Telepocalypse

A DRM compromise?

This is just a tentative idea, not a manifesto.

Current DRM technology is "read-act": every device that sees the DRM data has to act upon it for the DRM to work.

Can I propose a "read-only" alternative?

In this world, it would be illegal to modify author or copyright licensing data associated with the work. As with laws such as the DMCA or EUCD, distribution of tools or software that does such things is verboten. To be outlawed, it must be a contraption with a UI specificially tailored for tinkering with the metadata -- we're not outlawing the proverbial hacker 5V battery and piece of wire.

You can still distribute the file itself, do things that the license disallows. You can augment it, re-mix it. Whatever. Ideally, we'd have rules and standards that would allow us to "mark up" content with rich meta-data. "This sample from 0:46 to 0:48 was ripped from this source, which in turn has this meta-data." You can downsample to another format that doesn't permit metadata -- we're not asking for the technically impossible.

The advantages of this scheme are several. Firstly, it is morally and technically defensible. It's just a variant on droit d'auteur rights that have long existed in many jurisdictions. The incentives line up: there's little point in messing with the metadata or stripping it off if you can "play" the media regardless.

We can now also create innovative licensing schemes that would have some bite.

Unauthorised distribution of copyright material remains illegal. We focus on the distribution act, not the moment a digital copy is made, per se.

The idea and its pros and cons are still forming in my head. Comments and refinements welcome.

UPDATE: I probably ought to make clear that I'm making an assumption that the War On Bits And Consumer Electronics will be about as ineffective and pointless as the War On Molecules And Houseplants. We need a "Dutch" solution that avoids the worst of the costs of control whilst delivering some of the benefits (as well as some, um, err, fair inhalation).

Bravo! (Now do it again.)

There's an old, terrible joke that goes something like this:

What do you get if you walk under a cow?

A pat on the back!

So it is with having your business constantly critiqued by a bunch of bloggers. It might be flattering to be the centre of attention, but the barbed words sometimes aren't what you wanted. Since I've been hard on Skype recently for some things they're either not doing or not executing well, here's some editorial balance with something that is strategically spot-on.

Today they announced a whole bunch of ways to make it easier to give 'em some of your cash. I won't recap it -- you can read. But it extends the distribution of their service, reaches the parts that other private voice applications can't reach. Their PC distribution network comprises several stages: awareness, inquiry, download, install, pay.

Awareness was viral. Marketing budget: zero. Cost per gross add: infinitesimal.

The web site is a work of genius. Seriously, I think it's beautiful -- uncluttered, clear, direct, funky. You can sense that this has gone through some heavyweight usability testing labs. (Sprint once ran a corny ad campaign about how "Business is beautiful". Well, maybe they were right.)

Their download and install experience leaves the rest standing.

Finally, the last piece of the distribution jigsaw is catching up.

Now, this is just how your are distributing your product. How well does Skype meet the user goal of "The service is easy to acquire and is availabile wherever and whenever I need it." It probably beats the PSTN already. Easier to find a WiFi-enabled coffee shop than a payphone these days! It may still be a pale shadow of the money-capture networks the mobile operators have created, but nobody else comes close in the pure-IP space.

The question of what you are distributing is, of course, a different matter. But for now, time for Skype to get a pat on the back from the blogosphere.

The momentum of money

Marc Canter has an unmissable statistic:

Did you know that 45% of all of eBay’s listings come in through their APIs?

As you might remember, at Sprint we were trying to open up the wireless side into an open technology and business platform. It failed, mostly for lack of a cultural imperative to drive in that direction.

Ebay's business comprises two stages: someone lists an item (eBay gets paid for this), and someone buys the item (eBay gets paid for this too). They've taken all the friction out of the first half of their business. No human necessary! Only the actual purchase still requires a human click, and it can't be too long until the shop-bots start to change that too. (Although we're part-way there already.)

Now think about the traditional telephony business. I have to dial, you may have to answer. Voicemail part-automates the answering, generating more metered minutes. But you have to ask yourself: is it really the best you can do? Is it impossible to broaden the business model -- temporary buddies, address book access, directory, etc.? Can't you deepen it too, and automate previously manual business transactions via APIs?

If I were a telco investor, one of my key criteria of comparing the various "voice nets" (PSTN, mobile, Skype, open SIP, etc.) would be the existence, quality, adoption and economics of the APIs.

UPDATE: You can bet that a lot more than 45% of eBay's margins come from these transactions. And note how their business model has no upper bounds imposed by human action; an automated voicemail answer still requires a human-initiated phone call. Now, start to imagine your voicemail box (with a sensible UI) as your "RSS feed of the most important stuff" like customer service messages from your bank. Et voila! You have a platform business.

UMA: meat or seasoning?

I love reading Orlowski's stuff, if only because of the resentful bitterness and relentless cynicism.

He posits:

It's small, it's boring and won't turn any heads - but it probably spells the end of the road for Skype, Vonage and any other hopeful independent VoIP companies. It's Nokia's 6136 phone, which allows you to make calls over your home or office Wi-Fi network, as well as on a regular cellular network. UMA, or unlicensed mobile access, is the mobile operators' answer to the threat of VoIP - and now it's reality.

UMA basically lets you treat your wi-fi access point as a cellular site and do hand-offs. Kinda, sorta, with lots of messy interaction of tightly-coupled network layers.

Whilst it makes for a great headline ("Skype and Vonage: thank you, and goodnight"), the article is what is technically known over here in Britain as utter bollocks. (Well, if Andrew doesn't expect to get as good as he gives...)

There are two reasons: the theoretical one, and the practical one.

Theory first. Skype != telephony. It's got other, useful, stuff. Presence, meta-presence, file transfer, IM, web presence, rich directory, wideband audio, blahdyblah. Even if "telephony" is free, it's still crap. And there's no guarantee the operator arm-lock on the mobile handsets specs and their distribution will last out. Ultimately, the big handset makers are going to have to deliver what the real customers want, and clever operators will find ways to board the cluetrain before the last service departs. Powerful retail intermediaries like Carphone Warehouse and Radio Shack have clout, and aren't in the business of sustaining operator control-freak fantasies.

UMA is just seasoning on the basic bland telephony product. Skype is real, red meat. Yum.

Then the practical side. WiFi is truly dreadful to provision. Lots of people won't even know their own access point name among the 5 "Linksys" ones in the street. They've long forgotten the password their son-in-law set up two years ago and is nicely cached in their laptop. Access points have all sorts of wonderful, subtle incompatibilities when it comes to security features. They tend to overheat and fall over rather too often. The antenna may be oriented to give good coverage in the "laptop" work area, but not necessarily the whole property. The access you have at work requires a different set of network authentication, and is firewalled off. The access at the coffee shop is highly contended at times. Most commercial access points only offer a "port 80" splash screen, wholly incompatible with getting online via a phone screen. (Bundled connectivity services like Skype Zones will probably only take off when given away as a draw to specific retail outlets.) I think you're getting the point: this stuff isn't easy to set up.

