Enterprise VoIP: Not Sexy, Just Growing

Integration of voice with business apps might be the next wave of growth for IP-based voice. But for that to happen, basic VoIP calling has to be ubiquitous. Presence and unified messaging don't make sense until the basic voice platform has taken hold. And that is precisely what is happening in the enterprise space. Give a lot of credit to Cisco for pushing the business in the IP direction. Soon, we'll likely have to credit Microsoft as well for pushing the notion of what "voice" services are in the direction of unified communications. Voice really is becoming an application on the network.

More Online than Print by 2011

Online advertising sales will overtake print advertising by 2011, according to Veronis Suhler Stevenson. VSS forecasts annual online advertising growth of more than 21 percent, reaching $62 billion in 2011, compared to print advertising's forecasted $60B.

TV ad revenues will still hold the top spot at a predicted $80B in 2011. "The path of online advertising and newspaper advertising is a continuation of what we’ve been observing for many years, but it is finally getting to the point where the lines will cross," says VSS's James Rutherfurd.

The study notes that in 2007, the amount of time spent reading online will overtake time spent reading newspapers for the first time. Overall media use was down 0.5 percent in 2006 to 3,530 hours per person, while workplace media usage jumped 3.2 percent to 260 hours per employee per year.

Vonage Enhances Visual Voicemail

Vonage's enhanced Vonage Visual Voicemail now is available, and strikes me as more than visual voicemail, though there is not an elegant way to describe the feature. It is a premium service that transcribes voicemail into email. Most visual voicemail features put a message into a user email inbox, but do not provide transcription into text.

Voicemail transcripts can be sent to up to five email addresses at the same time, and to a user mobile phone using text messaging. The service costs $0.25 for each transcribed voicemail (plus applicable network fees for wireless text messages).

Some observers have been suggesting that Vonage do more in the "rich features" area and stop flogging the "lower price" angle for some time, so they will see this as a step in the right direction. I don't know offhand how long a voice message can be, but there are times when it might be really handy to have a transcript. Lists of things come to mind. Street addresses and phone numbers. Driving directions.

Google Phone Again?

Speculation about Google getting into the mobile phone space have been circulating all year. Most recently, the Wall Street Journal reported that Google has "invested hundreds of millions" into cellular phone development, and that the project goes far and beyond current incarnations of Google products on today's mobile handsets. So what is Google up to?

It isn't necessarily that complicated. Google might be simply be trying to show existing and would-be device manufacturers what can be done. Google doesn't necessarily have to be thinking about becoming a device manufacturer or "service" provider.

Google already has moved to put Google Search, Gmail and Maps onto phones. Google might be trying to illustrate, concretely, what a device can do, and look like, if unencumbered by all sorts of walled garden software. Call it a Google-optimized mobile Web approach, if you like. An approach that offers opportunity to exploit advertising revenues. If Google can get serious traction, it not only creates an important beach head in the mobile ad space, but also helps create the mobile version of the broadband Internet.

Ad-supported communications are a possibility, but not the only possibility. The "open" whole Web framework plays to Google's strengths. That might be the more important objective.

Expect to see Google pushing hard not only to get its software on more clients but to get users accustomed to behaving the same way with the mobile Web as they now do with the tethered Web. After all, the whole point of targeted advertising is to reach people where they are.

Three times as many mobiles are in use as landlines, and landlines don't offer much upside in the advertising space.

Voice is Not a Commodity

New communication modes complement, rather than substitute for, older modes, says Stefana Broadbent, who leads the User Observatory at Swisscom. That ought to lead service providers to think in different ways about the "commodity" nature of voice, for example, since it does not appear that voice and new forms of communication, though widely used, are consumed in ways that make them functional substitutes. And if they are not substitutes, neither are they commodities.

Different modes are viewed as best for some sorts of communications, and get usedthat way, she essentially argues. And while you'd expect wired voice, mobile, email, text messaging (short message service) and instant messaging to be key modes, you might not expect blogging to be a communications mode, though Broadbent says blogging is, in fact, a form of communications, not media.

So what are the key user perceptions of appropriateness (Broadbent studied consumers, not enterprises)? Wired phones are for "public" communications and intended to communicate lots of information that is of general use to all members of a family, for example.

Mobile voice, on the other hand, is a personal channel. About 80 percent of calls from any user's handset are with just four other people, Broadbent finds. Mobiles are used for regular communication with best friends and family.

