Having written about VoIP since the mid-late nineties and in this publication since 1998, I can tell you something amazing is happening in the market. The energy level keeps rising. This is our biggest issue ever and for that I thank you the readers for loyally reading this magazine through good times and bad and responding to the advertisements you have seen in these pages over the years. Whenever I come into contact with readers that have been with us since 1998 they always tell me they knew that VoIP would one day be here. They thank us for being the only publication consistently covering the space over the years. To all of you I say youre welcome. I am of course also speaking on behalf of Editorial Director Greg Galitzine, and TMC CTO and head of TMC Labs, Tom Keating.
To continue, I have some great news to share with you. Today is the big day. VoIP is here. There are a number of reasons that lead me to believe we have reached an amazing threshold and are beginning to pass it. Perhaps the most shining example is the fact, that as I write this article, eBay announced they are purchasing Skype Technologies. Couple this with the recent news that Vonage is filing for an IPO.
News of acquisitions and IPOs were commonplace in the technology market in the 1990s but recently we havent seen so many. This is why it is even more amazing to me that we are once again seeing multi-billion dollar acquisitions for companies that dont make much money.
Which brings up a valid point: the industrys biggest challenge is to determine how to make money. Is Vonage making money? We will find out soon. What is the companys plan for generating revenue tomorrow? This is a more pertinent question. There seems no more appropriate time to discuss what is next for VoIP than today, perhaps the VoIP markets biggest day. In just a few short years, VoIP has gone from a technology that was not too well-known to a household word. VoIP today reminds me of ATM machines. A few years after they launched them, even your grandmother was using one.
But is usage by the elderly a barometer of success? In and of itself, perhaps not. But there is something exciting happening. Once people get comfortable with VoIP and start using it they realize they can do things they couldnt do before. People are listening to voice mail on their computers, they are using a GUI to manage their call forwarding, and they are using their telephones anywhere there is Internet access. After a few decades where the biggest advancement was Caller-ID and touch-tone dialing, people are noticing a change for the better.
The population is slowly discovering the fact that they can use VoIP on a wireless network and use WiFi telephony to do all the amazing things they can do with landline VoIP and more. Service providers are seeing that WiFi telephony and dual mode phones will allow them to make more money. Of course we are early in the technologys infancy but I predict soon WiFi telephony will be advocated by cell phone providers.
Pay Per Call
There has been a tremendous amount of speculation documented on places like my blog at Tehrani.com that VoIP is going to be used by companies such as Google to allow pay-per-call advertising. Google makes a nice living selling ads on a pay per click revenue model today. Using VoIP, they can charge advertisers to make their phone ring with a customer call. Google has even started to experiment with print ads where they sell advertisers business card size ads that can have Google managed phone numbers. Google acts as a middleman and is able to measure advertising effectiveness in this manner.
Verizon is rolling out FIOS, its much-anticipated fiber-to-the-home solution allowing customers to take advantage of voice, video, and data from a non-cable company. Bundling services is something we will see more and more of. You dont need to own a data pipe to be able to stream video and radio to customers. I expect to see Vonage, Skype, and others soon doing exactly this.
Vonage has also been experimenting with WiMAX as a way to bypass the pipes owned by the cable/ILEC duopoly. In order for WiMAX to work, there needs to be affordable licensed spectrum and the unlicensed spectrum must not get too clogged with towers. It is early in this technologys lifecycle but for now we can say WiMAX will do exceedingly well in rural areas; metropolitan areas are a bit of a question mark.
Broadband over power line can revolutionize how we can communicate as the FTC has hinted or it may just be a dud. It is perhaps too soon to say, but if it does work, imagine being able to plug a WiFi access point into a wall and immediately having a hosted, wireless PBX at your disposal. An MIS department might be able to just plug access points around the corners of an office and have full data and voice connectivity. Wiring closets may soon go the way of the mainframe. In fact youll be able to put your old mainframe in the wiring closet if you still have a sentimental attachment.
Google has been dabbling in providing free Internet access via WiFi hotspots. They are experimenting with the ability to show ads to WiFi users based on their physical location. Imagine a movie theater advertising its movies on Saturday night to WiFi users within 25 miles of the theatre. How about a restaurant that has a lighter than usual lunch crowd quickly getting ads out to everyone within walking distance in Manhattan?
If the concept works, we may expect Google to be responsible for widespread adoption of free WiFi in the country and beyond. The company is flush with cash, they can do anything they want right now.
Monitoring To The Max
VoIP makes it exceedingly easy to monitor and record phone calls. One of the problems with Skype is that corporations cant monitor its use. Expect as part of eBays strategic plan to roll out an enterprise-friendly VoIP service that allows monitoring. Eventually Skype can even offer a service that listens into calls and scans for keywords. Most corporations would like to ensure there is no profanity spoken over the phones at work. Others need to record and monitor calls for Sarbanes Oxley or HIPAA compliance. Call centers will need to monitor their agents conversations for profanity and the mention of a competitors name. Google, eBay, and other VoIP providers are in a perfect position to do this for a fee.
