Leading up to Vonage’s IPO and since, enough naysayers have catalogued the missteps taken by Vonage. To counter that people like Daniel Berninger have suggested that it will recover well from this temporary setback, by invoking the entrepreneurial spirit of its Chairman Citron. But there has not been much discussion on the specific strategy Vonage should follow to turn things around.
Currently Vonage is focused on phone line replacement business. It has been widely reported that their customer acquisition cost is high; we are told that they lose customers at a high rate; but it looks like their operating margin is healthy. This suggests that they need to find ways to enroll customers inexpensively and once enrolled, the subscribers should find it difficult to walk away. Of course reducing the monthly charge is not preferable for two reasons: well funded competitors can play the same game and last longer and after a point, the reduction is not that dramatic for it to be an incentive. This suggests that Vonage has to introduce new features and services that do not incur much capital expense and at the same time takes the company away from a simple telco replacement play. The following are some of my thoughts.
They can do so many things. I hope the “genius” in Citron and the smart people he has surrounded himself roll out new features and services, put some excitement back into VoIP and silence some their critics.
Last week, Wall Street Journal had profiled our own Jeff. For me the noteworthy item is a quote attributed to him: "I blew it," Mr. Pulver says bluntly. "I had the juice. I could have done something." We all can question his self-critical assessment. I did. But the rest of the story talks about his future interest – “Internet video”. It is clear he is dead serious about it. So it is an interesting exercise to guess what he could be doing in this space.
The directory service and NAT/FW traversal techniques used for voice communication will suffice for visual communication as well. So there are no technical challenges for conducting real-time visual communication.
When I visited pulver.com recently, Jeff showed me his recording studio and talked to me about building up content. But in the scheme of things it is really not ground breaking. It will be beneficial if we make it easy for the general public to produce quality video. Indeed, recently New York Times had a story on this point. They talked about web based services like Jumpcut, Eyespot, Grouper and VideoEgg that serve this need. This means this is already a “me too” play.
There must be a place where people can go and access all this “long tail” video. Of course YouTube and Google video and countless others are already doing that.
So what is left?
I enjoy reading many text blogs. But I am too hyper to listen to podcasts. When somebody refers to a snippet in a podcast, I can not hear that portion; I need to play the podcast linearly and wait. Instead, it will be nice if click the URL and I am taken to the specific spot in the podcast, just like “#” anchor in http html, but with an enhancement: not just the author, but anybody must be able to place the anchor. This way it becomes a social effort. Imagine reading the line “It is not personal Sonny. It is strictly business”; you click on it and you see the clip from the famous movie. The media is still accessed at the rightful owner’s site; but a third party has identified the specific location. This way it has the shades of “social networking” and it optimizes the user experience. This idea is an extension of his recent experiment – Feedcollectors.
What do you think?
I came across a news item reporting on a new VoIP provider, efonica. Normally this would not have been noteworthy, but the company claimed that it uses a new (five years to develop, mind you) P2P architecture. Naturally, I wanted to get additional information. The description in their website does not fully answer my question – either I am missing some important component or the architecture is no different than the standard one.
They call the new architecture “DSP technology”. This label is a great choice on two counts: use of a well-known, but misapplied acronym (DSP does not refer to the more well known “Digital Signal Processor”, but “Directed SIP Peer-to-Peer”); use of two most attention grabbing phrases in VoIP (SIP and P2P). The following is their description of the technology: “When placing a call using Fusion’s Directed SIP Peer-to-Peer (DSP) technology, customers automatically access a central registry for authentication, enhancing security when compared to many peer-to-peer alternatives. A very sophisticated and powerful routing engine then facilitates a connection directly between calling parties without having to go through another user’s computer or calling device, as is required in other peer-to-peer models.” This really looks like standard SIP architecture. It doesn’t look like it is related to P2P SIP.
The next interesting item that caught my attention is their claim on another revolutionary idea – Internet Area Code (looks like they have even trademarked this term): “eNumber™, which is an Internet telephone number that begins with [10], the revolutionary worldwide Internet Area Code. efonica products and services require no change to our customers’ current calling habits – they simply dial 10 in front of a number they are familiar with. efonica members have the option to use their phone numbers as their eNumbers or we can assign them new, unique eNumbers. We employ an automated authentication process to ensure the numbers belong to the customers registering them.” I am not sure what is so revolutionary about it. It is not clear how this is different from ENUM. Doesn’t PhoneGnome use an automated and authenticated registration process? They do not give any clue as to why they require dialing the two additional digits. I hope it is not because they can trademark an often used phrase.
Carl’s guest post on Feature Interaction has prompted Alec and Martin to post their thoughts on this matter. Carl has responded to their posts. In this post I respond to Alec’s claim that “feature interaction is a boogeyman”.
