brings us to your portion of the site. Unlike many CEOs in the tech space, you have your own blog, and you actually write it. It's not a PR department thing.

BM: No, I'm live and dangerous!

SW: That's the killer quote of the day! But it must give them some gray hairs.

BM: Look, we're a small company of 150 people, and it's an open forum. Our PR people are too busy doing their day jobs to worry about me.

SW: You appear to be perfectly happy to editorialize on what you see in the marketspace, judging from your E911 column, which we've written about here before.

BM: Yeah, but to be fair, I'm biased as a poster on behalf of the company. I hope to get to the point where I can post some negative stuff, and tell people how we as a company are dealing with it.

SW: Do you think your willingness to be plain-spoken is a detriment or an asset?

BM: I think it's just my style. It takes people a while to learn about me. In financial meetings, for example, if things aren't going well, I say so, and sometimes people are shocked.

I think it's my education and my training as an engineer. We have a certain frankness.

I also became CTO under Joe Parkinson [former company chairman], and I learned from Joe's style. He was a big believer in stating the facts, and just the facts, and not putting a baloney spin on it.

I think that it comes across to our customers, when I send them replies to their emails. I think it's ultimately something I've turned into an advantage.

SW: Thanks very much for your time.

BM: You're quite welcome.

posted by Sean Wolfe at 1:18 PM 0 comments

Whither Vonage?

Speculation over Vonage's IPO plans is beyond swirling; it's a rolling boil. So for armchair CEOs watching the VoIP space closely, it's fast becoming an edge-of-your seat experience.

Vonage is reportedly putting in the finishing touches on a public offering hoped to garner something on the order of $600 million. That's not bad for a company that already secured $400 million from the VC market.

Rich Tehrani over at TMCNet opines on what will happen to the VoIP market if Vonage is successful in becoming a billion dollar baby.

CRM Buyer has another article on the subject which questions whether all this money-raising is in an effort to groom itself for acquisition.

IPInferno contributor and CMP Advanced IP Pipeline overlord Paul Kapustka is placing his bet that Vonage will be acquired prior to the IPO.

There are days when covering the ins and outs of the VoIP market is a lot like watching a smashmouth hockey match. This is most certainly one of them.

posted by Sean Wolfe at 11:59 AM 0 comments

Bursting the bubble

Don't believe the hype. That's the counterpunch from analysts at Forrester Research who contend that most consumers don't want VoIP services, and that the bullish projections on VoIP's market potential are mostly bull.

Forrester analyst Maribel Lopez contends that 70 percent of consumers surveyed have no interest in switching to a VoIP service, and that VoIP providers are too focused on price wars, not enough on developing compelling services.

CMP's Networking Pipeline has more on Lopez's views.

On a related note, Forrester also has a report out on the slow adoption of IP video conferencing and unified messaging solutions.

posted by Sean Wolfe at 11:51 AM 0 comments

Deadline looms

The FCC's August 29 deadline is fast approaching for VoIP providers to absolutely, positively inform their users of the state of their E-911 offerings.

And for those users who fail to inform their providers that -- yes, they understand their VoIP phone may not be able to summon the authorities in quite the same way as their landline -- will soon face a service outage.

Just how many users that will affect is an open question. Vonage and other companies claim they've passed the 80 percent mark, but that leaves a lot of wiggle room.

Will the Vonages of the world feel the sting of these users departing their collective fold?

Doubtful: The idea that there are users out there who have not been reachable by voicemail, email, and snailmail combined somewhat detracts from the notion that they were users in anything but name.

Moreover, those are the users most likely to -- I'll put this delicately -- not fully understand that their VoIP phones are significantly different from plain old telephone service. And therefore likely to make mistakes that, if lawyers get involved, can lead to legal proceedings.

There may be some exceptions. Some users may be taking lengthy excursions in Tibet, or perhaps fighting the war on terror in Iraq.

If so, the loss of service will likely lead to some disappointment. Of course, VoIP providers would no doubt be happy to reconnect them, after signing a few forms.

The Miami Herald has more coverage on this issue here.

posted by Sean Wolfe at 11:15 AM 0 comments

Wednesday, August 24, 2005

Enter the dragon

In a move that better positions Google to compete with Yahoo!'s Messenger capabilities, the search giant announced today it now has a VoIP offering.

The service, dubbed Google Talk allows GMail users to establish free PC to PC calls, providing their computer is already outfitted with speakers and a mic, now commodity peripherals on late-model PCs.

Speculation that Google was planning just such a move has made the rounds of the usual tech publications since almost eight months ago.

PCMag has the full story here.

posted by Sean Wolfe at 12:50 PM 0 comments

Tuesday, August 23, 2005

Cordless (Skype + Regular Phone) = DU@Lphone

Over the past week we have been testing a terrific new product just released in the US by RTX America called the DU@Lphone. This handy little device combines 3 technologies into a small well designed package -- first it is a cordless phone (the base charges as well as connects to all devices as you'd expect) but in addition to a cordless phone for your regular phone line, the DU@LPhone also connects to your PC and provides access to Skype! From the website:
Move up to 300m away from your PC and make Skype™ and SkypeOut calls. See who’s online with one push of a button on the handset. It’s a cordless Skype™ phone and ordinary landline phone in one.
I have the phone attached to my PC here at the office so I haven't been able to test the ordinary landline capability (we have a digital phone system via CallTower). But I am happy to say that the Skype aspect of the phone works great.

The display on the handset shows when your contacts come online or go offline. The handset has two different call buttons, one labelled "PC" but both with a green phone icon. Pushing the "PC" call button allows you to scroll through a list of your Skype contacts and select one to call. The sound quality is good and I have been able to roam throughout our office here talking on the phone. I haven't tested the full 300 meters range claimed in the ad copy though.