So you're probably going to have to supply your own pre-provisioned access point as part of your UMA bundle. Which only works in one location. And shoulder all the technical support costs of installation. That means you're spending cash to help users more rapidly move towards the open IP world, where you've no coherent strategy or control. Maybe the decreased churn and spectrum costs make the economics work. But I suspect that this isn't anything like the commercial holocaust Orlowski predicts.

Whatever its mis-steps and warts, Skype is a child of the Stupid Network, and the phone companies don't have a viable plan yet to fight it or co-opt it. UMA just prolongs the hallucination that control over the network's use can be sustained and extended. Vonage is a legacy telephony zombie disguised in Internet Protocol bandages wrapped around its body. But that ghoulish business won't need UMA to finish it off, anyway.

Metered telephony? No thank you, and goodnight.

Look Mum! My name on the Web!

I've written the intro to the spiffy Mk2 Moriana Report on IMS. Go download it here for free.

Disclosure: I'm doing it for fame, not fortune.

This morning's anecdote from Geddes central.

I'm working on the big table in the living room (rather than the usual out-of-the-home workplace) because I'm waiting for a package to be delivered. Can't delegate to Mrs G as she might be feeding the baby or whatever when it comes.

My elder daughter is playing on the little rocking horse.

"Uh! Uh!"

I look up.

"Oh no! Stop it! Stop it!".

She's not rocking any more. What's wrong, I wonder?

"Daddy, I've done a wee-wee."

A big puddle on the floor. Hmmm, the joys of toilet training.

Ever remind you of teaching a telco to build a viable strategy around abundance of connectivity?

"Daddy, I've done an IMS network."

I guess someone will have to come and clean up the mess afterwards.

I don't want my, I don't want my MTV

Paul Kapustka strips the Network Neutrality issue down it its real core:

The RBOCs and cable will use all their firepower to try to keep video captive, to make money off it the way they did off voice.

Americans love TV. They even had to invent the TiVo to extract the 0.1% precious metal from the toxic sludge. Just as Lessig lamented his Grokster framing as being too abstract, maybe this neutrality issue is getting too academic. OK, you and I know it's really about applications not yet invented. The 2040 fridge DNA sensor that takes a quick peek at the week-old chicken, sequences the genomes on its surface and refers the whole lot back in real-time to biohazard central for an opinion, or whatever.

For now, it's all about TV. Will the goggle box become the Google box, or not?

Why not call a spade a manual trench digging utensil and point out that the "triple" play involves telcos selling captive video over duopoly lines, which is direct competition to alternative Internet-based suppliers whom they would like to cut out of the picture (pun intended). (Of course, "triple" play is itself an idea caught in legacy telco-think, in that there isn't a total unbundling of all the stages of consumption, and fragmentation into a zillion aggregators, filters, distributors, etc. enabled by the uber-flexible Stupid Network.)

Couch potatoes of the world unite! You've nothing to lose but your peanut-shaped remotes!

Full disclosure: I went cold-turkey on the medium in 1989, don't own a TV, so I don't know what I'm talking about.

Freedom to Connect

I'm going to Washington, DC in April to attend David Isenberg's Freedom to Connect conference. I'm speaking, as well as listening. Why do I go? Because it's the best place to go meet dangerous ideas about network economics and society. I'm still grappling with David's daunting question: What is the Network for? We're barely a decade into the mass adoption of "stupid networking", and still struggling with basic issues are what it means to "own" a network. What (if any) "ownership" over the ideas flowing across the network be conferred from posession of a right-of-way, some copper and a DSLAM? What positive "social" externalities does the network offer? What co-ordination or market failures exist? Where do our existing legal, commercial and polticial structures reach their limits and break in a networked society?

Anyhow, we interrupt this bilge-of-consciousness with a message from our conference sponsor...

I'd like offer a special deal to readers of your blog that does not appear on the official F2C website. It is about 50% off the standard early bird pricing, $295 (vs. regular early bird at $595). They need to use code FOBDL when they register at http://www.pulver.com/f2c/. Unfortunately, this deal expires on February 28.

F2C: Freedom to Connect, will happen April 3 & 4 in Washington DC. This year I'm doing it with Pulver.com, with partnership of the Berkman Center for Internet & Society at Harvard Law School, Tropos Networks, O'Reilly Media, Voxeo, Free Press, Public Knowledge and many other companies and organizations concerned about Internet Freedom.

The speakers list is shaping up nicely. (If you'd like to come speak, welcome! Get back to me asap!) Here's the lineup so far:

Reed Hundt is giving the Conference Keynote. Representative Rick Boucher D-VA is confirmed. Chris Sacca, Google's biz-dev point-man has just signed up, and we have several other government VIPs at the forefront
of the Internet Freedom debate almost confirmed.

Other speakers include:
* Gary Arlen, Editor/Commentator, Arlen Communications Inc.

* Jonathan Askin, General Counsel, pulver.com

* Jim Baller, Senior Principal, Baller Herbst Law Group

* Drew Clark, Senior Writer, National Journal

* Mark Cooper, Research Director, Consumer Federation of America

* Cynthia De Lorenzi, CEO, Patriot.net

* Ed Felten, Professor of Computer Science and Public Affairs, Princeton

* Martin Geddes, founder, Telepocalypse.net [me!]

* Dewayne Hendricks, CEO, Dandin Group

* Dave Hughes, Owner, Old Colorado Communications

* Reed Hundt, Principal, Charles Ross Partners

* David Isenberg, Principal, Isen.com

* Jeff Jarvis, Creative Director, Advance.net

* Jim Kohlenberger, Executive Director, The VON Coalition

* Bruce Kushnick, Chairman, Teletruth

* Blair Levin, Managing Director, Stifel, Nicolaus & Company, Inc

* Om Malik, Editor, GIGAOM.com

* Rick Ringel, Dir. of Engineering, Media Applications Grp., Inter-Tel

* Doc Searls, Senior Editor, Linux Journal

* Ron Sege, CEO, Tropos

* Gigi Sohn, President, Public Knowledge

* Esme Vos, Founder, Muniwireless.com

* David Weinberger, Fellow, Berkman Center for Internet & Society

* Frannie Wellings, spokes person, Free Press

* Tim Wu, Professor, Coumbia Law School

More info at http://pulver.com/f2c

I'll have a better time if you, dear reader, are there too. So do me a favour, and go sign up. See you when the cherry trees bloom!

