The copyright industries have gone to war with their customers is the face of business model change. Will the same happen to telecom? How long will it be before you can expect a lawsuit from the CTIA for unauthorized use of your cell phone?
There are some obvious differences, and some less obvious similarities.
The telco content (for want of a better world) is owned by the users, not the telco industry. Apart from a few trivial sideshows like ringtones, communications is about user-generated content. People buy cell phones to say they’ll be late home for dinner, not to watch mobile TV. They buy AOL to find a mistress to make them late home for dinner, not to listen to music. They buy fax machines to file the divorce papers, not to receive comics.
This isn’t a question of copyright, though. It is an issue of control: who is allowed to get value from the system, and whether that value can be monitored and a toll exacted from it. For that, you need to understand where the peaks and valleys are of the value landscape. Which mountain passes will be guarded with regulatory and legal forts?
There are two places where the value gained is disproportionate to the number of bits transferred.
The first of these is the ability to locate someone else on the network: a directory. In traditional circuit-switched telecom, the routing tables that support the SS7 signalling are invisible to the end users. To participate, you had to be a member of the telco club. On the Internet, the DNS layer is much more exposed. Anyone can access the directory. Indeed, anyone can set up their own directory for services like dynamic DNS that were not envisioned by the original spec for DNS.
The arrival of ENUM will potentially enable the Napsterisation of telecom. ENUM makes public previously private routing data. The telcos just don’t see it in these terms yet. Napster enabled users to locate other users with certain properties with whom they wanted to exchange messages. Prior to Napster, I had no chance of finding anyone else with whom to exchange obscure Finnish folk rock. Suddenly, I can connect to fellow weirdonauts. The Internet rocketed in value, but the access service providers were not the ones making rent from that value (and neither was Napster).
Now, the telcos will try to turn ENUM into a private monopoly for regulated, approved, offical carriers. It will be painted as a cost saving mechanism — a mere technological efficiency. The problem is that this requires some wriggling around anti-trust rules to keep out third parties from the database. This can be done — there is no shortage of examples in other industries such as healthcare. Anticipate machine guns to be guarding the ENUM data.
You can imagine users attempting an end-run around even ENUM. As a thought experiment, what if there was a mass defection from the PSTN to Skype? Suppose Microsoft bought Skype, and the next thing from their hardware division was a Skype phone that you could give to granny. You register your regular PSTN telephone number in Microsoft’s Skype directory. A callback system calls your PSTN phone with an authentication code, so you prove you own that number. The Skype directory uses that number for routing Skype calls. ENUM isn’t even touched.
At which point does the telco dinosaur twitch and forsee its own extinction, and try some armed regulatory resistance? Is there a copyright in the matching of users’ phone numbers to their (telco-issued) IP addresses? The experience of others is that such associations can be proprietary property. But following number portability, who owns the phone number? Is it even “property” to be owned?
Expect directory access to be the Normandy landing of the IP revolution.
The second place where the battle will be fought is caused by a strange asymmetry in communications systems. If I’m receiving a signal from a central server, the most value that can be extracted from my access is the information in that single message. But if I’m transmitting, the same message is multiplied in value by the number of recipients. It’s more valuable to be a server than a client on the Internet. Even better, I can be both at the same time — everyone is a peer.
So it’s all fine and dandy to be able to get the IP address of someone through a directory, but if they can’t accept incoming requests for connections, their location has no value. Services like Skype spend a lot of effort doing an end-run around NAT and similar filters. They create outbound connections to intermediary servers, and then fake inbound connections. The terms and conditions of many ISPs explicitly forbid the deployment of servers.
This could quickly put the telcos at war with their customers. Both traditional copper line phone companies as well as cable companies want that rent from voice service. Municipal and mesh networks are rare, so you may have a choice of providers and prices, but no choice on terms and conditions. The final march to Berlin will be around whether you or your telco controls inbound connection requests to your own devices.
This isn’t a question of setting up a web server at home, attracting too much attention, and running up a bandwidth bill for your service provider. It is about them extracting economic rent from you, and price discriminating against activities that derive excess utility to the customer. Will they dare to seriously enforce their own contracts?
Expect a bloody fight and a lot of innocent casualties.
Posted by Martin Geddes at 03:23 PMTrackBack URL for this entry:
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Telepocalypse Nails It x 2 from Werblog
Martin Geddes, who works for an unnamed big telco, has a fabulous blog called Telepocalypse that I've linked to a few times already.
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"and *forsee* its own extinction" - this has to be a deliberate Freudian slip :-) ???
Posted by: at November 7, 2003 11:51 PMThe obstacle for peer-to-peer VoIP is the when an ISP does not issue a public IP address (perm or temp) to the user. (all other instances of NAT and DHCP can be overcome by the end users.) At least Optimum Online has gone from public IP address to a NATted IP address scheme; interestingly this coincided with theor OptimumVoice offering. This is why I feel that we should be focusing on regulating ISP business rather than keeping VoIP regulation free.
Aswath
Posted by: at November 10, 2003 06:35 AM