Alec’s example for feature interaction – failure of “simul-ring” when the call is originated from one of the “target” phones is not feature interaction at all. After all there is only one feature. As he points out it is an implementation of incomplete logic. As he correctly points out the logic should have checked for this possibility. (The corrective action suggested by Alec will work only if the SIP Proxy is given the caller id information in the first place.)
Alec rhetorically asks isn’t feature interaction “really just a case of a poorly designed feature?” I could take issue with it. But the point that Carl and I discussed is the logistical issues when features are independently developed and deployed. When I raised the possibility of false nirvana, Carl brought up the counter point that rich user interface will solve the problem of feature interaction. This is true, but does not solve the problem.
You see, the clients and the first n features have already been deployed. The users are familiar with these features. With this background, imagine an independent developer developing “n+1” feature. S/he must make sure that the logic for the new feature interacts in an expectable (acceptable?) manner, given the user interface limitations. This is easier said than done, because the set of “n features” may differ from one user to another. It is worse when “n+1” and “n+2” features (that may interact) are being developed independently but may be deployed concurrently. This testing and verification process introduces delay in deployment and invariably introduces the loathsome arbiter. I would think that there is a conference running on this topic for almost a decade suggests that feature interaction is a real issue.
In response to my post on one of Telio’s claim, Martin posted a comment that in my opinion lists why some of the claims against PSTN are justified. Since my response is a bit long to be a reply comment I am posting it as an entry. If you consider this post to be argumentative, please bear with me. I feel that it is important to discuss this point and reach a common understanding.
Let me reproduce Martin’s comment for ease of reference:
Technically, yes ... but if we take "PSTN" to be the wider system, including the pricing models, interconnect, settlement, etc -- then we can see that progress is basically impossible. How to get consensual agreement on a new feature being deployed? There's no possibility of incremental exploration of features that impact 2 calling parties, for example. A Vonage, Skype or PhoneGnome do allow such innovation (although not all choose to execute on it). Also, VoIP does make it technically simpler to unbundle the components of the service (e.g. select your own voicemail) - it's just a different URI in the config file, not a software update to a thousand switches needing a ton of systems management.That said, it is amazing how feeble the telcos have been in improving the voice product, even when in vigorous competition (e.g. in cellular).
The comment does point out that "step-child treatment" is meted out to PSTN by current thought leaders: “it might be technically feasible to do something in PSTN but business processes will not allow it”; “it may not be happening in VoIP, but it is technically feasible”. There is another instance of difference in how PSTN and VoIP are evaluated: in the case of VoIP, it is tacitly assumed that we will be using an "inexpensive" consumer device apart from a monthly charge; but PSTN will have to assume the old "12+1" button phone and any indication of monthly charge will be considered highway robbery.
One can justifiably characterize PSTN attempts in adding services to be feeble. Let us first tip our hat to ADSI phones and Verizon’s iobi. But then having done that, let us without even a pause challenge VoIP providers to deploy meaningful, differentiating services – not just the usual “do not disturb”s.
So I implore you to be true advocates of the end consumers by: 1. not discarding a technology that can still deliver useful value; 2. insisting on VoIP to deliver what can be done, rather than being satisfied that it can do it; 3. intolerantly complaining when an intermediary is introduced, especially by a member of the VoIP industry who is at the same time espousing “intelligence at the end” credo.
James Enck compares and contrasts the way Vonage and Telio approached the financial market. That well may be the case – what do I know about that. But one particular claim in their roadshow material caught my attention and I am taking an issue with them.
In their attempt to show their value proposition (page 6), they claim that they offer (could?) new services. But they do not stop there; they go further and claim that “New services are not possible on PSTN”. Probably they add some qualifications during the presentation. Absent that this statement borders on bravado. As I have stated many times before in this blog, there are only a handful of things that can be done in IP world that can not be replicated in PSTN. To get a full list of features Telio offers to their customers, I visited their site. But unfortunately I am not able to discern them due to language differences. I am guessing they are the usual laundry list, which are easily realizable. This of course includes “Keep your number for life”.
If you allow me to have a box that costs less than half what an ATA costs, I can have many of these “new found” features in PSTN as well. I really hope we stop creating schism between PSTN and IP Communications and focus on creating value for the consumers. Indeed, true IP Communications includes PSTN as a “sub-network”.
One day last week, I had trekked to Melville NY to spend an afternoon with Jeff Pulver and gang. They were gracious enough to spend the time discussing different aspects of IP Communications. My conversation with Carl Ford was even videotaped. Apparently the conversation also triggered some long held thought and Carl has asked others to join the conversation during Fall 2006 VON. I am sure that is going to be an interesting lunch.