May 21, 2008

Service Provider Views - Jajah, Ribbit and Ifbyphone

My latest article for Service Provider Views was published yesterday on TMCnet. The focus this time was on some variations of the platform play as a path that service providers can take in the Web 2.0 world.

In particular, I touch briefly on Ifbyphone, Ribbit and Jajah. They're all different, and illustrate varying degrees of what a platform play might look like. It's early days for all of them, but I think there will be a place in the market for each of these models.

In my view, Jajah represents the most complete solution as platform plays go, and they'll be the sole subject of my next article, including an interview with their CEO, Trevor Healy. As always, your comments on my column are welcome.


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Posted by jonarnold at 08:52 AM | Comments (0)

May 12, 2008

Skype-O Killer... que'st que c'est...

I can't seem to face up to the facts,
I'm tense and nervous and I can't relax...

Recognize the lyrics? Of course you do. But if you don't, it's from Psycho Killer, an early tune from one of my fave bands, the Talking Heads.

Like the title of my post? Clever, huh? Starts making even more sense when you start with the lyrics (did you pick up that other subtle Heads innuendo?). Those first two lines say it all for me when it comes to this Skype-killer storyline that started early last week with Om Malik's post.

Big telcos are a bit on edge these days, to say the least, and even though they still have the subscribers, their hold on reality is becoming increasingly tenuous. Fa fa fa fa fa, fa fa fa fahh...

I generally stay away from these big news items as I'm usually way too slow off the mark to comment on a timely enough basis. This time around was no exception, and there sure has been a lot of posting about it over the week. Some of it has been on the positive side, such as Erik Lagerway or Gary Kim, and some of it has dismissed what the telcos are thinking as ridiculous, as with Rich Tehrani.

A review of these posts tells the story, but here's the basic idea. Big telcos like AT&T, British Telecom and Deutsche Telecom are supposedly working together to come up with a common platform of their own to support wireless VoIP. It's a dream for the peering community, because they need the volumes of the incumbents make their exchange platforms economically viable.

Anyhow, this story is more about the intended losers than the winners. The real target is Skype, and if there's any substance to this grand plan, it's pretty strong validation that Skype still matters and is seen as a real threat to the incumbents. They may see Skype as siphoning profitable minutes of their networks, but I see it more about making the pie bigger for everyone. Long term, we all know that voice is going to zero, and the name of the game is connectivity and applications.

Whether this consortium comes together or not, the story raises an underlying issue about the dual-edged nature of Skype. Its early runaway success was about ease of use, which was due in large part to Skype's secret sauce, so to speak. Their technology was - and is - proprietary, making it difficult to copy, but likewise for integrating with other solutions.

Skype has managed to sustain its incredible growth with a proprietary solution while most of the telecom world has moved to adopt SIP, a standards-based protocol that allows for seamless interoperability. As SIP increasingly becomes the de facto protocol for VoIP, once big telcos cross that line and agree to peer their traffic, they will potentially have an answer for Skype.

I'm not saying that's going to happen any time soon, and if you side with Rich's post, you'll be of this mind. Still, even just recognizing this potential should be a wakeup call for the telcos to see that with SIP, they have incredible opportunities to do things that Skype can't do. Don't get me wrong - I'm a big Skype fan, and I'm not trying to create a recipe for their demise - far from it.

Instead, I'm trying to tie two ideas together that I think add something to this storyline. Most of the blog and media coverage about the "Skype killer" has been focused on the big guys ganging up on the newcomer and settling things once and for all. I get that - we all do, for better or for worse.

That's where the Psycho Killer idea kicked in for me. This ganging-up tactic strikes me as being very defensive and destructive - it's what you do when you're tense and nervous and can't relax, right?

To me, facing up to the facts should be more about building on your strengths rather than exploiting the weaknesses of your competitors. In other words, don't worry about trying to squash Skype. Their revenues in the big scheme of things are insignificant, and they really don't own the customer the way telcos do. It's a bit like all the effort some telcos are putting into their efforts to take down Vonage - it's negative energy that won't make you any friends down the line.