According to Stephen M. Gill, Vice President of Sales for RTX America, this product is available in Europe under the Olympia brand but that they decided to market it in the US under the DU@LPhone name. The European store is at dualphone.net. Engadget had a review back in November of last year. According to some of the comments from users in Europe the handset will also work with SkypeOut. We haven't tested that aspect as we don't use SkypeOut here at IP Inferno. Also important to the typical target customer for such a device -- the cordless phone now shipping from RTX in North America uses U.S. DECT -- so it will not interfere with 2.4 ghz WiFi networks.

At $139.99 this may seem like a lot to pay for a cordless phone, but if you are finding, as we are, that Skype is an increasingly important part of your communications - freeing yourself from your desk is definitely worth the investment. It is also reasonable to expect prices to come down as the phone gets into the distribution channel. RTX has a deal with Brightpoint to distribute in the US and expects the product to be in "big box retail" stores -- so expect a street price somewhat lower than the suggested retail price available today from the DU@Lphone website.

posted by Ted Shelton at 9:30 AM 0 comments

Monday, August 22, 2005

The mainstream press is starting to get it

So, the mainstream media is finally figuring out that VoIP is important enough to write about.

Courtesy of the Associated Press finally sorting through their inboxes stuffed full of aging press releases, we now have an AP article making its way through the consumer outlets. The article cites the Telegeography study, which notes, hey, there's 2.7 million VoIP subscribers in in Q2 "05, versus 440,000 in the year ago period.

They don't do the math to note that it represents a 513 percent increase.

That AP article has since been picked up by Gannett, so USA Today (finally) has the story in their tech section. The Boston Globe and Washington Post are also carrying the same article, proving once again that many U.S. newspapers would rather farm out their technology coverage than do it themselves, and probably proving that most newsrooms (I've worked in several) don't have a tech reporter to speak of.

In addition, ABI Research has a report out that predicts the market for VoIP will remain small compared to Plain Old Telephone and mobile service, at least until 2010, and you have two vectors of prognostication, neither of which are mutually exclusive.

We know already that wireless penetration in the U.S. has grown rapidly, and now stands over the 50 percent mark. It's also been hollowing out the landline market by a few percentage points per year. Add to that the fact that wireless data users have passed the 47 million mark, and that The Yankee Group has predicted the wireless data services market will grow to approximately $14 billion by 2008, but remains a small fraction (4 percent) of the overall market for wireless services.

Wireless, and its meteoric growth, is analogous to the VoIP market in terms of adoption rates and market potential. So the notion that VoIP remains small compared to the well-established market for landline telephony is not an entirely fair comparison. Comparing the VoIP adoption curve to wireless and Internet uptake would probably be more interesting, and that's something I'm currently working on.

But the fact that the mass media are finally reporting on it is, ultimately, indicative of which way the tide is flowing.

posted by Sean Wolfe at 12:15 PM 0 comments

Opinion divided on Yahoo's VoIP aims

Will they, or won't they?

That's the question on the minds of the VoIP editorial sphere, and the speculation in this case has Yahoo at its epicenter.

Yahoo, you may remember, was poised to enter the VoIP fray, according to Safa Rashtchy, a Piper Jaffray analyst. Rashtchy's speculative quotes propelled ripples throughout the tech trades and the blogosphere.

Then Yahoo denied it (days later), and there was a great silence, like a million keyboards being unplugged all at once. Then there was the weekend, and now speculation begins anew.

Bryan Richard, editor at VOIP Magazine (full disclosure: our fearless publisher Ted Shelton writes a column for Mr. Richard), who opines today that there will be no new VoIP providers this year.

The reason? Look no further than the heavy-handed tactics of the FCC on the E-911 front. Why would Yahoo want that kind of headache, Richard writes.

"Yahoo!’s Dialpad purchase was in the [works] prior to the E911 smackdown and while there may be some Dialpad technology in the recent Messenger release, I would imagine that acquisition is gathering a bit of dust," he writes.

ZDNet columnist Russell Shaw has a different take. Yahoo simply must be up to something on the VoIP front, and he imagines that the company's research labs are burning midnight oil to figure out exactly what.

Our two cents: Shaw and Richard are probably both right.

First, as Shaw notes Yahoo already has a toe on the water with respect to the VoIP capabilities already built into its Messenger service; Yahoo's Call Computer service lets Yahoo Messenger users call others who are similarly equipped, and also allows its users to place calls via Net2Phone.

With respect to market timing, Yahoo's under no obligation to enter this year or the next. It's all about delivering shareholder value -- on a silver platter if possible.

The smart thing for Yahoo to do would be to await the E911 thing to work itself out, and let Skype, Vonage, Nuvio, et al. take the heat, and pay the lawyers. Then acquire one of them. Clearly, as in the Dialpad acquisition, Yahoo has no compunctions about innovating through acquisition. It's what the big boys do.

posted by Sean Wolfe at 9:52 AM 0 comments

Friday, August 19, 2005

Podcast #3

The VoIP Magazine News Podcast #3 is now live...


Packet 8's online community, Yahoo!'s VoIP, and Who's Going to Buy Vonage This Week?



Get the Podcast

[MP3] Download the audio (MP3).



Hosts

Bryan Richard and Ted Shelton



Format

34:15, 15.6MB, MP3



Program

00:00 Welcome back

00:15 VoIP Magazine website redesign

00:58 Flood of PR Requests for Fall tradeshows

01:35 How to get Ted Shelton to your booth at a tradeshow

03:15 Packet 8 online community

05:10 Brian Martin blog


05:30 The perils of executive blogging

07:00 FCC wiretapping regulation

13:00 The perils of writing a regulatory column in a monthly magazine

14:00 Yahoo! VoIP service

18:15 Ted hates SIP!

19:00 Cool Thing of the Week: DualPhone

22:00 whichvoip.com

24:30 Segment: Who is Going to Buy Vonage This Week?

26:45 Enlightening disucssion of Wal*Mart's toliet paper inventory

31:05 Rupert Murdoch should buy a wireless company

33:10 Signing off

33:40 Ted wants your hate mail




LISTEN

posted by Ted Shelton at 10:07 AM 0 comments

Op Ed: Rumorama

Okay, so Yahoo is denying they want to enter the VoIP space.