Bookmarked

What do readers think of the following idea?

I've been working on this blog for over two years, and written a lot of articles. Some are tosh, some are quite good (I'm told).

I could put a lot of time and effort into a book on the future of telecom and networks.

I could put a lot of time and effort into writing a book on the future of telephony/IM/personal communications/presence.

Or I could say "sod that", get an editor, and re-cycle what I've got into a kind of smorgasbord of clippings from the event horizon of telecom and have it printed onto a load of Finnish wood pulp.

Obviously, there's quite a bit of work to transcribe stuff into the paper medium, un-URLify some it all. Give more context and introduction to the material. Lessen the minimum necessary reader IQ to something below 130.

Thoughts? Do you think anyone would find such a tome useful? Know any editor or publisher who might be interested?

Or have I just wasted 60 seconds for about 3000 people...? (You might not pay for blog content with your money, but I'm damn well going to take your time instead!)

Martin's mad manifesto

Just a trial baloon, want to see what you all think...

Owning a communications network is rather like being the in posession of Tolkien's Ring. It slowly corrupts and drives mad the keeper. "I'll capture your value, all my beautiful bits, preciousssss bits".

The temptation to look inside the packets, to demand tribute from the greater force of user innovation -- it always becomes too much in the end. Commercial insanity, or loss of all moral bearings in conduct of business all too often result.

Yet there's a way to neutralize the wicked force, to douse the heart's unclean desires. The pool of lava is the nature of the funding, ownership and pricing of the network. The different roles involved (rights of way, capital raising, capacity management, deployment, maintenance, support, retail, etc.) need to be slowly teased out, and allowed to evolve their own economics.

Now this may sound like the traditional "layered" approaches to regulation.

But there's more. I think that layers are a necessary, but not sufficient, part of rethinking how we create our communications infrastructure. For example, spectrum management rules that favour particular applications are just as harmful (if not more so) than a telco's transient price-discrimination efforts.

Capitalism normally does a good job of aligning the needs of buyers and sellers. Make a better widget and the world is yours. Capitalism is built from certain legal and financial building blocks. Contract law, tort, competition law. Property rights. Stable currencies to enable exchange of value over time as well as space. Freedom of expression is part too -- the message "better widgets! over here!" is an essential part of "the market".

But I feel we're not there yet. We've created many new "ownership" and "transaction" technologies over time. Limited-liability corporations, partnerships, co-operatives; equities, debt and derivatives.

We just don't have the mechanics to deal with a networked world and mass-participation in that network. Municipal networks are controversial because the only co-ordination mechanism is the force of government and the state. This is crude and dangerous; we contaminate the network with the power to tax, and the centuries of fighting we've undertaken to limit and mollify that urge.

What we're lacking is new forms of organisational, ownership and financial technology. It's how you align the interests of owners and users that counts. You'd complain quick enough about TV companies getting "free" spectrum if it affected your "spectrum dividend" cheque at the end of the year.

Once those interests of users and owners better align, the temptation to worship the Ring -- the false power over the passage of other people's information -- vanishes forever.

OPINION://See you there!

I've got a bit of a running gag with my little brother. (OK, he's taller than me, and officially old, but still my little brother.) We both spend a lot of time in airports. Airports are boring. Cell minutes are cheap. Often one of us will get a call from 'tother, which always begins: "You'll never guess where I am". The answer is, 80% of the time, just off the corridor in the domestic lounges at Heathrow Terminal 1.

Incidentally, growing up two miles from Heathrow gives you a totally distorted view of the world. Your isochrone map looks different to everyone else's. Twelve hours' journey from your front door lets you visit half of humanity, give or take. Allow me a day, and where in the world did you say you wanted to meet? (OK, it took 30 hours to here, and two weeks' walk to there, but you get the idea.) I can only imagine folk who grew up in other "crossroads of the world" like Dubai or New York quite understanding what I'm on about, and what a shock it is to have to get one of these strange "connecting flight" thingies. (Seriously, I'd been flying for two decades before experiencing one.)

Anyhow, one day a few years back my brother was picking me up at LHR. Arrangements were deliberately fuzzy -- I think I was in fact arriving by land. Ignore the planes -- Heathrow has all the bus and tube connections you need, too, for local transport. (Look, you might think Heathrow is a random mess of soulless buildings accumulated over 5 decades, but to us Staines folk, there's No Place Like Home). So I'm standing there, under the yellow "Arrivals" sign, yakking to him on my mobile.

"Where are you?".

"Under the yellow Arrivals sign."

"Well, I can't see you!"

"At the far end of the terminal -- same end as the BA Domestic Check-In, right?"

"Yes -- outside the lifts down to the Heathrow Express."

"Well, I still can't see you."

The reason? I'm upstairs, outside domestic arrivals. He's 5 metres below me, downstairs in international arrivals.

Naturally, there's a lesson out of all this for telcoland. People use their mobile phones to rendezvous. A lot. I used to walk around the vast Sprint campus, huffing and puffing and always calling ahead so say I'd be a wee bit late to the next meeting, owing to having left my hyperspace kit at home.

Yet our mobile phones are locked into the "phones" mindset. They aren't adapting to the things that people are actually doing: the user's actual goal. I'm not phoning my brother, I'm meeting him.

One thing that struck me when at Sprint was that phone calls made up the vasy bulk of the company's revenue. Yet getting people to make more and better calls wasn't on the strategic radar. We didn't even have any idea as to what people were really calling each other about! Everything was focused on Java downloads and minor stuff. Yet I suspect a huge proportion of "calls" are actually one of two things: manually-exchanged presence messages, and physical rendezvous.

"I'll be home in about three hours, honey!"

Which, if you live close to Heathrow, means you're somewhere within about 1000 miles.

Peekaboo! I can see you now!

Mr Marketing2.0, aka Johnnie Moore, has an interview with the "peer-to-peer banking" outfit Zopa. Their business model is, um, to put lenders and borrowers in touch. Just in a more "banking 2.0" manner, where people are treated as people and not account numbers.

These two notes quotes struck me as interesting:

4 40 Dave: Messaging has been important, so borrowers can leave a message for those who are lending to them. Some lenders love to get messages from borrowers, why they're borrowing and how they're using the money. Understanding the people behind the user name has been really interesting, a real talking point for our members.

5 47 Johnnie asks about the role of telephone sales people. Dave: Value of the role of talking to people on the phone, it's been reassuring to members, they've made a real difference. Hearing a voice on the end of the phone has made a difference to people.