Wouldn't it be better to not worry about Skype, and just focus on building on the inherent advantages of what you have today, such as SIP? Skype doesn't have this, and if you can turn it to your advantage, it doesn't matter what Skype does.

Why am I saying all this? Well, because I want to steer you to a nice article written for me by the CEO of SightSpeed for the IP Convergence TV portal, which I'm the Editor of. CEO Peter Csathy prepared a thought leadership piece for our portal about the virtues of SIP and interoperability for applications such as video.

Following an email exchange with Peter the other day, we both realized that since this article was just published about 2 weeks ago, it was very timely for this Skype item. To me, it really embodies what I'm getting at here as a perfect example of how service providers can embrace SIP-based applications to add value for subscribers - regardless of what Skype is doing.

While it's true that Skype can easily match most of what any individual telco can bring to market, what they can't do is federate their offerings with other operators. That's the next big step for carriers to take, and potentially, it could be a Skype-killer. I don't really want to go there, but I will say, they can't even consider taking a step like that without first having a common basis for providing services - and that's what protocols like SIP are all about. In that regard, Peter's article is a tangible example of how carriers should be thinking. They have the solution within their grasp - and they don't have to take Skype out of the picture along the way.

On the other hand, I agree with Ken Camp's view that big telcos have not been very good innovators since the rise of the Internet, so if left to their own devices, it's going to take a huge leap of will and vision to go down the road Peter is advocating. On the other hand, the competitive environment is far more challenging now and the pace of change is simply too fast for telcos to try and catch up on their own and try to out-innovate new players like Skype. SIP is here now, and it seems to me that the sooner the telcos start using these tools to their advantage, the better.

So, thanks for connecting the dots, Peter, and I hope all of you out there give his article a read. And remember where you saw it - exclusively at IP Convergence TV - and we've got lots more thought leadership like this, so come back and spend some time there if this is your cup of tea.

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Posted by jonarnold at 08:52 AM | Comments (1)

April 30, 2008

Service Provider Views - Latest Article

My latest column for Service Provider Views was posted today. It continues my exploration of the service provider-as-platform play idea. Hope you enjoy it, and feel free to continue the dialog.

I've been writing in a few different places lately, so I've been keeping busy on a few fronts. I'll be updating my blog with these items as the week progresses.

Yesterday was a day off from blogging - it was my birthday, and I had other things to do...


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Posted by jonarnold at 01:34 PM | Comments (0)

April 18, 2008

Service Provider Views - the Platform Play Model

My latest article for Service Provider Views was posted this week, and continues my exploration of theme about the viability of service providers becoming a platform play. There's lots to explore there, so I'll be continuing the theme on upcoming articles.

By all means, I welcome dialog around this topic, as I think it has many facets to consider, both pro and con.


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Posted by jonarnold at 10:51 AM | Comments (0)

April 04, 2008

Branham 300 - Canada's Top Tech Companies

Just saw this list, which is published annually in Backbone magazine. It's one of the better known barometers of Canada's tech sector, and I just wanted to share a few highlights with you.

The Branham 300 is actually 3 separate lists. The big one is the Top 250, ranked by revenue. No surprise to see Nortel #1 at $10.8 billion. Of course, it's debatable just how Canadian they still are, but they're clearly our biggest tech company. Following them is Celestica at $7.9 billion. Not much surprise for this IBM spinout, but they're not really in my everyday radar.

Rounding out the top 5 are the Big 3 operators - BCE at $7.7 billion, Telus at $6.0 billion and Rogers at $5.1 billion. Honorable mention - RIM is #7 at $3.0 billion. They probably have the strongest growth story of all these big players, and I wouldn't be surprised to see them move up a notch or two next year.

After this, things fall off rapidly, with a few companies in the $1 billion range, and then another drop off to around $500 million. Canada has always had very concentrated ownership, and it's no different in tech. Only 17 of the top 250 are $500 million or more, and only 11 are $1 billion or more.