This, of course, underscores the old journalistic saw that single source stories are suspect. I was amused to note just how many articles (I counted over a dozen) cited one Piper Jaffray analyst Safa Rashtchy. And no one else.

The article from Silicon.com we cited here in our earlier post (see Rumor Mill) featured another analyst from Daiwa, but he was only suggesting that should Yahoo take on VoIP that it would put pressure on Skype. Many other publications were perfectly happy to go on Rashtchy's quote alone.

Moving on, new grist for the rumor mill:

This article mentions coverage by the Wall Street Journal alluding to Google's reasons for IPO, Part Deux: Acquisition tear in Asia, and "secret plans" for entering the VoIP space.

Now, let's assume this rumor is true, and Google wades into the VoIP space.

I see two major effects: First, that smaller VoIP providers that don't happen to have $4 billion in their coffers will have to adopt the Galapagos strategy, and adapt by specializing. Second, consumer awareness about VoIP is going to get a big shot in the arm.

Whether Safa Rashtchy is right or wrong, the fact remains that Yahoo is already in the VoIP space through its Messenger service. If Google ultimately lurches into the VoIP space with its warchests full of cash, Yahoo will likely have to move defensively in order to flank their biggest competitor.

posted by Sean Wolfe at 9:53 AM 0 comments

Say what?

Here's a collection of interesting datapoints, brought to us by our friends at ZDNet.

It seems, per a Telegeography survey of 1,500 U.S. broadband subscribing households, that 30% of them have never heard of voice-over-IP (VoIP) telephone service.
Secondly, over half of the online households said they'd happily subscribe to a flat-rate VoIP service if it cost $30 a month.

Clearly the RBOCs and their ilk already knew this, which explains the pricepoint for AT&T's CallVantage VoIP service, and MCI's Neighborhood Broadband service,which was quietly launched in June.

The same survey also found 2.7 million US VOIP subscribers nationwide in Q2 2005, compared with just 440,000 in Q2 2004. The revenue generated from consumer VoIP services rang in at $220 million, but TeleGeography is bullish on the future, forecasting annual VoIP revenue hitting $3 billion by 2007.

So, we have price sensitivity, and a massive consumer education challenge, and a bright future if the survey proves to be indicative of the actual market space.

posted by Sean Wolfe at 9:34 AM 0 comments

TMCnet's David Sims: A Better E-911

TMCnet columnist David Sims has posted an excellent summary of the snares and pitfalls confronting VoIP companies under government mandate to provide E-911 services to their customers.

Sims writes that rather than simply imitate Plain Old Telephone Service capabilities on the emergency service front, players in the VoIP space would like to have the breathing room to rethink the service, and provide further enhancements.

VoIPers...would like to run it through routers, and provide maps, photos and other cool stuff the current system doesn’t do but which is possible with VoIP. Note that there’s no government regulation requiring them to do so, because it’s not the nature of government to require ingenuity and technological advancement. That’s why business is business and government is government -- business creates new realities and government comes along afterwards with the pushbroom.

Government can require VoIP to provide E911 the old-fashioned way, or it can let VoIP come up with a better way.


He goes on to speculate that Nuvio's lawsuit against the FCC (about which IPInferno has posted previously) is tantamount to a delaying tactic to the industry can "create the better way of doing 911 before they have to waste a great deal of time and energy complying with the very system their technology has rendered obsolete."

Sims' points are echoed in another article on Internetnews.com

posted by Sean Wolfe at 9:19 AM 0 comments

Thursday, August 18, 2005

Packet8 CEO fires back on E911

Packet8 CEO Bryan Martin writes an evocative post on his journal, which is also part of Packet8's recent effort to combine e-community and blogging services to its customers.

Martin, like many in the VoIP industry, begins with what amounts to the VoIP industry's mantra on E-911, which is of course he supports the law enforcement community wholeheartedly, "especially in this era of homeland security concerns...", and that his company has been duly diligent in attempting to comply.
And this is no criticism of Mr. Martin, save that his post reflects the currwent political climate: No one on an executive team wants to be seen as soft on terrorism.

Martin then goes on to mention some credible concerns, that are also being echoed in other quarters.

He writes:
What concerns me about the recent series of orders emitted from the FCC is the limited view they apply to VoIP as just a replacement for conventional telecommunications services. The FCC seems to be thinking only with their "legacy copper wire" view of the world. As an example, do the wiretap obligations extend to IP video communication services, as well?? And if the FCC were to ever clarify that video calls are not subject to CALEA obligations, because in that mode of operation the videophone is not "interconnected" with the PSTN, wouldn't all of the criminals out there just sign up for Packet8 videophone services?

My biggest issue with the timing of this order is that throughout the 18 months that I have been involved with the CALEA discussions at the FCC, the Department of Justice (DOJ), Federal Bureau of Investigation (FBI), and the Drug Enforcement Agency (DEA) (the three bodies that originated this wiretap petition) have not once produced a documented case where the interconnected VoIP industry, even in the absence of regulatory compulsion, has failed to successfully respond to a law enforcement request. In fact, there are only documented instances where the interconnected VoIP industry has successfully delivered information and media responsive to law enforcement requests. There are a lot of smart people working in the VoIP industry who are willing and able to solve all sorts of technological issues. But we need to have a definition of the problems facing the law enforcement community, whether they are real or theoretical, if we are going to be able to provide solutions for the benefit of everyone.


He goes on in a later post to say that ultimately, E911 compliance should be less about sending stickers warning customers that their VoIP phone is NOT like Plain Old Telephone Service, and delineates the real front in the battle to extend E911 to customers.


The future of E911 is all about how we get direct IP connectivity into the Public Safety Answering Points (PSAPs) – these are the dedicated people in emergency call centers who answer 911 calls. Not only will direct IP connectivity to these call centers reduce the infrastructure costs necessary to build and maintain these PSAP networks, but it will enable the transmission of other types of media, such as video, directly into the emergency call center. The VoIP and 911 communities’ ultimate goal needs to be focused on how we transmit more useful information to the first responders who are rolling to the scene of the 911 emergency. This information could include building blueprints, 2-way video from the scene of the emergency, pinpoint location information (not just a street address) and other types of data and media that would better prepare an emergency response crew for the situation they are about to encounter. The growing prevalence of wireless IP networks make these types of emergency response applications possible, and are even more useful to the crews in route since their in-route interaction with this information can be 2-way (vs. the limited 2-way radio chatter that is used today).


