According to Webster.com, the noun
frustration dates back to 1555 A.D. The definition reads "a deep chronic
sense or state of insecurity and dissatisfaction arising from unresolved
problems or unfulfilled needs." More on-topic for Internet telephony, let's
explore "Telecom frustration," which I define as living in a heavily
populated area near where your colleagues all have high-speed Internet
access and you have no chance of getting broadband access any time soon. All
the while you see ads on TV, in the newspaper, and radio for speedy Web
surfing that is simply not available where you live.
This is the case with many of my coworkers that live in various parts of
New York, New Jersey, and Pennsylvania. These people browse at full speed in
the office and are forced to deal with sluggish dial-up access at home,
keeping them from downloading any video or audio files of length, as well as
large graphics necessary in their jobs.
I wonder whatever happened to supply and demand? Weren't we all educated
about this in high school economics? Who will supply broadband connections
to the people that so desperately need them?
So many CLECs and other providers jumped into the pool trying to quickly
splash up the market share in the broadband area, and suddenly the capital
markets eroded beneath their feet leaving many companies and consumers
without any broadband options. Unfortunately for many new service providers,
they are now being faced with the prospect of sinking. Their business plans
called for them to receive investments for a number of years while gaining
market share and that funding is just not materializing.
So what do today's service providers have to do to make money?
For those of you that have been reading Internet Telephony Magazine for a
while, you know that we have been excitedly heralding the onslaught of new,
exciting, better, and more profitable services for a few years now. I've
spoken about new services at trade shows. I've written about them. I am
sorry to say that they have just been too darn slow to take off.
Part of the reason for the slow pick-in service implementation in my
opinion is the large opportunity in the arbitrage market -- there is a race
on to supply international users with IP telephony service while the rates
are still high enough that they can be easily undercut. This market is quite
large; and as deregulation is a recent phenomenon in most countries, it will
get bigger. I mentioned this a bit last month. We can expect the arbitrage
opportunity to be huge for two to four years (in my estimation) and then the
market will slow a bit.
Certainly arbitrage is almost dead in the domestic U.S. market. Really,
how much money can you really save when the major providers charge around
five cents a minute? This brings us back to how the new breed of integrated
communications providers are going to make money. This of course in a single
word is services.
But what kind of services you ask? I've asked the same question of many
industry insiders on my recent whirlwind tour through Canada and the greater
Boston area. One company that caught my eye in the course of my many
meetings was Ubiquity, whose motto is "service
providers need to provide value added services." What a great place to
start, I surmised.
We've all heard of unified messaging-style services, but I wanted to look
for more compelling services. I decided to ask the company for a service I
had never heard being offered: Fedex or
other carriers could sell a "Share the moment" service and you could check
the box corresponding to this service on an envelope when you send it out.
Since Fedex agents are already able to connect wirelessly to the home office
and transmit the status of packages that are sent, the addition of this
service is quite rudimentary. A Fedex agent in the home office needs to just
call the sender and the recipient of the package and conference them
together. Ubiquity responded with a SIP-based intelligent connection service
that rings when a package is delivered.
This service would be a great e-commerce booster. I recently sent some
books to my cousin on his birthday and would definitely have checked this
option if I had it. I have been thinking about how other delivery companies,
such as flower shops, could take advantage of this service. It occurred to
me that the delivery person could use a WAP phone as a method of delivery
confirmation. Drivers can have a Web page with their personal delivery
schedule saved in their favorites menu and check off each delivery as they
are made. An ASP could once again conference the two parties together at the
Another potential service the company discussed with me is of the
follow-me variety, but it would additionally offer the ability to interface
with your scheduling program to determine your location including any
conference rooms you may be in.
I wondered how these types of services could be marketed, as I know that
many technology companies typically make lousy marketers to begin with. One
great response was that you could give away a basic service that easily
leads the user to try a paid service. (Dialpad
has done this phenomenally well. First they allowed domestic long-distance
calls to be made for free and then started charging low prices for calls
outside the country.)
I was intrigued by what Ubiquity's ideas and philosophies were. I wanted
to delve deeper by asking some important questions about reducing consumer
call-cost in order to help today's service providers (both old and new)
learn more about generating new revenue streams -- a necessity in today's
profit driven capital markets.