So, in terms of service providers, after you get beyond the Big 3, there's Shaw at $1.4 billion, and everyone else is pretty much south of $1 billion. You don't need to look much further to understand why the regulators are so obsessed with the lack of competition up here.

With that said, I'd like to cite some of the other companies that are closer to my focus in this list - Mitel, Aastra, Ascalade, Vecima Networks, Sigma Systems, AirIQ, PIKA Technologies, Digital Fairway, Espial Group and Counterpath. Congrats to all of these for making the top 250 list.

The other two lists are much shorter and more focused - the Top 25 IT Multinationals and the Top 25 Up and Comers. The former has all the usual suspects - IBM, Cisco, Microsoft, HP, Siemens, etc. No surprises there. The other list is more my cup of tea, and two in particular are worth noting - Mobidia and Octopz. Most of the others are more focused on pure IT or softward, but there were a few I didn't know who are more into telecom and IP communications, so I've got some homework to do.

All told, it's a great snapshot about our tech market, and you're free to review it in more depth off the website.


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Posted by jonarnold at 10:58 AM | Comments (1)

March 31, 2008

Service Provider Views - Latest Article

My latest article for Service Provider Views was published today, and I just wanted to share that here. The topic is whether service providers should become platform plays, a theme that was addressed several times at the recent eComm2008 event. I definitely think there's merit to this option, although it's easier said than done.

My article is hardly definitive, but I'll continue exploring this theme in upcoming pieces. Perhaps more importantly, I hope it stimulates dialog, as there many facets to this idea, and I'd love to bring multiple points of view to the conversation.

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Posted by jonarnold at 08:28 PM | Comments (0)

March 20, 2008

Service Provider Views - Rethinking the Service Provider

Just wanted to share my latest article for Service Provider Views, which was posted today. Titled Rethinking the Service Provider, I've begun to explore some of the implications of new business models for service providers, as well as the limitations of relying too heavily on offerings sponsored by advertising. There are many tangents to this topic, and I'll continue with this theme in upcoming articles as well.

Hope you find it interesting, and I encourage you to continue the dialog here.


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Posted by jonarnold at 08:56 PM | Comments (0)

February 29, 2008

Service Provider Views Article - Q&A with Catharine Trebnick

My latest Service Provider Views article was posted the other day, and I wanted to share it with you here. This time around, I did a Q&A interview with Catharine Trebnick, Senior Research Analyst at America's Growth Capital. I wanted this column to focus how investment markets are looking at service providers, and Catharine had lots of good insights to offer.

We sure could have gone on at length, and hopefully we will some time in another forum, but a web column isn't the place for that. Along those lines, just to tie things up here, Catharine and I recently did a webinar together that was very well received. We're hoping to do more of these, so that just may be the place to explore this in more depth. Will let you know how things progress.


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Posted by jonarnold at 12:59 AM | Comments (0)

February 21, 2008

AT&T Canada adding video to their marketing mix

Just a short post about how corporate giants like AT&T are starting to use more multimedia tools in their messaging. AT&T Canada recently opened a data center in Canada and have made a series of announcements about their capabilities to support multinational enterprises. This includes a very good series of white papers and research briefs about their various capabilities and their current state of thinking about the value proposition of hosted network services. They also have produced a couple of videos with their key executives expounding on these themes, and I was invited to contribute my thoughts on one of them (Globalization and Emerging Trends). All of this has just been posted to AT&T Canada’s website, where you can view the clips and download some of these materials.

It’s a pretty good effort and is more engaging than most other corporate web sites – not Marketing 2.0, but not 1.0 either – 1.5 is where I’d put it. Maybe add some blogging, interactive video, a wiki, a click-to-call – that would get us closer to 2.0. In time, in time. This takes me back to my post from Monday previewing Cisco’s Uber Networker announcement. Very slick, and much closer to 2.0. AT&T Canada isn’t there yet, but they’re definitely going in the right direction.


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Posted by jonarnold at 09:46 PM | Comments (1)

February 20, 2008

Skype is on a roll - 100 billion minutes and counting...