Today, your bank doesn't appear in your IM client buddy list. I'd suggest that ten years from now, any bank that hasn't figured out how to be there is going to be heading for the great debt collector in the sky. Getting access to people's social and transactional network, even for short periods, is going to be big business. Anyone who captures a "hub" role here is going to make Google's meteoric impact look minor.

Also, corporations clearly need to get personal and transparent. How about this for a first step. When you've got someone on hold, why not tell them "Why not go to phone.foo.com and see a webcam of our busy call centre? You can also enter your number and see where you are in the queue." It's the first step in adding "real presence" to the experience.

Next step: you'll be able to see the person you get put through to. Suddenly, you really are the face of Citicorp or whoever. Being a customer service rep should be a rewarding, interpersonal high-contact job which tests your social skills. Today, we've got those people acting as transcription agents papering over the technology gaps between telephony, the Web and our inadequate public digital identity infrastructure.

OPINION://1-800-REINTERMEDIATE

Skype's stuck in a strategic dead-end at the moment. Their short-term revenue targets under the new management will no doubt be driven by SkypeIn and SkypeOut. This is the self-defeating PSTN disintermediation business. The brand licensing side of the business won't grow fast enough to justify the acquisition cost. Andy points to a research note that highlights the need for Skype to break out of the PC ghetto. PCs make lousy phones compared to, um, phones.

So, here's the Telepocalypse-approved patent-not-pending public-prior-art way of doing it. You don't get payback off a $4bn deal by thinking small. The job of Skype is to make eBay's transaction businesses pump more volume and value. What I'd want to do is insert eBay into any kind of contact between the public and merchants. Plus, it has to work with the legacy telephony infrastructure.

Let's instead re-invent the "800 number" (freephone) business and make eBay the next Visa or Mastercard.

The first part is how the public contacts merchants. You're out and about and you see a poster ad with a normal 800 number to call. If you want, you can call it as you do today. But SkypeBay will give you an alternative. The poster might follow the 800 number with the logo "eBay Outside™". And this is where things get very, very different.

eBay also gives every user a personal 800 number. You can use this number to place calls, and will have it as a speed-dial on your mobile and home phone. You call eBay first, and then dial the merchant number. You've pre-registered the caller ID of devices you personally use, so eBay already have you identified (not authenticated).

Why would you bother? Because eBay is going to give you a better experience, and protect your privacy. When it comes to the "checkout" process with the merchant, their call centre agent transfers you back to eBay. You hear some appropriate message like "To authorise a payment of $193.20 to Foo Inc, and release your name and delivery address, please enter your PIN. To decline, press star. For more options, press hash." Ta-da! The merchant gets your details without any transcription mistakes. You don't have to reveal your payment info to yet another merchant. The UPS delivery is scheduled into "My eBay" or whatever, no hassles. The merchant up-front may even get language preference data, so no more of that "par espanol" stuff for us monoglot Anglos.

Naturally, you don't have to use the 800 breakout number. You can just use your multimodal Skype client and have a great experience that way. Skype is the upwards migration path.

This is "real" IP communications. The link between eBay and the merchant is passing all kinds of information that SS7 telephony signals can never convey. The simplest case is that the merchant gets the message "Ship order X to this address -- and here's the non-repudiable payment receipt from us." We're just using ye olde telephony as a two-way audio link into the new world.

You win, with a better user experience. The merchant wins, with lower data capture costs and call centre costs, less fraud, higher customer satisfaction. And eBay wins, because they get rich.

Think of it as an identitiy and reputation network that overlays the traditional payment network. It also out-paces Google, with their ad network. If everyone uses their eBay reputation and credentials, a raw "click to call" model doesn't help so much. Google get to build their network around the wrong node of the value chain, too far from the real customers: the public.

Now, at Telepocalypse HQ there's the company motto above the door. It says "Do as much evil as you can get away with." So here's a wicked twist. You can give your 800 number out to merchants, should they wish to contact you. But when they call, it won't be from one of your registered numbers. They'll have to have a relationship with eBay before they get through (via the eBay/Skype find-me/follow-me service). And believe me, this won't be a freephone service from their end. Plus, if they telemarket to you or spam you in any way, you get the chance to send them some negative karma.

One interesting aspect of this is that telcos themselves probably can't cannibalise their 800 number business even if they wanted to. They don't have an existing hub like the eBay auction business around which to crystallize the required changes in user and merchant behavior. No one telco has enough heft to effect any unilateral change. The only strategic question they need answer here is: how can we still take some small slice of these emerging business models?

I'm hoping this all sounds utterly crazed. Because it is. Just like ten years ago, it would have been nuts to think I could locate someone with an obscure cheap laptop expansion base the other side of the world, get it shipped to my hotel in California for me to collect as I pass by, and still have change from $40.

The difference is distribution

So, unsurprisingly BT didn't find enough takers for e-mail and Web phone kiosks, and are not rolling out any more. The usual sorry story of telcos not being able to judge what the user needs are at the application layer.

But wait a minute ... imagine for a moment the alternative "Stupid™" business model of "just get the damn connectivity out there!". Imagine all BT payphones were also WiFi hotspots. Easy to do -- they have power, almost all can be DSL-enabled. Now allow "free" access to BT landline subscribers or MVNO mobile users. Ta-da! The old edict of coverage always wins comes true. "Distribution" (as opposed to technology, product, sales method, etc.) is the business model archetype of telecom. Stick with that, and you'll be OK.

Vonage Isn't Paying Off

I told you so back in 2003.

Looks like the script is unfolding to plan, give it another 24 months for the economics to start to fall apart. It'll start with a nice stock pop (because someone underwriter's bonus depends on it), but I couldn't think of a worse time to IPO. The cablecos in the US are entering the voice market and are happy to give it away to keep hold of (copyright monopoly protected) media content distribution.

And the "Everything2.0" entrants are lining up on the starting grid with a feature set no faux-telco can ever hope to rival. How can you boast about cheap call waiting when Google will bung you a free gigabyte of mail storage -- and tell you when each buddy is online, and connect you for free over the same Net connection you've already paid for? I hope the "risks" section of the IPO filing contains something like "Google goes scorched earth, offers free Net-to-PSTN interconnect, captures effective market pricing power within 12 months, market opportunity recedes to zero. Google uses call records to create popular social search apps." I suspect Google's infrastructure also by now easily outstrips the entire legacy telcos in sophistication and capability. The other Net giants are also revving up the communications game after a few years lost to Skype.

Looks like I'm still #1 on Google for "Vonage business model". For a while in the early days I was on the front page for just "Vonage", so I'm not expecting any Christmas cards from them.

Hmm, looks like "gloating" qualifies for the first of the seven deadly sins, so I'd better shut up for another two years.