More good stuff in the same vein, on how the FCC is ultimately stifling innovation on his blog entry, made August 1.
And if any of our readership thinks IPInferno is singling out Mr. Martin for criticism, that's not this correspondent's intent at all. In fact, I'd like to compliment Mr. Martin for saying all this publically, when so many in the industry prefer to comment off the record.

posted by Sean Wolfe at 9:17 AM 0 comments

Wednesday, August 17, 2005

Should Vonage ape Dell on customer service?

That's what ZDNet's Russell Shaw has to say in his column today. Basically, it's a warning shot to Vonage, and just about every other tech company that relies on call centers armed with scripts and outsourced tech support.

Shaw's pointing to the latest American Customer Satisfaction Index, where Dell and Apple have long outperformed their competition in the hardware market.

Digging deeper, the report's commentary notes that even Dell, a top performer for years in the survey, took a sharp (6 percent) drop in customer satisfaction.

"Customer complaints are up significantly with long wait-times and difficulties with Dell’s call-center abound," said Prof. Claes Fornell, who among his other credits is also the director of the National Quality Research Center at the University of Michigan.

What Fornell's getting at here is something many have experienced firsthand at the consumer level. The customer's time is valuable, and if companies don't treat it accordingly, they run the risk of losing a percentage of their customer base.

All this calls into question the metric companies use to determine whether it is better to reduce the FTE count and outsource customer service to people who make little better than minimum wage, and often aren't even in the same time zone as the companies they call their clients.

For companies that live and die by their customer base, is it really better to hand over their most valuable possession to contractors?

It's a rhetorical question, but from this correspondent's perspective, the formula that includes the drop in fixed costs from outsourcing, should also factor in what happens when the likely attrition of a company's customers begins a few quarters later.

posted by Sean Wolfe at 8:47 AM 0 comments

Tuesday, August 16, 2005

Dual mode: Wave of the Future?

It will cost you $2,995, but if you want to read it, the firm In-Stat is seeding the infospace with blurbs from its latest look at the VoIP space. The gist? Bullish as all get out. It's like HDTV penetration projections in 1994.

Some high points:
  • By 2009, In-Stat forecasts that over 66 million cellular/WiFi handsets will be in operation.
  • Worldwide, consumer VoIP subscribers using wireless IP phones will grow from 2% currently to 73% in 2009.
  • Based on competition from mobile carriers without wireline operations, Europe will be the largest initial market for dual-mode smartphones.
  • While mass production of dual-mode sets is not scheduled until 2007, an In-Stat market survey found that over 80% of businesses have an interest in the technology.

posted by Sean Wolfe at 1:45 PM 0 comments

Rumor Mill: Yahoo to enter VoIP fray?

Silicon.com has this article, replete with analyst speculation, that Yahoo Inc. is in the throes of tossing its hat into the VoIP ring. Probably within the next two weeks, according to this article from the Red Herring.
Yahoo already offers PC-to-PC calling following its acquisition of Dialpad, so at least two analysts from Daiwa and Piper Jaffray will not be gasping for breath if Yahoo gets more aggressive about entering the space.
Speculation at this point amounts to a two-prong strategy for the Yahoovians, viz. free, stripped down type service, and a premium service with more bells and whistles. Naturally, we'll be watching the signal traffic for signs that this will indeed come to pass, and report it here.

posted by Sean Wolfe at 1:24 PM 0 comments

More E911 Rumblings

More shots fired on the E-911 front, this time in the legal trenches.
An appeal by Nuvio (detailed ,here by ZDNet correspondent Declan McCullagh and Anne Broache from ZDNet and CNet respectively) in the U.S. District Court of Appeals for the District of Columbia Circuit. The gist here is that Nuvio doesn't want to disconnect its customers who may not have responded to the company's manifold declarations that say something to the effect of: "You do realize, of course, that your VoIP phone can't possibly be expected to function like your hard line at home, right?"
In any case, Nuvio wants the court to review the FCC's regulations on the E-911 front, and other protestations to the effect that the FCC's ruling is unfair, unnecessarily burdensome, and unreasonable.
They haven't gone so far as to say "arbitrary, capricious, and unfair," but that's the general drift.
Russell Shaw, in his inimitable blog suggests five (count 'em) reasons why VoIP providers want a deadline extension. Bottom line? They want more time -- time to amortize their costs, time to file lawsuits, time to make their E-911 systems, not just bullet-proof, mind you, but proof against consumer lawsuits. I'll leave the other two suggestions to Mr. Shaw, whose pithy style to which I can do little justice.

posted by Sean Wolfe at 1:21 PM 0 comments

Monday, August 15, 2005

Can You Hear Me Now?

VoIP Magazine has launched a complete website refresh! A great new design is part of a larger plan to focus more resources on the Web, creating a more up-to-date resource to complement the monthly magazine. For some time now I have been contributing a column to the magazine and I recently started to work with Editor-in-Chief Bryan Richard on a podcast as well. My latest column is now on the site -- a short opinion piece about VoIP on mobile phones.

Excerpt
I am deep in EV-DO country, driving down a highway late at night with a friend using a Microsoft based phone. While I try to stick to the speed limit, he has other plans in mind. Connecting to EV-DO from his phone, he gets a 170K connection and assures me that he has often seen even faster rates. Things are about to get more interesting as he launches a VoIP application and “calls” a friend in Finland. “Terve!” comes the crisp and clear Finnish hello, thousands of miles across the Internet and through our mobile data connection... VoIP over cellular is here.
Read the rest on the Voip-Magazine website!

posted by Ted Shelton at 5:54 PM 0 comments

Saturday, August 13, 2005

Your tax dollars at work

The federal government, through the National Science Foundation, has plunked down over $300,000 to underwrite research into how to tap VoIP calls.