Skype has recently hit a couple of big milestones, and for all the problems around their marriage with eBay, you have to step back and give them some credit for doing things that have never been done before.

First off is the recent news that Skype has passed the 100 billion minute mark. I don't know about you, but I sure can't count that high, and it's a huge number, especially for a service that's only been around a few years. Anyone know how long it took the PSTN to get this? Of course, that's where the discussion ends, as the telcos have made billions over the years, and for the most part, have had the regulators on their side.

Skype, on the other hand, is making decent money on fantastic volume, but they have a long way to go to become the money maker that telcos have long been. There's more to discuss here, of course, but basically, Skype has had a hard time finding market acceptance of their business model and vision within the eBay fold, and it's anyone's guess as to whether they will stay with eBay, or pass into the hands of someone like Google. Oh, so much to talk about here, but let's move on...

That aside, the legacy of Skype so far has been one of disruption, and making the communications pie bigger. Maybe not more profitable, but bigger. Whether Skype becomes a money-maker or not, there's no turning back the clock. VoIP is here to stay, and the PC-based flavor that Skype has done so well with has changed the way we communicate. And if they do nothing else, that's enough for me. Rich Tehrani adds his thoughts from earlier today here as well.

The second item is equally encouraging, and was posted today on Skype Journal. On Monday, Skype hit the 12 million online user mark for the first time. It may not sound like much, but it's an awful lot of concurrent VoIP calls going over a single platform - way more than anybody else is doing. If there's a better validator out there about VoIP's ability to scale, let's hear about it.

Skype may have its share of challenges, but they have definitely taken telephony where it's never been before, and of course are trying to do the same now with video. You only hit 100 billion once, and it's a great testament to what Niklas and Janus started only a few years ago, and I'd say it's definitely worthy of recognition. And for what it's worth, I've used Skype more today than I have in ages, so in my very small way, I'm helping the cause.

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Posted by jonarnold at 06:48 PM | Comments (1)

February 19, 2008

Bell and Cisco Partnering on Managed Services

Today started off with an early briefing at 8:30 with Cisco and Bell Canada. That's what this post is about, and I had every intention of getting this written and posted by 9am, but boy has the day zoomed by. I'm off to New York for the next two days on consulting work, and there has been a non-stop stream of things to tie up, so here we are.

So, when Bell and Cisco asks you to be on a briefing at 8:30 the morning back after a long weekend, you gotta figure this is big news. In some ways it is, but I wouldn't say it's earth shattering, so I don't feel you've missed too much hearing about from me at this point in the day. Haven't seen anything about this from the bloggers, although to be fair, many of them are blogged out after last week's mega conference in Spain, MWC - Mobile World Congress.

Closer to home, today's news is somewhat interesting at face value, but I think it's more interesting for it may represent. At face value, Bell and Cisco have partnered to provide managed services to Bell's customers - high level details are in the press release. This is a win-win - more or less - in that Bell comes to market with a complete solution to leverage their nationwide network and deepen their customer relationships. Cisco wins by getting the upper hand into Bell's enterprise customer portfolio with managed services, deepening their existing relationships on the networking side. Two Tier 1 players working together makes for a very strong proposition. Fair enough - that's just the way the markets go these days - the big get bigger, and hopefully that's good for the customers. Time will tell.

The other interesting part of the story is the 'knowledge gap' they referred to a few times. IP is advancing quickly, and it's no surprise there is a shortage of well trained, qualified technical people to deploy, manage and maintain these wonderful technologies. To address this, Cisco and Bell are opening two 'Knowledge
Centres' - Montreal and Toronto. Makes sense. Not only will enterprises gain more Cisco-certified staffers, but these centres will become test labs where new features, applications, etc. can be trialed before being launched in their networks. Good idea, and a great way for Cisco to further embed itself in these networks.