Just In Time Communications
This market is really on fire I describe JiTC as the ultimate productivity booster a set of technologies squeezing inefficiency out of communications. I am seeing collaboration tools coming online from many companies. Some are PBX providers such as Avaya and Inter-Tel, and others are software companies like Oracle and Microsoft. There is a bright future in helping people communicate more effectively.
It seems that ATCA is the new development platform for VoIP applications and Intel and others are pushing this platform as the perfect place to develop your products, whether they are softswitches or session border controllers. By going to ATCA, companies can save money on proprietary buses and allow Intel to share in their development efforts.
HMP is gaining steam but is still not the best way to go for large-scale service provider applications. In time HMP will challenge DSP resource boards but many in the industry representing the board makers are eager to point out that the more sophisticated host processors get, the more we need them to do. This means that the high-end market will always need DSP resource boards.
Skype Voice Service
This could have fit in someplace above, but it is such a big idea that I decided to put it in its own category. By teaming up with VoiceXML hosters and platform makers, Skype allows any voice developer to make applications that can be accessed by Skype users worldwide. If you have a horoscope application that works in ten languages, today, you need banks of 800 numbers in different countries. Not anymore. Now you use Skype and everyone has access immediately. Skype takes a percentage as any middle-man would. In speaking with people in the industry, they tell me off the record that porn will be the biggest application of this service as phone numbers will not show up on a credit card or phone bill.
Just like the Internet itself, the porn industry will be a huge part of the business but its use will finance better infrastructure and other large applications which I predict will be gambling, horoscopes, games, and dating lines. Hey, I didnt say the future will be pretty.
The Presence Of Presence
Within a few years, expect your PC or laptop to have built-in Bluetooth. We will all have Bluetooth phones. Software will know where we are within the enterprise at all times. Again, I am just the messenger but I would love a day when I know where coworkers are at a moments notice. If the marketing team is in the conference room, I may decide I need to connect with all of them. Many employers will want to know if workers arent in the office and this is a simple way to make it happen.
Brutal VoIP Wars
Every person on the planet who talks on the phone will use VoIP. This is inevitable. The question is will there be enough business for all? Microsoft, Vonage, eBay, Skype, AOL, Yahoo and these are just a handful of companies in the space. I didnt mention AT&T, Vonage and others. Then there are hardware companies. US Robotics, for example, picked today to get into the VoIP hardware business. Will there be enough business to go around? This is an important question as VoIP grew and died from 19992001 because of over-investment by CLECs and not enough customers.
This time it is different as todays VoIP companies spend a fraction of what yesterdays CLECs spent. Few companies are laying down miles of fiber to homes and offices. Moreover there are customers this time. Vonage has about a million and Skype has over 50 million.
I predict there will be a shakeout at some point but there are billions of dollars out there for the smart companies to pocket if they move quickly enough. After all, look at Skype. The company released a bit of software and became a phone company supporting 50 million users in just a few years and without too much VC money. Now thats a disruptive market.
I couldnt think of a better heading for this topic as China in just a few days announced it will fine users of Skype Out and then China Telecom decided to block the Internet ports that carry Skype traffic. In China and in other countries you need a license to carry VoIP minutes. If the world copies China, we are in a tough pickle as an industry. Sure, VoIP will still be used in these countries but markets will not be truly open meaning little consumer choice. In many countries this isnt news. Hopefully the WTO will help stop port blocking.
More service providers, Fortune-class corporations, and contact centers peer every day, building a new voice Internet. Soon, most VoIP users will bypass the PSTN altogether. It is at this point the Universal Service Fund will crumble and the U.S. government will look to tax broadband to make up for the deficit perhaps sooner.
In the meantime, VoIP users who peer will enjoy better quality VoIP calls and eventually my personal dream of stereophonic surround-sound conversations will become a reality.
Reflect & Learn
Twice a year, the industry gets to reflect on all of the above issues and moreover learn about them in more depth and detail. Of course I am talking about Internet Telephony Conference & EXPO (www.itexpo.com) the preeminent VoIP conference. This year we are so excited to announce that we have the best educational program we have ever developed and we will go into depth on all of the above. There is nothing left out. Skype founder Niklas Zennstrom is back by popular demand, returning to speak at the show where he made his U.S. debut. This will mark the one-year anniversary of Mr. Zennstrom speaking at ITEXPO and I am more excited than ever to speak with him so I may learn more about how the eBay acquisition will change the landscape of communications. I hope to see you there.
Oh, and dont forget! We will have Carly Fiorina and Former FCC Chief Michael Powell speaking as well. You wont want to miss this show. I am just blown away by the level of companies from service providers to resellers and Fortune-class enterprises that are registering. We expect this to be the largest Internet Telephony Conference & EXPO ever and are very excited to be bringing the worlds largest VoIP event to the Los Angeles Convention center October 2427, 2005. IT