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Dec 14
2005

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Bruce Stewart's doing great work over at the Emerging Telephony blog. I loved this snippet from his interview with France Telecom's Norman Lewis (emphasis mine):

Stewart: Who thinks they own this space: the Telcos, the ISPs, or the Google/Yahoo/EBay trinity?

Lewis: Actually no-one but the customer 'owns this space'. If there's anything we should learn from history is that user behaviour and social forces will determine the shape of this space in the future. Just remember the first predictions on telephony itself!
But there is a sea change taking place. Telcos have begun to understand that voice is simply another data service over wireless or wired networks and that this migration of voice into the application layer opens voice to competition from other application-level players, such as portals. Though it appears GTalk, Y! Messenger, AIM, MSN Messenger and eBay's Skype could commoditise Telcos as simple pipe-providers, it should be remembered that Telco expertise in identity and authentication, quality of service, convergence, billing and customer care, places them in a strong and potentially dominant position. This space will become hotly contested: Telcos believe they can maintain their positions while ISPs, MNOs, portals and others believe they too can occupy this space and thus overturn old hegemonies.
'Telcos' in the traditional sense of the term will not occupy this space. VOIP is destroying existing business models and they will be disintermediated. But in the words of Lawrence of Arabia, 'nothing is written' - yesterday's Telcos can transform themselves if they recognize this threat and become 21st Century converged communication platforms.

Norm's keynoting at the Emerging Telephony conference. It's fascinating to think of telcos as having strengths in identity, QoS, and customer care. I certainly noticed that the ISP I worked for became more like a telco the longer it was in business: a call center helpdesk, online account checking, online status checking, they're even offering voice services now. I'd love to survey customers about their experiences with phone companies and ISPs: who has the better service? Who gives better value for money? Who would the customer rather put their business with?

ISPs have acquired many of the skills of telcos (any ISP still in business has become very good about billing!), and now they're looking hard at identity. Can the Internet crew out-innovate the Telco crew and be the first to converge on a single platform offering that is high-quality and does no evil toward the user? The best part about VoIP, in my opinion, is that it breaks down the barriers to entry; it's now possible for garage startups to write applications that before were only the result of dedicated multiyear multimillion dollar projects at carriers. And with US communications alone a $700+ billion market, it's mighty attractive to developers.

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Comments: 5

Roger [12.14.05 04:18 PM]

Like I said in the comment to Bruce's blog entry, I personally don't know what Telcos the guy from France Telecom is talking about. Perhaps telcos in Europe have strengths in "quality of service, convergence, billing and customer care", but my comment pointedly talks about SBC/AT&T's serious lacks in this regard.

I work for a small ISP. We have something like 1000 hosted domains and websites, 500+ DSL users, 200+ cable modem users and are working on adding wireless customers too. We have something like 10,000 email accounts.

By most accounts we are a pretty small ISP. Our focus is primarily regional - most of our customers live within 30 miles of our offices. We're well known in the community, because we've been here for 11 years now.

Customer service is where we really differentiate ourselves from companies like SBC. We can offer personal service. People bring their computers in to us and we help them. We've gone out to ISDN and DSL customers - both business and residential - to get things fixed when something breaks.

Here's the problem with VoIP from our standpoint - there's no way for us to make any money at it! When you have to compete with Skype and SIPhone and all the other folks who are closing in on free calls, there's just no way a small company like ours can offer VoIP at any sort of competitive rates. About the only thing we could do is resell someone else's service.

gnat [12.14.05 04:51 PM]

I can't speak to your telco's experience, but I've had far better landline call quality, uptime, and customer service, than I had with my cellphone or Skype. Skype periodically sucks balls and fails to transmit audio intelligibly. My cellphone was useless half the time I was driving around the Bay Area--I'd drive up 280 and it felt like my T-Mobile was out of service far more often than it was in. Even my cable modem kept croaking and needing a reboot. My DSL in New Zealand has a modem that periodically resets the connection (dropping downloads/ssh sessions) and forgets the username/password to reconnect, thus requiring manual (or Perl) intervention.

I was amazed when I actually got to the US. I'd heard how the phone and cable companies gave crap service and were the bane of consumers lives. My experiences were nothing like that. The occasional hell IVR call was the exception and not the rule. The landline was flawless. The cable TV was nowhere near as flaky as I'd been lead to believe. I'm prepared to accept, based on my experiences, that landline phone companies (definitely not mobile companies, which are uniformly sucktastic in my experience) and cable companies are better at service quality and customer service than ISPs.

Your local ISP might have good customer service. I've worked with ISPs who had no phone numbers, just email. (That's great when your network connection's down!) I've found it harder (impossible?) to find someone clueful at Earthlink, for example, whereas it was only two transfers to get me to someone clueful at Qwest. Yes, my local ISP would get me someone clueful with one transfer, but their prices weren't competitive for the service I needed.

As for VoIP and local ISPs, I agree. Simply routing calls over the Internet is a commodity service. You want to enter that business about as much as you want to enter the network pipe business. That's why we're focusing at ETel not on transport but on content: the apps that run over VoIP. That's where you have the chance to add value.

Sell Asterisk boxes to small businesses. Build IVR systems for local companies. Offer consulting around integrating voice into businesses. Watch the hackers for products you can sell (imagine a product that answered every call, checked for the 'click' of a phone bank transfer, and send the telemarketers straight to hell). These are the equivalents of hosting sites, managing DNS, and all the other value-add extras that make the $$$ for the ISPs.

Paul [12.14.05 08:38 PM]

Telcos may have an understanding of reliable service, but that is the heritage of operating in a highly regulated environment. The downside of that heritage is a history of operating entirely without competition. In my experience, the cable companies have been much more responsive than the phone companies when it comes to customer service. Cable is in a competitive race with satellite TV, and that has had an effect on its corporate culture. The Telcos haven't quite figured this out yet.

My experience with small ISPs has been very good. I think there is a certain diseconomy of scale (if that is a word) which makes it difficult for a large company to offer good customer service. Perhaps it's the attention of all those accountants who view the help center as a cost center rather than as a potential competitive advantage.

I don't know how the ISPs are going to survive in today's regulatory environment, which is handing Telcos and Cable companies monopolies over the last mile into the home. Gnat has some good ideas there; perhaps there are opportunities to add value in services.

software-development [01.12.06 08:15 PM]

VOIP has erally taken a hold of the way we live and work. To not embrace it is just missing the competitive edge. We live in a 'flat world' where we can reach out via VOIP and 'touch' someone way out in the boon dog as though he/she is in the next room next to us.

To compete in this industry is really tough now. The good times of the phone cards guys will come to an end soon. I basically forgo my VOIP phonecard in replacement of Skype and Net2Phone. Phonecards are notorious for losing minutes!

Anyway, if anyone is interested in getting CTI applications software develop, check out the guys at http://www.cotzgen.com