All good, right? It is for these companies, but am not sure what this means for others. I can't imagine this is good news for Nortel, and maybe even Microsoft - two companies that have an alliance of their own. These companies are all vying for the Unified Communications vision, whereby they have a chance to control most if not all of the customer relationship. The stakes are high here, and I think Cisco has made a savvy move here to get the inside track with Bell, who has the lion's share of Canada's enterprise business. Let's not forget that the privatization track for Bell is a bit shaky these days, and they need all the good news stories they can get. I'm sure Cisco recognized they could help Bell's cause with such a move, as they need to do whatever it takes to hold on to their customers. It will be interesting to see what MTS Allstream and Telus do in response.


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Posted by jonarnold at 03:34 PM | Comments (1)

February 06, 2008

Service Provider Views - Latest Article

My latest column for Service Provider Views was posted today. It's titled "The Service Provider Dilemma", and I welcome your comments.

Rich Tehrani shared his thoughts and concurs with my views about how the large incumbents still hold the strongest cards, and it's really their market to lose.


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Posted by jonarnold at 08:03 PM | Comments (0)

January 16, 2008

My New Column - Service Provider Views

It's been a very busy week, and I've got a backlog of posts to get done and some new initiatives to update you on.

First is the launch of a bi-monthly column I'm writing now, and my first article just ran this morning. It's focused on service providers, and I'm hoping to develop this into a forum for thought leadership on the topic - not just from me, but readers and guest contributors as well.

I'll have more to say about this soon, but for now, I just wanted to get the word out. It's called Service Provider Views and you can find it here.


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Posted by jonarnold at 11:39 AM | Comments (0)

December 18, 2007

IP Convergence TV Updates Posted

Wearing my Community Advocate and Portal Editor hat for the IP Convergence TV portal, it's my duty - and pleasure - to let you know the latest update is running live now.

Not only is there new content, but the look and feel of the website has been updated. It's more user-friendly, but still a work in progress. I can tell you that traffic has been building nicely, and we're getting some great feedback from both vendors and carriers.

Two things in particular to draw to your attention....

1. My feature has been been converted from a podcast to a blog. So, my existing podcasts have been transcribed, and can be found in a new section called the Convergence Blog. My latest posting is an extended review of some recent research from Deloitte that I posted about here on my own blog a couple of weeks back.

The Convergence Blog is very early stage, though, and the look/feel will definitely be evolving - please bear with us. For those of you who were following my podcasts on the portal, I should add that all the posts on this blog can still be heard. Just like I do on this blog, the Convergence Blog posts are audio-enabled courtesy of Odiogo. I think this is a great application, and recommend it for any blogger.

2. In terms of new content, there's a new white paper from AudioCodes, 3 new video interviews conducted by Erik Larsson, and 3 new Guest Opinion pieces from some very good writers/industry players... Thomas Howe, Dean Bubley and Bob Emmerson.

I hope you read 'em all, and sign up at the site to get alerts on our updates. Got a lot in the pipeline already for the next update, so if you're following convergence technologies - IPTV, FMC, IPTV, IMS - you should find this a useful resource.


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Posted by jonarnold at 12:55 PM | Comments (0)

December 05, 2007

Verizon Forbearance - Not This Time!

Been on the road since 8:30 this morning, and am way too tired to get into a long discussion. This news has been out for a while but this has been my first chance to respond, and I wanted to close the loop on my post from yesterday.

So... Verizon lost - that's about all I'm going to say. Newfound pal Ike Elliott was kind enough to leave a comment on yesterday's post with the news, so he gets the big hat tip. Have a look at his post for the details.

Am sure the legal teams at all the CLECs who have been stating their cases so well are breathing big sighs of relief today. It's got to feel good. Competition lives another day!


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Posted by jonarnold at 10:05 PM | Comments (0)

December 04, 2007

Verizon Forbearance - More Bad News for Telecom Competition?

Tomorrow - Dec. 5 - the FCC will announce its decision on Verizon's forbearance petition. I'm not a regulatory expert, but have learned enough that this could have serious implications for the state of telecom competition in the U.S.

Blog posts from Om Malik and Alec Saunders from earlier this week tell the story quite well, and those are good reads to get the basic storyline. If you're a supporter of free markets and open competition, you may want to explore things a bit further. A good starting point is Comptel's Free to Compete website, which states their position pretty clearly.