UPDATE: One to watch for. When companies say "our churn rate is X", you need to ask yourself is that voluntary churn (people who quit), involuntary churn (folk who don't pay their bills and get cut off), or both? As noted, the Vonage figures exclude those who return the product in the first 30 days. Also watch out for the "non-activations", which are a useful pile of folk who buy the hardware and are too afraid to turn it on. (Hope you're reading this Dad -- the cell phone's probably fully matured and ripe for using now.) They can be included or excluded to massage the figures a bit. And the cost per gross add is easy to fiddle, because you can so easily move costs between the generic marketing bucket and the customer-specific acquisition cost. Even revenue per user can be messed with, because if people won't pay their bills there can be a big gap between billed and collected revenue. So basically don't believe any headline numbers until you read the small print.

Your worst nightmare... as requested

I'll shut up about network neutrality some time, but the craziness of the whole think just gets me riled.

Imagine that a 'neutrality' rule is imposed in the US. Verizon and at&t's regional market power goes unchanged, and the cablecos are the only competition. Continued artificial spectrum scarcity is bought with some skillful lobbying. Don't expect any price competition, because game theory tells you that you need a minimum of 3 players to de-stablise a cartel (even if an unspoken one).

If I'm Ed or Ivan, what should I do next? Easy. Raise prices for "Internet" access. And put in place a system not interconnected at the IP layer, where every service has to get through a gateway. Sell this "Web + mail" Net at a reduced price. (It looks just like the restricted GPRS gateways we live with today, so everything's off the shelf and the regulatory rules are predictable and favourable). Want to run Vonage? Fine, $5/month, we've cut a deal with them, and know how to proxy their SIP traffic. Want to run Skype? Tough, they don't support our proxy.

Note that they ARE NOT SELLING 'INTERNET'. Your neutrality rules don't apply: it's entirely a private IP network with some application layer gateways. Unless you believe that such network architectures should be illegal, too. Whaddayamean, you didn't think of this in your "interconnected Internet Protocol network" definition? ;)

I suspect that decreasing the number of people with "Internet" access isn't the intent of neutrality advocates. The assumption seems to be that the incumbents won't react to the obvious incentives placed before them. Lots of mini Chinas.

By the way, does the 'no application discrimination' rule mean my Tesco Mobile data service is illegal (ignoring the 4000 mile jurisdictional leap)? Their main selling point is cheap circuit voice minutes. The data offering is a minor feature to their users. It's built on IP, but the only destinations allowed are those on the ports for HTTP/HTTPS. Do you think a neutrality rule would make Tesco open up full Net access? Or just junk the whole data side? Why do you feel that I should be prevented from buying such a service from Tesco, presuming the limitations are made clear?

Is the Internet the only networked good deserving of a neutrality rule? There's a lot of network-effect industries out there. Should the makers of USB-enabled goods not be allowed (by force of law) to set license fees that depend on the application? Why doesn't this 'neutrality' logic stop at exchanges over Internet Protocol? At what size of player does neutrality no longer apply?

What evidence have "neutrality" proponents have that it is better to treat the symptoms rather than causes of uncompetitive connectivity markets? Why is it so important to prevent a price signal of "MONOPOLY RENTS -- OVER HERE! COME AND GET IT!" leaking out? How come the forces that scream blue murder when it comes to freedom of speech fall silent when it comes to freedom of contract?

Now there are some things that could be done that would be fair and constructive. There should be "full disclosure" rules, much like with credit card offers. I would also suggest that some "regulated terms" be used that compulsarily be included in all marketing material, e.g.:

• "Full Internet access". Does what it says on the tin. Servers, VPNs, pr0n, whatever you like. Any default filters can be turned off by the user (a sensible compromise, IMHO).
• "Partial Internet access". Anything less than full Internet access where end-to-end IP connectivity is in place. Filters can be at the IP layer, or in Terms of Service.
• "Restricted Internet access". Access is provided via proxies to selected services, and not end-to-end IP connectivity.

(There would be common exceptions for illegal content, protection of networks from attack, etc. And some special rules would apply to content delivery network caches.)

Other progressive, constructive suff to campaign for? Switch all Universal Service funds from one application (landline PSTN) to connectivity. Unbundle the identity space (E164) from the telephony service using some cunning privacy-enhanced version of ENUM (I've got a few ideas...). The usual spectrum stuff. Oh, and give the FCC commissioners a big bonus package if they manage to abolish themselves ;)

But the last thing you want is a neutrality rule. As Vint Cerf's Senate testimony said:

nothing less than the future of the Internet is at stake.

Indeed. But in the exact opposite way to which he suggests.

SkypeOut: Not good enough

At my in-laws here in snowy and overcast Vilnius, Lithuania.

Their DSL connection is only 256kbit/128kbit, but does me fine for most of what I need to do. And it's fairly cheap -- about US$13/month for 6Gb. (Although French readers will be snickering at this point...)

I find Skype-to-Skype calls work just fine from here. Although it's terrible to configure with a USB headset, BT Communicator makes great-sounding calls to the UK. But SkypeOut? Forget it. Novelty value only.

I'm consistently finding the same at home too in Scotland, with a much meatier Net connection. And in the USA. This is getting to be more than anecdotal.

There's a branding tension between the "free" part of Skype and the "better" part which shows up here. They've aligned SkypeOut with the "cheap" side. In their own words on the home page (my highlights):

You can call anyone else on Skype, anywhere in the world for free. And you’ll always be able to do that. There are some other useful things you can do on Skype that aren’t free (but they’re pretty cheap, actually).

And on the next page:

That’s why we have SkypeOut, a low cost way to make calls from Skype to friends who still use those traditional landlines or mobile phones. That means calling anyone, anywhere in the world at local rates.

Not a single mention of clarity or quality. Spot the open goal into which some competitors might kick the ball?

So they're positioning themselves as a price leader, which is kind of tough when they generally aren't. And it isn't a very attractive business proposition either. There are much bigger players with global networks and zillions of minutes who can probably buy wholesale cheaper than you. And do you really want to boast to your investors and owners that your aim is to raise as little revenue as you can get away with? There's always someone else willing to offer a lower rate and ever worse experience.

But the thing that attracted me to Skype originally was that it was better as well as free. The presence, IM and file transfer made it irresistable to many SOHO/small biz workers like me. The wideband audio makes for a more personal feeling when talking to colleagues and clients -- the distance fades away from the mind. Why complement the best on-net call quality around with a lousy PSTN experience? We'll pay for quality, really!

SkypeIn seems to works OK. I know it isn't the connection itself that's at fault. Please, make this product work properly!

OPINION://Neutrality, schmootrality: a heretic speaks

The calls for a US "network neutrality" rule get louder and louder and louder.

I've covered this topic at length before. But here's the real issue in a nutshell.