The CNET coverage of this important story is quite good, and well worth reading.

One key point is that the researcher claims to have already figured out a method to tap calls made on Skype.

posted by Sean Wolfe at 2:04 PM 0 comments

Tuesday, August 09, 2005

Q&A with Phil Zimmermann





Who: Phil Zimmermann

Age: 51

Title: Independent data security consultant

Where: Palo Alto

Biggest Hit: Released Pretty Good Privacy, an
encryption scheme for electronic mail in 1991. PGP, and PGP compliant applications are now the most frequently used programs for email encryption in the world.

Next Big Thing: Zimmermann is preparing to release ZFone, a working title for his latest application, which is aimed at encrypting VoIP calls. He envisions a suite of ZFone products, including software that will run on an existing VoIP client, as well as software that could reside on routers.



A conversation with Phil Zimmermann

By Sean Wolfe
Special to IP Inferno

Interviewed Wednesday by telephone, privacy advocate and PGP inventor Phil Zimmermann was generous with his time, and held forth on a number of issues, including his prospects for ZFone, a product he is developing that would encrypt calls made using VoIP.

The name “ZFone” is a working title for the product and Zimmermann is holding a contest on his Web site to give the products a flashier appellation. Currently, the product exists in prototype form for the Macintosh, but he plans to create a Windows version in the near future. He is currently at work raising money to underwrite the development of the product suite, assemblingr a management team, and working out a way he can distribute his prototype without running afoul of federal export restrictions.

SW: You first announced the product at the Black Hat Security Conference in Las Vegas two weeks ago. Is it typical to do product launches at such conferences?

PZ: I’ve only had two products in my life that were entirely my own creations – PGP and this one. PGP was not announced at a conference. I announced it on Usenet newsgroups back in 1991, but people don’t really use Usenet anymore, or if they do, it’s not in the same way, so I chose a conference setting.

SW: What was the reception there like to the announcement?

PZ: It was very positive. People were enthusiastic, and I also did a similar announcement the next day at DefCon, and that also went very well.

SW: What kinds of issues were raised in conversations you had at those conventions? Did people there really see a need for the product?

PZ: I think everyone there recognized the importance of VoIP as an emerging technology. I also think everyone recognized there are security problems with VoIP. At other conferences there wasn’t as much awareness, but at Black Hat, which mostly attracts security professionals, they were quite aware of VoIP’s security issues.

SW: There’s been some talk amongst the trade press, including here at IP Inferno (see our most recent podcast), that encrypting VoIP calls is something of a solution in search of a problem. How do you react to that?

PZ: (chuckles) Everyone who hasn’t been living under a rock the past few years knows the Internet is a rough neighborhood. The fact is, the Net is a playground for criminals. There are all manner of criminalexploitations going on right now, whether you’re talking about phishing, identity theft, distributed botnets, or malware that infects PCs within minutes of connecting to the Internet. Clearly, if we are to move our phone calls into such a hostile environment, we will
need protection.

SW: I think we’ve all read many of those stories, sometimes on a weekly basis, but how does that apply to VoIP calls? Isn’t there a kind of intrinsic security through obscurity, because of the labor involved in actually finding a specific conversation that could contain sensitive information?

PZ: Not really. There’s a piece of malware out there that if it can infect just one computer in the enterprise, it can sit there, capture all the VoIP calls made on your network, record them to disc, and organize those recordings like a Tivo player. In other words, these recordings can be browsed and selected for persons of interest to listen to. For instance, one could hear all the calls made by the in-house counsel to the outside law firm. Or what one CEO says to another. I think a lot of people are accustomed to the relative safety of PSTN (public switched telephone network), which we’ve had for a century. But the PSTN is like a well-manicured neighborhood compared to the crime-ridden slum of the Internet.

SW: That’s a pretty dark picture you’re painting.

PZ: You bet.

SW: That said, I’ve not read any stories about VoIP networks being exploited in the way you describe.

PZ: It’s a new medium, and it’s a matter of time. But think about this. Not a week goes by without another scandalous revelation about thousands of IDs stolen because of hackers breaking into this or that computer, or backup tapes from a UPS truck. I read this in the news constantly. We’re going to see the same thing happen with VoIP.

SW: Unless…

PZ: Unless we start protecting these calls with powerful encryption.

SW: So you’re advocating against complacency.

PZ: People who think there’s no problem with VoIP need to remember that we’ve heard the same things from complacent IT managers about email encryption years ago. These are the same IT managers who are now red-faced victims of break-ins and massive identity theft.

SW: What about the argument that law-abiding citizens don’t need to worry about encrypting their calls, because they don’t’ have anything to hide? And as a corollary argument, what about the idea that if it’s tough to wiretap VoIP calls, that could ultimately aid wrongdoers?

PZ: I’ve maintained that we need to protect our nation’s critical infrastructure from attacks by criminal organizations, terrorists and foreign governments.

The debate now about how this could be used improperly is very similar to the whole crypto debate in the 1990s about PGP, and export restrictions.

That question of whether strong cryptography should be restricted by the government was widely debated: the White House, the NSA, the FBI, the courts, the Congress, the computer industry, academics, and the press all got involved. This debate fully took into account the question of whether terrorists or criminals would benefit from using strong crypto, and in fact, that was one of the core issues of the debate. Nonetheless, the collective view was this – the FBI's objections notwithstanding: We would be better off with strong crypto, unencumbered with government back doors.

Ultimately, the export controls were lifted and no domestic controls were imposed. I feel this was a good decision, because we took the time and had such broad expert participation.

As we contemplate this momentous migration of our phone calls from PSTN to VoIP, it would be a bad move to reverse such a careful decision, one that will not only hurt our democracy, but also dangerously increase vulnerability of our nation’s critical infrastructure.

SW: But now the FCC has announced it is in favor of broadband providers providing backdoors to their networks for purposes of law enforcement wiretapping. So it would appear that that careful decision you describe has already been reversed.

