Excel Offers Roadmap for Communications Service Providers, says Jaduka

Commodity voice now is part of a broader communications environment more focused on voice and communications as an attribute of many other experiences and applications, says Jaduka CEO Pete Pattullo. 

In part, that means creating the ability for direct integration of communications into business processes, even though stand-alone versions of voice will continue to be important. One example is how voice can be used to improve the efficiency of package deliveries. 

"We have a customer that delivers packages for which there must be a signature," says Pattullo. "So the company calls ahead, just before a delivery, to make sure packages can be delivered the first time, without return visits."

Application providers have to step up and create easy ways to "drag and drop" voice and communications features into existing applications. But app providers cannot do all the work, he says. The analogy is Microsoft Excel, where a tool allows end users to create their own custom spreadsheets.

Creating application program interfaces is a start, but the APIs are not, in themselves, a business model, Pattullo says. Service providers need more awareness of the actual business problems their customers have, to be able to create lots of applications using voice and communications features that are germane to users. 

Business VoIP: Lots of Hybrid Deployments

Only 34 percent of businesses with VoIP use it exclusively, and have no TDM infrastructure, according to analysts ar Research and Markets. VoIP is expected to be used by 74 percent of all U.S. businesses by 2012, Research and Markets projects.

Global Bandwidth: Video, Video, Video

Hibernia Atlantic CEo Bjarni Thorvardarson says trans-Atlantic routes now are driven by "video, video, video."

He's got that right. About 78 percent of global traffic now consists mostly of video, according to TeleGeography. 

Voice represents about one percent of traffic. And that illustrates a problem network services providers face. The one percent of traffic underpins the business model, while most of the video contributes little, if anything, beyond driving broadband access package upgrades. 

More Use of Mobiles for International Long Distance

Participants on a Pacific Telecommunications panel on voice peering agreed that mobile termination rates are under pressure. That is one reason why more people now are using their mobiles to originate international long distance calls, as TeleGeography analyst Stephan Beckart says. 

Asked about the notion that many forms of voice will move to some "no incremental charge" basis, panelists from Orange, Sparkle and Rogers Communications agreed that regulators are unlikely to disallow cost recovery that the termination regime now permits and requires. 

There still are costs to terminate calls, and those costs will have to be recovered. What remains unclear, though, is whether the incidence of those cost recovery mechanisms will remain where they presently are. It is possible that broadband connections might emerge as the replacement, in some cases. 

Are Telcos Losing Revenue Because of Low-Quality Voice?

Telcos are losing some voice revenue because existing voice quality is poor, says Andrew Odlyzko, University of Minnesota Digital Technology Center director. Despite growing volumes, “toll quality voice is lousy quality, especially for women’s voices," he says. Likewise, "wireless voice is horrible; it has been selected to be the lowest quality one can have that people wouldn’t reject.”

There is room for higher-quality voice as a premium service, Odlyzko maintains. As others have argued, Skype provides an example of quality "better than toll." 

The problem is that many examples of higher quality voice are hard to separate from other variables that also might illustrate what the specific value proposition is. Skype, with good microphones and on a good broadband connection, can sound better than toll. But such connections also provide other sources of value, such as the ability to talk internationally for "no incremental cost."

What cannot easily be tested is the thesis that, for this particular application, even lower quality would not reduce usage, or destroy the value of the application. In fact, if voice volumes, using Skype-style mechanisms as well as mobile and fixed line long distance, continue to grow, it is hard to argue clearly that there is an unmet consumer need. There might be. There should be. But so far, no clear test has been devised.  

“There are opportunities for higher quality voice,” he says. One suspects he is right, though it is not so clear, beyond business videoconferencing, where one can point to examples. 

Odlyzko is an original thinker, so some of his views run counter to conventional wisdom. He argues, for example, that wireless providers have erred in focusing on mobile data, where they might have used their 3G networks to provide better voice. 

I'm not sure I agree with that conclusion. And, perhaps, despite his views, neither does Odlyzko. He pointed to at least some forms of wireless data as services that provide higher value and margins. That clearly is the case for text messaging. It appears to the case for mobile Web access. 

So far, the service provider effort has been to provide IP-based equivalents of time division multiplex voice, with equivalent stability and quality, not greater quality. It might be interesting to see whether such a clean test could be market tested. 

Not many service provider executives appear to believe there is a significant market for higher-than-toll-quality voice in the consumer market, though. Users might well like it, but service providers likely are skeptical about whether consumers would pay a premium. Business users might be a different case, but not many clear examples aside from room conferencing systems can be noted. 

Service providers might be losing some revenue because of poor voice quality. They also are losing some customers for other reasons, such as a secular decline in demand for landline voice. It is unknown whether a revenue opportunity exists in the mass market for higher-quality voice. There should be an opportunity in business markets. But the thesis largely remains untested. 

That isn't to say some providers have failed to offer better-performing codecs, for example. That should provider higher-quality voice. The issue is whether consumers are willing to pay a premium for it. They might be. The problem is arranging a clear market test where some other obvious variable does not cloud the test. 

Microsoft to Sell Comcast Stake

Microsoft has decided to sell its 7.3 percent stake in Comcast. Microsoft had owned 150,935,575 Class A common stock in the cable operator.

Microsoft made its $1 billion investment in Comcast in 1997, when Microsoft had interest in becoming a major player in the cable set-top box business. Some observers familiar, even casually, with cable operator strategy would have argued even then that the effort was unlikely to bear much fruit.

As anxious as some operators might have been to gain a stamp of legitimacy in the coming wave of Internet-based or interactive content, cable executives when speaking to other cable executives would have insisted they had no intention of "letting Microsoft take our business." In those pre-Google days, it was Microsoft cable operators worried most about, in terms of digital-savvy outsiders with the skills and credibility to siphon off the leading edge of interactive attention, if not business.

Apparently Microsoft long ago realized its hoped-for strategy would not lead to success. After several years when Microsoft powered an on-screen program guide for Comcast in some of its Washington markets, Comcast stopped using the guide altogether, in favor of its alternate guide, developed with Gemstar.

In May 2007, Comcast stopped using Microsoft’s on-screen program guide for its digital cable boxes in Washington state, the only U.S. location that software feature was being used.

Microsoft has had much-better luck as a technology partner for leading U.S. wireless companies, though.

New Buyer Concerns in Undersea Market

Latency, not to overstretch too much, is becoming for some customers the first requirement for a connectivity provider, followed in very close order by physical diversity, though in some cases jitter performance might rank among the top three requirements, ranking perhaps even before bandwidth. Such concerns are paramount for many financial and media firms, as you might guess.

So a touted feature of Hibernia Atlantic's new Amsterdam and its 37 POPs in North America is latency performance. The new route completely bypasses London’s common congested terrestrial fiber routes. Latency on the new Amsterdam-to-Boston route is now 74 milliseconds, making this the fastest available route, the company says. It also offers the fastest route between Amsterdam and Dublin, Ireland.

By using its northern cable, Hibernia’s new network bypasses London’s traditional backhaul by offering a diverse express route that shaves two milliseconds off the latency on the existing London-to-Amsterdam route.

“This new route is attractive for any business that requires direct, low latency connectivity between North America and Europe at competitive rates,” states Bjarni Thorvardarson, CEO for Hibernia Atlantic. “Financial firms, movie studios, IP providers and data storage companies requiring a fast, diverse connection over the Atlantic while avoiding London are among some of the enterprise customers that can benefit from the new route, as well as global carriers.”