Would you want to make it illegal for at&t to offer a $5/month plan to poorer households that only allowed access to services by Yahoo!?

The proposed neutrality rules would do just this, hurthing the weakest in society most. Perhaps the Internet is supposed to become a polite, middle-class over-educated ghetto, but that's news to me. (Personally, I'd prefer to make typographically-challenged corporate identities illegal first!)

Network neutrality rules, apart from being a fuzzy undefined concept, throw out the best of price discrimination and entrench the false "natural duopoly" for access.

There are deeper, more philosophical reasons too for being suspicious of such rules. Underlying the idea of "neutrality" is the idea that Internet Protocol embeds no assumptions or values, and the mesh of interconnect agreements we call the Internet is likewise "neutral".

You probably won't fall off your chair with surprise if I tell you this is nonsense. The Internet is riddled with design and political assumptions, and we should be open to competing architectures emerging.

Exhibit A. The Internet takes the "end-to-end" philosophy of distributed intelligence well beyond the application layer. There is no equivalent of the GNU General Public License for the Internet that you have to agree to in order to join. Repressive, filtering China can happily peer with anyone else. Everyone is free to negotiate their own interconnect at the financial and political layers.

You might want to contrast this with the PSTN, where common carriage agreements flatten the possible set of interconnect agreements. There are plenty of "managed" networks in telecom with standard rulesets to be abided by. The resulting networks have a more homogenous nature. This might be a good thing, or it might not. Let the customers decide. Would an "IMS-net" with universal rules for interconnect create more value than the deliberate emergent, chaotic Internet? I have an opinion, but I certainly don't want to make the experiment with other people's shareholder capital illegal!

Exhibit B: The semantics of IP addresses follows a particular "lowest common denominator" format. The databases held by ARIN, RIPE etc. allow you to trace back from an IP address the ISP to which it is assigned. This is probably the minimum possible assumption that can be embedded in the network, so follows the "end-to-end" philosophy, although is outside the scope of its original concept. But we can imagine networks where these databases offer much greater detail on the nature of the end nodes. Is it a good anti-fraud device for me to know you've been personally assigned that address for 3 years? For me to be able to verify with your telco (for a fee) that the delivery address you gave for the plasma TV is the same as the premises address of your IP address?

Exhibit C: The Internet doesn't allow "topological introspection". OK, protocols like BGP in principle allow this. But you don't get access to that data as an edge node. Yes, you can traceroute your way around all day. But as a matter of universal fact, you can't from the edge determine the real topology of anything in the middle. Internet Protocol assumes the world is, indeed, flat. Which is fine, until you hit the limits of that abstraction. I'd rather stream my P2P IPTV from someone else the minimum possible number of hops away. We have kludge it, but it's not pretty.

In fact, there are lots of ways in which the current Internet design could be improved, and many people working on doing that just now.

Having a "two tier" network is something we should look forward to. We want more Internets! Plural! They may continue to interconnect; they may decide that the Internet Mk1 is more a source of digital pollution than valuable content. I just can't see how any "stop the clock -- we're all just comfortable as we are!" neutrality rule helps us reach new and better places. Even monopolies have an interest in deploying new and more valuabe (monopoly) stuff. Kinda hard when by law you're only allowed to offer Net service as experienced via dial-up modem c. 1997, only faster.

Indeed, this is all reminiscent of the arguments about socialised medicine in the UK. "We must spend more on the National Health Service to prevent a two-tier system emerging!" Yet lots of people who can afford it opt-out and but private medical care. Likewise, ossifying and constricting the Internet's rules of engagement will just result in a hidden transfer of traffic onto other, completely private networks outside of the neutrality rules. Do you really think the Baby Bells won't be able to buy some finessing get-out clauses? This is a much easier lobbying problem that undoing the whole unbundling regime of the '96 Act!

So neutrality rules that entrench our "Internet Mk1" as somehow sacred, hallowed and for all time are just totally counter-productive. Better to allow Verizon to screw over their customers and make it worthwhile for someone to bypass them entirely using newer technology. Or just swallow your pride and copy the unbundling rules that work just fine over here. BT can deploy a two-tier walled IMS garden, if they like. Just they have no way to make me buy it unless it creates some compelling value.

OPINION://The Last Word in Telephony

This is the second part of my ETel closing keynote on the future "ultimate communications experience" -- hence the (double entendre) title. It follows yesterday's essay that helps us reflect on where we are. The second half of the deck focuses on where we're going.

Rather than focus on particular features and functions that are missing to attain the "ultimate experience", I thought I'd try to re-frame the debate about what personal communications systems are for. By far the most imaginative exposition I've seen is Douglas Galbi's epic 190-page Sense in Communication (big PDF). This encyclopaedic white paper documents the past, present and future of "presence". But Douglas uses the word in a much wider context that smiley icons showing if your friends are online.

Unfortunately, the paper is also wholly inaccessible to the layman, so here's my attempt to extract the essence. You might want to refer to Stuart Henshall's parallel notes for another perspective once you've scanned this essay.

At the heart of Douglas's message is the idea that there are three fundamental modes of communication.

Information transfer is understood by geeks. They grok bitstreams, Shannon limits, and encoding. Similarly, storytelling is the domain of the humanities and arty-farty folk. But the public value above all else the sense of presence of others. Geeks really don't get this concept.

As befits an economist, Douglas notes that there is a production and consumption cost for rendering each of these communications modes down to text, images and audio. The relative costs of these has also changed with time. Images are now relatively much cheaper to produce and consume than they were only a decade ago. The Web revolutionised the economics of sharing text.

The three modes are not mutually exclusive. A single piece of media or communication can embed all three forms.

So what our communications tools do is offer us "port holes" to other places and times out of current physical sight. Media rushes through those port holes. The job of the tool is to minimize the cost of producing the message, and maximize the value of the message to the user. Obviously, you're limited in the value you can create by the number and nature of the port holes you have access to.

Traditional telephony gives us a two-way audio stream to another place at the same time. A tool like Skype adds in the ability to exchange text; and you get a sense of whether someone is at their computer from the presence icon. A fuzzy, incomplete, subconscious mental image of the other person's setting forms in the back of your mind when you see that presence icon.

So as an example, here are some swans in the grounds of Linlithgow Palace in central Scotland last November.

Except they're not. What you are seeing are some glowing phosphor dots or liquid-crystal filtered light coming from your PC's display. You interpreted them (very easily) as being swans. I spent some effort taking the picture; you spend some effort interpreting it. As a result you got a "sense of swan", and a port-hole punched through space and time.

So I think you get the basic idea.