PZ: I haven’t read the FCC’s recent decision.

SW: The text is not yet available as I understand it, but the gist of it is in their press releases.

PZ: I have a lot to say about my project and the design approaches I’ve taken, but when it comes to trying to evaluate how the FCC rulings affect me, I’m a little reluctant to speculate.

As I understand CALEA, it mainly applies to service providers, especially where things touch the PSTN. The point here is that I’m not a service provider, I just want to make products for people to use. For example, if you had to talk to someone with a normal telephone on the PSTN, and you had a VoIP connection, at some point the call has to go through a gateway from the network to the PSTN, so it would have to be decrypted. That would be a convenient place to wiretap, if the government chose to do so, but by definition, it would be outside the scope of my product space.

SW: Back to email, and PGP for a second. What about the critics who cite the fact that because the bulk of email goes unencrypted, that PGP is a solution in search of a problem as well?

PZ: Well, again we get back to the fact that we’re sending live customer data through a network that could be compromised en route, or at its destination where it’s stored. The fact that few people do encrypt their email is not an indication of a lack of need to encrypt it. If we did encrypt more of our data traffic, would be fewer of these massive compromises, and less data and ID theft.

I maintain that email should be encrypted in transit and in storage. I think we were right all along about that, and only now, with scandalized IT managers having been caught with their pants down in the press what seems like every week, are people starting to wake up and smell the coffee.

SW: PGP seems pretty popular among those who do encrypt.

PZ: And wildly so. If you look at the pie chart of all email sent, you’re right, a small sliver of it is
encrypted. But if you look at that small sliver, and expand it into its own pie chart, PGP (and OpenPGP compliant products) make up practically the whole pie.

I like to say that you need sensitive laboratory instruments to detect the pharmaceutical impurities of non-PGP encrypted email.

SW: So what are the next steps with regard to getting this product out? I understand you have a working prototype. How can people get their hands on it?

PZ: I do have a working prototype I can give to people. I’m currently working on raising funding, and getting a management team together. I’ve decided I’m not going to write a VoIP client from scratch, so I’m going to have to license one. But this and the other products on the roadmap all have fairly short development cycles.

SW: What are you looking for by way of capital?

PZ: I’m looking for an A-round in the $5 million range, and a seed round in the sub-million range, around $700k or so.

SW: So we’ll see all this sometime in “06-07?

PZ: No, that’s too pessimistic. There will definitely be releasable products ready within a year.

SW: So what about the prototype? Can our readers play with it?

PZ: Right now we’re getting the mechanisms in place for a Web page that checks the person who is downloading it and ensures they aren’t from North Korea, or Iran, or another embargoed nation. It will probably be the end of this month before we have that in place. In the meantime, I’ve been giving it to individuals one at a time.

SW: Thank you very much for your time.

PZ: You're quite welcome.

posted by Sean Wolfe at 11:00 AM 0 comments

Podcast #2

Bryan Richard and Ted Shelton offer Podcast #2 on VoIP...

Get the Podcast
[MP3] Download the audio (MP3).

Hosts
Bryan Richard and Ted Shelton

Format
44:30, 40.8MB, MP3

Program
00:00 Welcome back
00:49 August issue of VoIP Magazine now online
01:02 Talking about the Andy Mattes interview
02:34 Recap of last week’s stories
02:41 Cisco’s continued security problems
04:20 Mike Lynn interview at Wired News
05:30 Cisco.com’s passwords reset
06:50 PKI vs. Phil Zimmermann
09:35 Converns over the Ensign Broadband Bill
12:30 Ensign bill would supress Muni WiMAX
18:12 VoIP Developer’s Conference
22:30 The apps Ted and I would like to see
23:30 What should we expect to see on the expo floor at VON?
25:00 Tekelec Q2 financial
26:15 The cost of creating something that will fail is going to go down
27:50 Comcast offering VoIP service
29:40 Further defining our roles on the podcast
30:00 New Segment: Who’s going to buy Vonage this week?
39:45 Comparison of 8×8 and Vonage customer acquisition costs
41:20 New Segment: Cool thing of the week (postponed)

posted by Ted Shelton at 9:37 AM 0 comments

Research: ABI Predicts slow VOIP growth

The gist of the latest report from Oyster Bay, NY-based ABI Research suggests a few datums, none of which will be surprising to close observers of the VoIP space. First, the report suggests that even by 2010, the number of VoIP users will be less than the number of those using landlines. The second is that the VoIP space will be a dynamic market, and those that succeed will be those who have figured out how to add value, ie, generate revenues from their broadband infrastructure.

Michael Arden, principal analyst for ABI on the broadband space, goes on to suggest that the key battleground in the U.S. will be a redux of the old telco v. cable operator fracas. Noting the Japanese example, where Softbank BB has rolled out a substantial residential VoIP deployment, by using an existing DSL network and adding VoIP to its bundle of services.

"Because of the dominance of cable broadband, the battle in North America will be between hosted VoIP companies and cable companies. The cable companies will push VoIP to their existing customer base using cable modems," Arden said.

If Arden's right, what this will amount to is a resumption of what we'll call the Pipe War. A decade ago, the telco/MSO rivalry was all about who could deliver broadband services to the home. The idea then was who could deliver things like movies on demand, and similar services. The telcos thought they could hollow out the market for cable programming, and similarly, the MSOs thought they could carve out a sizable telephony business for themselves. Both were stymied to a degree by the expense of actually executing the Last Mile, ie, hooking up all the homes in their areas.

But to diverge into editorial for a moment, there was also more than a pipe problem. Consumer devices a decade ago were less interoperable. And consumer habits were more fixed -- ie, that's a television, I use it to watch television. That's a phone, and I use it to place calls. That's a computer, and I use it to run software, and check my email. All that is of course changing. One data point that's worth noting is Hewlett-Packard's latest strategy of targeting homes with what amount to multimedia centers, where the services of television, media playing, computing, the Internet, and probably phone services will all converge. It's the new version of the decade-ago dream of the digital appliance. And to the degree that pipe owners and the consumer electronics sphere work in concert, there's an opportunity. Consumers are already patching together their own multimedia systems. Softphones are on the rise. The computer is now capable of being the home's central communication device.

