Can You Survive the IP Shift?

A few of you are familiar with a story I’m fond of telling. Once upon a time my market research company started to get asked what would happen if Congress passed a new telecom act. This was 1994 and 1995. The truth was, we weren’t sure. To make a long story short I embarked on a personal research program to figure that out, and ultimately boiled my findings down to about a dozen bullet points.

Roughly at the same time, I started getting asked what the actual cost of a phone call was, and where that all would sort out. To make a long story short, I wound up with a concept I have called “near zero pricing” ever since. And, ever since, I have urged everyone to build their business models on that premise.

More recently, new questions are being asked. Many successful providers of voice-centric services are asking whether they can remain relevant, and prosper, in an IP world where so much value and revenue conceivably shifts to application providers, and is not captured by “network services” providers.

My off-the-cuff answer has been that “100 percent of those of us who survive this shift will be providing all sorts of Web services and applications beyond basic ability to make, store, forward and retrieve voice messages.”

The inevitable next question is “what are those things and what do I do to create and deliver them.” That’s an open question, but has to be operationalized, and soon.

There’s a third question I now am set upon deciphering: what does the communications business look like after wider IP transition allows latent demand to surface. Put another way, there are lots of problems end users have that we haven’t been able to profitably address with TDM solutions.

All that is about to change. We are going to witness the emergence of all sorts of market segments and niches that we now can serve profitably, and this will happen all over the place.

The issue is to discover precisely how the process will unfold, so we’ll know where to focus our time and money to capture this newly-visible demand.

Another observation is that network services providers no longer can do everything themselves, and they know it. “MetaSwitch is at the heart of this transition of our business,” says Sylvie Couture, Télébec’s chief technology officer, about the ways MetaSwitch provided extensive professional services, not simply “a switch platform” to the Quebec-based carrier.

Other infrastructure providers also offer evidence that such things as a complete redesign of the entire IP network often cannot be done as well by carriers themselves as by their supplier partners. This understanding needs to be extended further into the application development process.

Also, the idea that voice services are a commodity needs further and serious reexamination, because it probably isn’t true at any level except in the sense of raw transmission of bits.

Consider softphone technology, to use but one example. The issue isn’t whether soft clients replace physical phones, but how and why soft clients work for people. There are many applications, and many settings, where a soft client makes more sense than a physical hand set or desk set.

Wainhouse Research surveyed enterprise end users and found that soft clients had already been purchased by 24 percent of respondents, while another 20 percent saw this as a future purchase. Obviously, there are some places where softphones make more sense than physical instruments.

In a completely superficial—but real—sense, if you can talk real-time through your PC, and you can get your voice mail there as well, and you're already comfortable using a Bluetooth headset, maybe you don't need a traditional phone.

The point is that if voice is not a commodity—and my contention is that IP is going to prove this is the case—then those who make the transition and prosper are those who can move adroitly to create voice services that aren’t commodities.

My guess is that every user of communications can point to ways that various modes of voice, on different devices, used at different times of day or week, to communicate with different people about different things, already exist. And we’ve just started to make the shift.

And my point is that these various modes of communicating are in fact not completely functional substitutes for the other modes. If they were commodities we wouldn’t bother using the various modes in different ways. Again, to use a crude example, mobile voice is not completely a functional equivalent for POTS. If it were, people wouldn’t be willing to pay so much more for the service, or use it as readily as they do.

POTS is a different product from some forms of over the top VoIP. Both are different from some forms of IM-based or soft client voice used on a PC platform. DIDs get used in different ways than they used to. People who use voice white lists and black lists are different from people who don’t know what the difference is.

Now, to answer some possible objections that might be forming, if voice is very much contextual, and not a commodity, then even when the “raw” cost of talking is very low, the value might be very high. Voice is not POTS. Voice is not simply mobile, or IM, or a soft client experience. Sometimes it is click to call. Sometimes it is enhanced with video. Sometimes it is synchronous. Sometimes it is asynchronous.

Sometimes it is a voice SMS. Sometimes it is a voice post on a Web site, rather than a text post. Sometimes it is integrated with podcasting. In the future it might be integrated with a video experience. Sometimes it flips from one device to another, mobile to fixed, or fixed to mobile. Sometimes it is personalized for friends and family. Other times it is screened and filtered for work.

At times it might be integrated with some sort of collaboration, such as review of some sort of document. It might be launched from inside an enterprise application, an email, an IM, a Word document or spreadsheet. At other times talking on a device recognizable as a phone is just fine, with no need for image or text support.

I stand by my contention: 100 percent of today’s voice practitioners who survive the IP shift will have found ways to unlock voice from the plain vanilla box it now is in. All of the survivors will have found ways to customize the voice experience for latent demand that is going to surface.

And 100 percent of those survivors will have found ways to use new IP-based tools to innovate faster than IMS or the core network protocols will permit. You want different answers? Ask different questions.