As Peter Cochrane noted in his opening keynote, telcos don't get emotional impact. They're stuck in a mindset of solving functional user problems. But as Maslow noted (and whilst you may disagree with his model but the point stands), people are in search of higher things that aren't easily pigeon-holed into functional needs like finding the nearest hotel for some sleep or a restaurant for food.

The swans were rather boring. The emotional impact was low. So how about something with more oomph?

Here's one of Douglas's many examples. The "wow" media experience of the 16th century wasn't going to see Star Wars or The Matrix. No, it was to travel half way round the world to see the Hamzanama Folios. About 1400 were produced, and around 250 remain. I went to see a few Mogul scrolls myself in the Victoria and Albert museum:

The pictures just don't do them justice. They're extraordinary. The detail, the shimmering colour, the sense of emotion. Yes, you really get some "sense of presence" of those who 500 years earlier were motivated to create these masterpieces of art. They are truly, utterly sensuous.

Some people just have presence, and boy do these three have it in bucketloads. But that "presence" a Churchill had when he staggered into the room isn't readily replicated with our tools.

Note how the picture invokes a sense of good and evil; the resonance over space and time of deeds great and vile. This image has a sensuous impact. Douglas's belief -- backed by plenty of evidence -- is that it is the sensuous impact of a medium that people desire.

If some people have presence, others feel it. As little Carol Anne sensed, there were others out there, and they were like us. Indeed, we are like automata locked inside a permanent ink-blot test. We cannot but help look for the monsters in the closet! We are engaged in a perpetual search for the sense of other; identifying those that are alike us. We have a Pavlovian response to our "new email" icon; the sense of "other" contacting us must be followed! Yet how do you feel when your "new email" icon turns out to be some automated message compared to one from a friend? Why can't the system distinguish the two and reflect that in the presence status it conveys down in your Windows system tray?

Here's just a great example of presence called Budapest Heat. It's the Hungarian entry from a Europe-wide art competition. Inside are a whole load of aircon and heating units, plus plenty of pipework. A mobile phone inside receives updates of the current temperature in Budapest. Air blows out from the contraption heated or cooled to that temperature. The same air is routed around the interior to make the surface temperature that of Budapest. And to pop the cherry on the cake's icing, the whole thing is painted in thermochromic paint so the colour changes to reflect the current temperature in Budapest. Sensuousness galore! There can't be a more emphatic way to insert some "Budapestness" into your surroundings anywhere in the world.

Let's say you know that there's a demand for a "Budapest temerature system". Left to the geeks in information-transfer mode, it would be a digital readout on the wall. The everyday artists might have an analogue display encased in some over-designed case. Yet this is the purest presence-centric representation you can imagine.

Another example was from Media Lab Europe, now sadly shuttered. I haven't been able to get a picture, so it's just from memory. They had a video camera recording people coming into the lobby of an office building. On the wall they projected the images of those who had passed by in the last 30 minutes. The frames were automatically selected to minimize the overlap between people. Each person faded out over that 30 minute period. So this gives you a sensous time-smeared view of the "presence" of those inside the building. Contrast this with the "space-smeared" Budapest Heat example above.

Here's another example of sensuous presence from Media Lab Europe. When your significant other comes online, the plastic flower on your desk blooms. From an information-centric viewpoint, it adds zero value. A binary one or zero can equally be displayed as a desktop icon. But from a sensuousness standpoint, it's in a different league.

This one is a port-hole in space, but not time.

To change tack a little, here's some examples from the cover art of Led Zeppelin's album called Presence. This is done by Hipgnosis, also of Pink Floyd album cover fame. The images centre around the "festishist object" (their term, not mine). This object is simultaneously both present and absent. It brings out two points. One is that absence is the shadow of presence, and also deserves sensuous representation. Ever written a love letter to an absent partner and sprayed it with scent? (Nope...) Felt the smell in the clothes of someone departed? You've got it. The other point is that "unexpectedness" is a facet of presence. When someone comes back from two weeks of vacation, their presence needs a different sensuous form to when they have been around all along.

So we're done with examples of sensous presence. How about some un-sensuous presence in our current toolset? It's kind of sad. I've written before about how presence representation can be improved.

In this case you can’t see any history of presence; the time of day there; the weather; if they’re busy; who they’re talking to; what kind of device they’re on. The information architecture is a dumb alphabetical list with no awareness of social relationships. When you meet your buddies in a bar, you don't ask them to line up alphabetically, I hope!

It’s also totally “unidirectional” presence. Imagine we can co-listen to your music, and change the volume and skip (for both of us!) for tracks we like like/dislike. The sense of "other" is thus re-inforced.

Why can't I leave a "presence tickle", where I just merely think of you, and re-assert our social connection? Why can't I click on a few buddies and have my avatar in their IM client give them a wave?

I then went on to give some practical examples of applying these principles. Bother examples were lifted from Douglas's paper. The first is that voice messaging is likely to slowly supplant SMS for many situations. SMS has a high cost of composition and consumption, and offers precious little sensuousness. The other was the need to integrate telephony and photography into a "show and tell" experience. MMS fails as information transfer, storytelling and presence mechanisms.

OPINION://The Penultimate Word in Telephony

So, here's the first half of my deck from my closing keynote at O'Reilly's rather good Emerging Telephony conference. I've rendered it as a blog post, rather than the usual boring Powerpoint download. Unfortunately, it screws up the font formatting a bit when you save slides as images, so blame Bill, not me. I'm also skipping a few linking slides which are better turned into text for reading. Plus as a reader-only bonus, I'll explain some of the material in more depth here than I was able to in 15 minutes up on stage.

So, the usual quick intro. This is me.

I'm older and uglier than I look. This blog is a badly behaved two year old. Started as a bit of a joke when I was at Sprint, which got out of hand (getting quoted in Business Week and Forbes), before turning into a career as a freeloader, sorry, freelancer. So you've been warned. Blogging is hazardous to conventional career development.

Down to business. I've been doing work for some large and publicity-shy folk in the mobile space. They want some guidance on the future of telephony. Together with the folk at Skype Journal, we devised some reports and workshops around that. This presentation includes a few of the highlights of that thinking.

The first step in re-imagining telephony is to work out where we are. Decompose the current telephony product into the bits where economic activity takes place. So people pay for social networking services, directory services, telemarketer filtering, and so on. If someone is paying for it, then there's a user need and value proposition behind it. That need may be filled in a different way in future.

When we're running a workshop, we get the teams to note down some of the user pain with the current approach. For example, calling a freephone ("800") type number means dictating your name and address to someone who doesn't understand your accent, and then reading out your credit card number plus security code to someone you've never met and don't necessarily trust. It's not a triumphant user experience. Likewise, the telecom industry treats call detail records as a form of digital efflent to be incinerated at the first opportunity. All the feedback from the call is manual. The system does nothing to update your contacts, arrange your next meeting, revise your social network, etc.