SMS is seen as more intimate channel, oddly enough with more perceived "emotional capability" than voice. SMS gets used only with best friends and family and "grooming" messages ("thank you", "I love you") represent about half of the messages. SMS is seen as a way to keep relationships alive. More than 50 percent of all grooming communications happen through SMS.

Email is used as an administrative channel to get tasks accomplished and share attachments such as photos with networks of friends or social groups. Email also gets used for communications of an "impersonal" nature (contacting retailers, for example).

Instant messaging tends to be a multitasking medium, with a live channel opened in the background while a user does other things. People just step in and out of conversations.

Blogging is a "networking channel," used in place of email in many cases and a way to extend the total number of "friends" one can interact with, as it allows one-to-many communications much more simply than email.

Significantly, says Broadbent, the new forms are not substitutional. Each new channel slowly redefines the uses of older media, and uses are very sophisticated about the strengths and weaknesses of each form. SMS gets used with people one knows very well because they have the context to decipher very short and cryptic messages.

A key takeaway from Broadbent's research is that though "price" is a factor in just about any purchase, communications are about other things as well, providing some space to innovate on the value front to create new levels of comfort with "price."

700 MHz Rules: More Impact than Carterfone

Though some might really have preferred mandatory wholesale rules for a portion of the 700 MHz spectrum, the "Carterfone" style "any compliant device can be attached to the network" provision will have much more impact than did Carterfone. Carterfone lead to widespread use of modems on the public network, initially by business customers who did not have to "ask permission" to do so. Consumers initially could "buy and own" their own phones instead of renting them from the phone company.

We also might credit the rise of much of the Interconnect and business phone system business to Carterfone.

Then, because modems could be used, we can further say that Carterfone helped pave the way for creation of the Internet itself. First dial-up access, then broadband access, became possible because of Carterfone. Because of broadband the visual and now semantic Web developed. These are significant effects, indeed.

But the 700 MHz spectrum should ultimately have more impact. We assume the C block will be assembled into a national network. We assume a high-quality, low-latency core, with short access "tails," and full mobility across the whole network.

The near-term impact will be significant. Device manufacturers will benefit, since they simply have to build equipment that complies with the technical specs. Users will benefit since they can use any handsets they choose. But there will be more impact, fairly shortly.

Because the new network will be based on IP (as well as Ethernet), there will be ways to provide VoIP, even if network operators try to wall off all voice services in the traditional walled garden. Technological cleverness will take care of that problem.

That is going to create a potential new "offer leader" in wireless. And recall that AT&T's "Digital One Rate" completely reshaped industry-wide packaging and pricing, not simply some of AT&T's offerings. The C block network potentially lays the framework for a service provider with some scale to reshape consumer expectations of what things should cost and how they should be packaged.

More significantly, the C block network potentially allows a provider some latitude to redefine the customer experience as well, creating new expectations of what media "should" be available, how they should work together and what the "right" price is for such capabilities.

We can't really predict what other developments might occur. I don't think one would have extrapolated the creation of the World Wide Web or VoIP from Carterfone. I don't think it is yet possible to extrapolate from the wireless equivalent of Carterfone, either.

But this is a bigger deal than most people assume. It just will take a while before the wider ramifications are seen. And by the time it happens, nobody will remember a relatively "small" regulatory decision.

No Wholesale? No Surprise

To almost nobody's surprise, the 700 MHz auction will not have a mandatory wholesale provision. We might argue that a robust "third" or "fourth" or "fifth" pipe would result. What is harder to argue is that any such pipe provider would be able to make the investments required, operate its network at a high level of quality and still return the required returns to investors.

Other wireless infrastructure initiatives highlight the problem. After reporting a $16.3 million second-quarter loss last week, EarthLink reiterated that it was reassessing its municipal wireless business. Revenue is the issue.

"Until we're confident that we can build new networks and get an acceptable return, we will delay any further new buildouts," CEO Rolla Huff said.

EarthLink has been one of the biggest builders of city wireless networks, with projects built or in the works in 13 municipalities around the U.S., according to its Web site.

The problem with wholesale access business models is simply that it is so difficult to earn an adequate return. In a competitive market, a provider needs both significant penetration and reasonable margin (40 percent is a common threshold). Wholesale makes that tough.