VoIP Driving Broadband??

One of Niklas Zennstrom's statements at VON Canada (Page 10 of the presentation) is that "VoIP is Driving Broadband." Interesting statement, and rather provocative. How many of the 100M Skype downloads were people who were just about to download Skype over their V.92 dial-up internet connection, and then said, "Gosh, I better go out and get that broadband connection before I use this"? How many of the 32.5M broadband subscribers in the US went out and got their broadband connection so they could get Vonage, AT&T CallVantage, or one of the cable VoIP services?

Somewhat less facetiously, is there any data related to broadband purchase decisions that shows that "ability to use VoIP" was a factor in the decision for any significant number of purchasers? I haven't found anything regarding decision factors in broadband purchases on the Broadband or VoIP categories of itfacts.biz.

Widespread adoption of broadband access is clearly an enabler for VoIP, but a claim that VoIP is "driving broadband" seems a bit of a stretch to me.

Synchronicity

So today, Om Malik cites a Yahoo Finance story that Verizon is offering naked DSL, and Aswath Rao cites a Russell Shaw blog entry about how Verizon's iobi service could be a VoIP killer.

How could Verizon really kill VoIP? How about an incentive to Verizon DSL customers: Keep your telephone service, and we'll give you unlimited local and LD, plus iobi Home, for $19.95/month. E911, line power, five-nines reliability, and use of your existing home wiring, for five bucks a month cheaper than Vonage - with all the nifty features you get from Vonage except portability and a non-local DN.

The only advantage that would leave Vonage is the regulatory arbitrage of avoiding all the add-on fees (911 surcharges, USF, etc.). And as has been shown in the past (see ISP-CLECs and reciprocal compensation), regulatory arbitrage is not a sustainable long-term business model.

Skype: Windows for VoIP?

One reason (I'm sure there are many others) that Windows came to dominate the PC business is that they had a published API. This led to an explosion of diverse applications - which is what most people buy PCs for, after all.

Of course, Microsoft also builds its own applications, and has integrated some of those applications into the OS platform, undercutting application developers that had contributed significantly to its success and leading to all sorts of nasty antitrust claims.

Skype has a published API. Third-party developers are able to build all sorts of diverse applications making use of a basic peer-to-peer voice over IP infrastructure provided by Skype. And while free peer-to-peer voice communications is pretty cool in and of itself - just like a windows-based operating system is pretty cool in and of itself - it's this potential explosion of applications that is the real "disruptive technology".

Questions remain. How will Skype manage the inherent conflict between providing an open platform for applications developers and providing applications on that platform - especially when they give the platform away for free and make money on the applications? Can a third-party developer bundle the Skype software with an application they sell, built on top of Skype, without violating the limitation in the Skype Distribution Terms to "non-commercial gain"? Do enough applications lend themselves to a peer-to-peer model to be worthwhile? (Interestingly, the three applications that Skype is selling - SkypeIn, SkypeOut, and Skype Voicemail - all seem to hybridize the peer-to-peer model with some level of specialized nodes, either gateways or servers.)

But the potential that is unlocked by an open API is tremendous. Tremendous enough to make Skype the Windows of the VoIP world? Time will tell.

Software Management Humor

Seeing Ronald Gruia's pointer to Tom Evslin's translations of programmer-speak reminded me of something I got almost ten years ago. I received it from Jim Tomayko, who was at the time on the staff of the Software Engineering Institute at Carnegie Mellon University. I don't know if he was the original author, but I give him all the credit. (There's no copyright notice on it, so if you read this, Jim, I hope you weren't planning on publishing it in a Big Book of Software Humor and making a ton o' money...)

"Essentially complete"
Translation: It's half done

"Schedule exposure"
Translation: It slipped three weeks ago

"We predict"
Translation: We hope to God

"Screen design is lagging"
Translation: Not a single screen exists

"Risk is high but acceptable"
Translation: 100 to 1 odds. Or, with ten times the budget and ten times the people, we stand a 50/50 chance

"Potential show stopper"
Translation: The team has updated their resumes

"Serious but not insurmountable problems"
Translation: It'll take a miracle

"Basic agreement has been reached"
Translation: The &%$#@s won't even talk to us

"Results are being quantified"
Translation: We're massaging the numbers so that they'll agree with our conclusions

"Task force to review"
Translation: Seven people who are incompetent at their regular jobs have been loaned to the project

"Not well defined"
Translation: Nobody's even thought about it

"Still scoping the requirements"
Translation: See "Not well defined"

"Not well understood"
Translation: Now that we've thought about it, we don't want to think about it any more

"Requires further analysis and management attention"
Translation: Totally out of control

"Results are encouraging"
Translation: Power-on produced no smoke

Eliminating the Service Provider?

In a comment on the previous Disappearing VoIP entry, Aswath writes, "the only promise of VoIP is end-to-end direct communication, unaided by any provider."

Any provider is a bit of an overstatement - someone's providing the broadband network and the software - but I get the drift: eliminate the voice service provider. Yes, VoIP enables this in a way that is impossible in the POTS network. By the same token, I could download a free copy of Movable Type and host this blog on my home PC - but I find it easier to use Blogger. I could run a mail server, but gmail works fine and, again, is a lot easier for me. Eliminating the service provider is possible for a lot of applications, and there will be those who want to do so, for flexibility, control, features, dislike of the service provider, and a variety of other reasons. But there will plenty of people who are perfectly content to let someone else do the heavy lifting.

If the only promise of VoIP is end-to-end direct communication without any voice service provider, there will be a very large category of people who will not particulary care about VoIP.

PaleoISPs, Walled Gardens, and Adoption Rates

I came across an interesting historical nugget today. In September of 1988 the General Manager of GEnie (does anyone out there remember GEnie?), in a speech to the Electronic Networking Association, cited a prediction that "...by the year 2000, it is estimated that 50 percent of the U.S. population will be using videotex services on at least an occasional basis."

What I found interesting was that the timing was pretty close - Harris Interactive's surveys of internet usage, as cited by clickz.com, show the 50% threshold being crossed some time in 1999, with 63% online as of 2000 - but the services were so wrong. So wrong that the spelling checker in Microsoft Word doesn't even recognize the word "videotex".

Back in the pre-WWW days of the late 80's and early 90's, companies like GEnie, CompuServe, Prodigy, and The Source provided online information services in closed communities - what today are referred to as walled gardens. Then came the Web and the ability for anyone, anywhere, to provide information, applications, and services. Instead of a service provider deciding what content, information, applications, services would be offered to the market, anything that someone thought would be useful could be offered to the market - and the market could decide what would succeed and what wouldn't.

And a small group of people will never be as good at identifying what ideas will be useful to the market as will a very large group of people with the ability to try anything.

The PaleoISPs are largely gone - CompuServe survives as a part of AOL, and Prodigy's name lingers in the SBC Yahoo domain names; The Source was bought and dismembered by CompuServe, and GEnie was bought and later shut down by IDT. Meanwhile, somewhere on the order of 75% of Americans have home internet access.

Lessons for VoIP providers are left (for now) as an excercise for the reader.