Now we take each of the activities in turn and recover what the abstract value proposition is, the ultimate user value proposition, as well as a snappy summary. So, the first one is "get a device and get connected". The abstract activity is distribution, and the Ultimate Distribution Experience™ could be:

“I can easily acquire the system and join in. It is available for use wherever and whenever I want it.”

This can be somewhat inaccurately precised to the Powerpoint-friendly phrase "Always available, everywhere".

Rinse and repeat for the other steps in traditional telephony. Skip a few details that only people willing to pay for consultancy will see, and you get eight "value axes" on which to describe the communications experience of different telephony-alike systems. Whip out MS Excel, dig out the charting wizard, and get mapping:

Now, suppose you can score the different systems on a 0-10 scale. By definition, the Ultimate Experience scores 10/10 on all value axes.

A quick aside. Not every axis has the same weight to each user. And the linearity of the axes is hard to determine. Sometimes going from 0 to 1 is the big step. But sometimes not; there may be network effects in play. Plus there's something akin to the lump of labour fallacy from economics. Instead of labor, the fallacy is that there is a fixed or bounded amount of possible value to be created. For example, given the amusement possibilities of 2006, saving you a minute of your time is much more valuable than it was in 1906; and in 2106 you'll need to penetrate a thicket of smart machines to interrupt anyone's relaxation. The same "save a minute" becomes more valuable over time because of the value effects of substitute activities.

Now, a bunch of folk have done a lot of work to enable the public to have access to free telephony using an open SIP-based network. We've seen this before, although we don't always have the language to deal with it:

• HTTP protocol (open standard) and the Web (open network of servers and browser clients -- any client can connect to any server).
• SMTP protocol (open standard) and email (open network of relays, where anyone can send email to anyone else, multitudinous exceptions acknowledged).

This open SIP network doesn't have a name like the Web. So we'll call it (punningly) the Vob.

I think even the most ardent of Vob promoters would have to admit it's not been a hit with the public. Despite widescale broadband adoption, SIP phones are not flying off the shelves of Best Buy as I type. Only SIP devices tethered to closed networks are selling. The reason is simple: the Vob doesn't meet the needs of user. Note that price isn't on the spider diagram. That's because price (money) is something you take away from the user, in return for the value proposition you deliver. Price isn't value; it's some orthogonal axis. You don't re-invent telephony's value proposition just by playing with the price.

The only thing the Vob delivers on well is comprehension (aka audio quality). You can deploy a wideband audio codec. As for everything else, it's a bit crap. No reflection on those who tried: the problem of building the Vob just turned out to be much harder than email and hypertext.

A word of caution. Everyone who scores these communications systems gets different answers. Please, don't write in arguing with the minutae of the scores. I'll ignore you. Really, I will. The overall picture tends to stay the same, even as the details vary. Plus there's a load of detail on how high the bar is set for the Ultimate Experience that isn't in the slides with their crude and rude axis labels.

(Free anecdote interlude: a crowd at a nameless mobile handset vendor thought that current GSM mobile telephony scores 9/10 for the ultimate audio quality and comprehension axis. I think they need to get out more...)

In contrast, the PSTN sweeps out a pretty impressive amount of space. The area inside the yellow line represents maybe a few hundred billion dollars a year. (Telecom is supposed to be $1.2tn a year as a whole, so if mobile is half of that, and PSTN is maybe 80% of landline revenue, etc.) And the good news for O'Reilly ETel attendees is not just that Powerpoint does great animated slide builds, but also that the space between the PSTN and the Ultimate Experience is likely to be worth mucho wonga. Expect many more ETels as the stupid network finally unleashed innovation on the parched ideas desert of voice communications.

So, to wrap up this post, a comparison of the landline PSTN with mobile telephony and VoIP's poster boy, Skype. Two take-aways. Firstly, mobile telephony more-or-less envelops the value proposition of fixed telephony. Hence we see mobile substitution and loss of landlines. The gap between the two? Oh, just another few hundred billion dollars.

And Skype? Well, it exceeds the PSTN and mobile operators in several respects. Maybe $4.2bn wasn't so mad after all. But look at the "transactions" axis. You can't call many businessed on Skype. They aren't creating a "next generation 800 number" experience. Yet eBay with Paypal is a transaction company. They face a tough challenge in upping the score on that axis.

So, the 10-hour time jump has caught up with me. California to Lithuania as fast as possible: two very contrasting places. Time for bed. More on the Last Word in Telephony another time.

The FONey war

OK, I can't resist posting. I've been a good boy, done my day's alloted work (OK, I should have phoned the VAT man, maybe tomorrow). The kids are asleep for their afternoon naps.

The News Du Jour is that a company called FON are starting a "user-sponsored" public WiFi network. I saw their pitch at the ETel conference, and you have to be impressed by their passion, if nothing else.

There's plenty of places to go read the PR blurb and the blogospheric commentary.

First, the good news. This aligns with what I've been saying for a long time, namely that the locus of innovation in telecom will move to how networks are priced and financed. When the user and owner interests align (because in some respect they're the same folk), nobody cares any more about capturing the consumer surplus of the stupid network.

Now the bad news. I think they've started with the hardest case first, which is consumers. The highest possible cost per added node, the lowest revenue per user. A more promising start might be enabling public-service workers to roam among localities, or companies to have reciprocal rights in business parks.

Sadly, it also highlights a screw-up in how almost all corporates set up their networks. Somehow, physical connectivity within the building is seen as a great way to ensure secure access to networks. (Hey, all the contract cleaners are trustworthy, aren't they?) The sensible alternative would be Internet access everywhere in the building, and get people to VPN in. If you find that VPNs are too expensive, you're buying your networking gear from the wrong vendor. This also avoid the frequent and ridiculous situation of visitors being unable to get Net access. Some of those folk are $'000s per day consultants you're working hard to prevent from being productive. Anyhow, FON isn't easy to do for corporated because they've embedded security policy in the access network, the exact opposite of what the end-to-end principle tells you.

So FON is a very risky venture, where unless they find some seed markets onto which to condense a critical mass of connectivity, you're just left with isolated islands too disparate to justify the effort of membership. After all, our friendly open networks "Linksys" and "default" are pretty ubiquitous, too. I want them to succeed, but it looks like the kind of venture that you need to bung $1bn at to get it started. But as a way of Google kicking sand in the face of some telcos, maybe that's an affordable budget.

PS - it's cold enough here in Vilnius that the snow is just precipitating out of the air near the freezing ground -- blue sky above! Was -19C when I arrived last night, and felt it too.