What will be interesting, in the way deja vu always is, will be to watch this latest front in the telco/MSO fight, and see whether the players learned anything since 1995, and more importantly, will rapid VoIP rollout to consumers and businesses generate the kind of revenue both sides are hoping for?

posted by Sean Wolfe at 8:33 AM 0 comments

Monday, August 08, 2005

FCC Wiretap Ruling: Releases and comments

The full text of the FCC's August 5 ruling requiring broadband and VoIP providers to accommodate wiretaps is not yet available, but the press release can be found here.

FCC Chairman Kevin Martin calls the ruling critical to national security in his comments here.

CNET's Declan McCullagh calls the FCC's rulings schizophrenic, and wisely notes that CALEA (The 1994 Communications Assistance for Law Enforcement Act) was never intended to specifically regulate the Internet.

posted by Sean Wolfe at 11:23 AM 0 comments

IP Inferno Interview with Zimmermann Tuesday

We at IP Inferno are looking forward to Tuesday morning, when we're scheduled to interview encryption and privacy advocate Phil Zimmermann, about whom we've written previously. The plan is to publish that interview in Q&A format here tomorrow, so be sure to visit.

And if you have questions for Phil, be sure to write us today, and we'll fold those into the interview as time permits.

Among the things we'll be talking about will be the recent FCC ruling requiring broadband providers to make their networks accessible to federal wiretapping.

Zimmermann's announcement two weeks ago that he plans to launch a product called "zphone" could, in theory, throw a spanner into the FCC's plans by enabling VoIP users to encrypt their phone calls so as to make them resistant to just such a wiretapping effort. No doubt Zimmermann will have a few things to say on that issue.

posted by Sean Wolfe at 10:44 AM 0 comments

Thursday, August 04, 2005

MCI accelerates VOIP plans

Eager as ever to put the Worldcom/Bernie Ebbers scandal behind it, MCI has announced that it's dipping its toe into the VOIP waters ahead of schedule.

MCI announced Wednesday (IP Inferno neglected to blog it, because we were having fun in South S.F. rubbing elbows with hardcore VOIP developers) that its wholesale VOIP product suite would be immediately available, citing strong demand, instead of rolling out later this year as previously planned.

The suite includes Carrier IP Termination and SIP Gateway Service. The company said the Carrier IP Termination product, available throughout the U.S., is aimed at customers who already own media gateway equipment and want save money by originate their own IP traffic. MCI's SIP Gateway Service is available to at least 54% of the company's U.S. business and residential customers.

posted by Sean Wolfe at 9:02 AM 0 comments

Wednesday, August 03, 2005

SF VOIP Conference Update

Call it a gathering of the tribes.
Management, bizdev, marcom, and programming folks filled the meeting rooms at the VOIP Developer Conference in South San Francisco today, where the topics ranged from forecasting the future of VOIP applications, to the nitty-gritty details of how to cope with the immense numbers of protocols involved in getting applications to talk to an increasing number of devices.

The landscape for VOIP developers is daunting, to say the least. At least a baker's dozen worth of protocols govern how VOIP applications would interface with celphones, softphones, messaging, games, multimedia, conferencing, and other applications.

The prayer among some developers here is that SIP (Session Initiation Protocol) will ultimately emerge as dominant, replacing 3G-324M in enabling multimedia communications. Amnon Gavish, VP of business development at Radvision characterized it as an "interim standard" at his keynote today, but said no one could tell when SIP would replace it.

"The number of protocols people have to be aware of, is almost as complex as the protocols themselves," he said. "324, for example, is a monster. It's hard to embed it into devices, and it's almost impossible to test. SIP doesn't want to be that complex, and it shouldn't be. Otherwise you have another monster."

Another challenge facing the future ability of SIP to become the defacto protocol for VOIP development is a move to add more functionality to the protocol. The downside there, Gavish said, is that the codebase could become bigger, and thereby more difficult to embed in future devices.

Protocol issues aside, Gavish was bullish on VOIPs future. "If you count it by the business we are doing, and what we sell, and the number of accounts and projects we're working on, then future of VOIP is huge," he said.

* * *

Looking relaxed after spending time in Palm Beach, Florida, Daniel Borislow, (of Tel-Save fame), and now CEO of YMax, echoed Gavish's sentiments.
"The market for wireless, wifi and VOIP have to get their acts together and adopt standardized coding. It would help the business a lot, but there isn't much of a motive for companies like Cingular and Sprint to do it. They have this 'family plan' thing, and I guess that helps them retain their customers."

* * *
What format will win the protocol battle drew the academic interest of Roger Miller, D. Sc. who is the Jarislowsky Chair in technological innovation and competition at the Ecole Polytechnique in Montreal. Miller's interest is in how technologies compete, dominate and are ultimately refined over time. He has a $6 million (CAN) budget to examine the topic, which ranges from how competing standards in the software and other industries are explored, exploited, and ultimately refined.

"This particular game in VOIP is a battle for architecture. Now it is an open system, and the architecture is changing all the time. Eventually, it will become a closed system, like the PC," he said.

* * *

Daniel Leih, a former product marketing manager for Microchip Technology Inc. in Chandler, Ariz. who is making the move to become strategic marketing manager for Motorola's computing group (also in Arizona) said the upside for VOIP is just beginning. "
This area is already having a huge impact on the telcos. It's a new revenue stream for them, but I think net-net, they're going to lose business
, because it's going to allow anyone able to put up a network into this market," Leih said. "I think we're seeing just the tip of the iceberg right now."

* * *

Certainly the interest in VOIP is good business for Rich Tehrani, president and group editor-in-chief for Technology Marketing Corporation, the outfit that's putting on this trade show.