I'd like to thank Ubiquity's Martin Sendyk for taking the time to answer
Q: How should the telecommunications industry view the recent shake
out in the carrier space?
A: It's sad, but it's as natural as the laws of competition. It's
difficult to be a successful service provider because competition is
cut-throat. The value of current services is decreasing, and arbitrage-based
opportunities are drying up. Amongst this growing need for differentiation,
customers are demanding more. Carriers have spent a lot of money deploying
IP-based networks. The current situation leaves service providers looking at
the entire IP-based infrastructure and asking themselves "Where is the
Q: What is it going to take to breathe life back into this carrier
A: The solution begins with the right attitude. An attitude of
value-added as opposed to cost reduction, an attitude of providing something
to the end user that is better and more useful as opposed to simply cheaper --
these attitudes are key. Service providers need to stop telling their
customers "Come with me and I'll save you a dollar." Instead they should be
saying, "Pay me a dollar more," to the subscriber, "because I have a very
special service for you." The bottom line is that the solution lies in new
business models and new technology, specifically in new value-added
converged services based on Session Initiation Protocol (SIP).
Q: So what's it going to take to get us to this "Promised Land of SIP?"
A: Well, we're basically there. Softswitches and the application
services platforms that sit architecturally above them, need to be flexible
and robust enough to enable service providers to develop revenue streams by
creating and deploying next-generation converged services both quickly and
cost effectively. Since salvation for the carrier community comes with
differentiation, service providers need to have the flexibility to build
specific custom services for niche target markets. This is really the only
way for them to inject the dollars back into the dial tone and feed their
networks with traffic generated by new applications.
Q: Does this mean architectural changes in the network?
A: It sure does. On the architectural side it means doing away with the
monolithic structure of the traditional Class5 CO switch. Enter the
softswitch. The most important concept associated with a softswitch is that
it allows for a "Service Layer" to rest (architecturally) on top of it.
Remember -- a softswitch is really only as exciting as the services that it
can support! Softswitches must be flexible enough to allow an application
services platform to rest comfortably above it in the Service Layer.
Q: Wait a minute, what is this independent Service Layer anyway?
A: The Service Layer is an architectural construct, a concept if you
will. It is this Service Layer that is the bridge between service delivery
vehicles that touch the end user (phone, PC, mobile phone, PDA, etc.) and
what I will call the "underlying infrastructure." This independent layer of
mediation and the application services platform that lives in this layer
latches to the softswitch and the core of the network via SIP.
This Service Layer must be an independent layer. This means that most
services should not be built right into a softswitch because it only leads
to re-creating the same monolithic architecture that we had before. We don't
want to go back to a world where service providers are single sourced, and
held captive by large network equipment vendors. An independent Service
Layer means that service providers can build multi-vendor networks. It's
going to be a "network of networks" in the end, and subscribers will expect
to get their service of choice ubiquitously and seamlessly.
Q: Is this all really coming down to "a war of architecture?"
A: It sure is. And what I've described is the only architecture, which
allows a truly open environment where a third-party community of developers
can for the first time in history create converged telecom services. These
services can be created rapidly and cost effectively. Gone are the eight to
24-month wait cycles for service deployment. CLECs (those that remain!) and
other customer carriers can differentiate their service offerings and move
their business models to the next level long before they build out their own
networks. It's all about getting the architecture right, and it's all about
Q: Why does SIP keep coming up in our discussions about what carriers
need to do next?
A: SIP (i.e., IETF RFC2543) is the right vehicle for this because of its
low complexity, easily extensible, horizontal architecture. Most importantly
however, SIP "thinks like the Internet." It borrows on many existing
Internet protocols and become the ideal vehicle for the converged services
that represent the value added we talked about in the beginning. SIP is also
in a good position to dominate over potentially competitive protocols such
as H.323 because next-generation call control companies, service creation
environment companies, and, most importantly, the service provider
community, are embracing it.
The future of communications is without a doubt going to be full of service
providers hosting a variety of services. The reasoning behind this trend is
obvious -- the time has come for all service providers to start thinking
about the future and start providing these services to customers. This is
the best way, at least in my estimation, for these companies to start
swimming in the turbulent economic environment facing them today.
To The June 2001 Table Of Contents ]