The show is just in its second year, and Tehrani said it's doubled in size to 200 registered conference attendees and 1,000 registered for the event. The group's Los Angeles show (to be held this October) has managed to bag former FCC Chair Michael Powell, and ex-Hewlett-Packard CEO Carly Fiorina as keynoters -- something Tehrani anticipates will draw in the crowds, which he estimates will be around 7,500 attendees.

Subscriptions for TMC's Internet Telephony Magazine are also up to 40,000, from 30,000 last year.

posted by Sean Wolfe at 3:43 PM 0 comments

Tuesday, August 02, 2005

Opinion: E911, management by fiat

The FCC's approach to E911 is an attempt to manage an overwhelmingly complicated infrastructure issue by little more than edict. And the result leaves VOIP providers, at least those that offer mobile service, holding the responsibility for execution, and little wherewithal to pull it off.

It’s at best a Band-Aid measure for consumers, and a significant diversion for VOIP providers who are calling, emailing, and sending letters to their customers in the hopes of getting a 100 percent mark in complying with the FCC’s order, when the message is little more than “your VOIP phone doesn’t work like your other phone,” something most savvy consumers know already, a few tragic customers in Florida and Texas notwithstanding.

To add insult to injury, all the scrambling does nothing to solve the immense infrastructure issues, and serves only as a distraction from the real work, which is upgrading the infrastructure of emergency services nationwide to accommodate this sea change in telephony.

That immense task will ultimately fall to states and municipalities, many of which are strapped for cash in the wake of, among many other issues, the stock market correction prior to and following September 11, unfunded liabilities in public employee’s retirement plans, the escalating cost of petroleum, and in California’s case, the shock of Enron’s gaming the energy market.

VOIP companies like Vonage also face an entrenched rival, in the form of the regional Bell operating companies, who have been the sole provider of E911 to states and municipalities. Already stung by the wireless market, the RBOCs, according to some in the VOIP industry, have shown considerable reluctance to extend a helping hand to a new generation of competitors.

For all the handwringing rhetoric at the FCC and RBOC level for maximizing the safety of citizens and customers, there are few signs that fixing the infrastructure is underway.

Viewed topographically, the challenge for the VOIP providers is to provide the enhanced 911 service, ie, where an emergency caller's location and phone number is revealed to the emergency operator, so that if the call is cut off, public safety authorities at least have an idea where to investigate.

At this point, revealing a mobile phone user's location is still a troubling issue for mobile providers, and they've had a decade or better to get that capability in place. VOIP providers have had just a year or two.

The workaround adopted by some, notably Vonage, has been to provide 911 access to administrative numbers in some states to emergency services, rather than patching calls into the 911 switchboard. This “back door” approach has alienated some in the public safety sector, who see it as an opportunistic exploit, rather than an attempt by a relatively small company to offer its users an emergency service.

There’s been some comment at the FCC level that mobile phones should be fitted with global positioning devices, so that if the user makes an emergency call, their location will be broadcast.

The downside is that such a feature could open the door to abuse. Some consumers don't want to be broadcasting their location when using their celphones. It's like the old saw, on the Internet no one knows you're a dog. Except on a mobile device, no one knows you're playing golf, when you should, perhaps, be elsewhere.

In VOIP’s case, the problem becomes thornier. When a Vonage user makes an emergency call, the address provided to authorities is their registered address. That may work well for customers making calls from their home or office computers. But one of the appeals to some Vonage customers is the idea of having incoming calls find them where they are, not where they’re registered.

If the incoming call makes its way to you, whether you're at the office, at the home-office, on the road, or wedging your way out of a sand trap, there’s no way authorities will have reliable information in the event of an emergency. That’s one of the risks, one can suppose, of early adoption. But now court cases, administrative rules, and risk management are making their collective presence felt.

What this brouhaha amounts to is nothing less than an acknowledgement by the RBOCs and the government that VOIP is a credible threat to the existing order of telecommunications companies. Welcome to the big time.

posted by Sean Wolfe at 9:00 PM 0 comments

Packed to the gills

That's the word from Day One of the VOIP Developer Conference in San Francisco, where developers and other pros flocked to pack the meeting halls at the South San Francisco Conference Center.

The conference continues through August 4. IPInferno will post interviews from the scene Wednesday.

The scene there contrasts interestingly with MacWorld, held at the Moscone Center in S.F. in January. That show, while well attended, was a pale shadow of past events. Granted, Apple chose to launch Shuffle there, but surrounding Apple's massive booth, there wasn't a great deal to look at. Music software developers showed up. So did makers of wetsuit-style cases for IPods. But from the fresh product perspective, Apple was the standout innovator.

With respect to the show being packed, however, one must remember that the Moscone has about forty times the floor space -- and that's to say nothing of banquet halls -- than the South San Francisco Conference Center.

However, should the VOIP sector continue its momentum -- and recent analysis from Gartner Group anticipates that the format won't plateau for another 2-5 years, perhaps the show will get enough foot traffic to justify booking the Moscone in the not too distant future.

posted by Sean Wolfe at 5:06 PM 0 comments

Monday, August 01, 2005

Skype Worth MORE

Why didn't Skype sell for $3 billion when given the chance? Perhaps they looked at the recent investment in Vonage and, based on that valuation, thought that $3 Billion was a paltry sum.

According to industry watchers, the Vonage investment was made at a valuation of $1 billion... and Vonage has less than 1 million subscribers. Skype on the other hand has over 2 million people logged on at any one moment of the day and an estimated 20 million active users. Add to that the fact that Skype has become an internationally recognized brand name and perhaps a valuation of $30 billion is not unreasonable.

It will be difficult, however, for anyone (even Microsoft) to acquire a startup with hardly any revenue for $30 billion. Cringely writes:
Expect Skype to be sold, another viral marketing success sucked up by big business. Expect it to go to either a major broadband provider or, more likely, to a big mobile carrier with no fixed telephone assets.
Unless the founders just get greedy and want out fast, I think he's wrong and that Skype is much more likely to go public.

Hooray Internet Bubble 2.0...

posted by Ted Shelton at 10:53 AM 0 comments

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