To really get into detail, you can review the report prepared by QSI Consulting that attempts to quantify the economic impact if Verizon got all of its petitions upheld. They make the case that this would lead to a $2.4 billion increase in subscriber costs across the 6 markets covered by Verizon's petitions. This translates to an annual increase of $114 per household.

There are several competitive operators who stand to lose from this petition, and you can view their submissions as well - Covad and XO, Earthlink,and PAETEC.

All told, there's a lot at stake here, and Verizon has been getting its way lately, most recently with their patent litigation against Vonage. If all or part of their petitions are granted tomorrow, life simply gets harder for any CLEC or over-the-top operator who relies on Verizon's last mile copper to access subscribers. If they really want to drive out competition, they'll simply raise wholesale prices to the point where others cannot make money and will need to find other routes to market.

I've always contended that whoever owns the last mile wins, but in today's market, it's not realistic to expect non-facilities based operators to build their own networks. That may have been the spirit of the 1996 deregulation, but it's a different world now. Actually, this may just drive competitors to jump on the WiFi bandwagon and create an end-to-end alternative that bypasses Verizon altogether. Wouldn't that be interesting?

Anyhow, it's the precedent that would be of most concern. If Verizon is even partially successful, it will embolden the other incumbents to follow suit. It's my understanding that Qwest wants to follow suit, but lacks Verizon's clout. And the other major - AT&T - has to sit on the sidelines until 2010, which was a provision for getting the SBC merger done late last year. That's only a few years away, and you can be sure they'll be doing as much groundwork as possible now should Verizon come out on top tomorrow.

It all adds up to an environment that is rapidly reversing the course of telecom deregulation. With the pureplay VoIP providers pretty much out of the way now, the telcos can now move on to the CLECs, and this petition could lay the foundation for raising the barriers to entry so high that only the incumbents can stay in the game.

If this is the world you want to see, then you'll be rooting for Verizon and a friendly FCC tomorrow. I'm in the other camp, however, and feel that this is another example of anti-competitive behavior that is ultimately not serving the best interests of consumers. For anyone else who feels the same, please have a look at these links, and pass them along.


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Posted by jonarnold at 04:52 PM | Comments (1)

November 30, 2007

Telus Consultants Program Highlights

Yesterday I attended a day-long session held by Telus, which they do on occasion for the consultant community. It's one way they do outreach, and in this case, the focus was an update on some of their key partner relationships. The day was split up with presentations from Intel, Nortel and Microsoft, with a lot of focus how well they're partnering with Telus to bring innovation and value to the Canadian market.

The audience is largely technical and IT consultants, so most of the messaging was about speeds and feeds, as opposed to business and strategy issues, which is more my cup of tea. I was really the only industry analyst there, so I didn't have any expectations otherwise. That's fine - was still pretty interesting, and it's clear that Telus is thinking more like a Telco 2.0 carrier than 1.0 carrier, although this may take time to percolate down to the masses.

Even though Microsoft and Nortel have a strategic alliance going, they each did their own thing yesterday, so there wasn't any indication of joint solutions coming with Telus. However, Nortel did have some nice SMB solutions on display, and I got a good demo at their table. To be fair, I couldn't stay til the very end, but I didn't see any evidence of cross-vendor synergies finding their way into Telus' portfolio. Not to say this couldn't happen, but these were for the most part serial presentations, and if I had to do it over, I'd look for Telus to talk more about the collective benefits these partnerships are bringing, as well as how they are helping create some distinct integrated solutions that customers can't get anywhere else.

As an aside, much of the banter between the presentations was about the major news that hit the media that morning about new regulations to open up the wireless market here. It's a big story, and in some ways it overshadowed what was going on in the sessions. None of the speakers made any reference to it, and given that Telus is one of Canada's 3 major wireless players, I think this could have led to some interesting discussions.

Here are some photos, courtesy of my Nokia N95....

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Comments from Bill Edwards, who leads the Telus Consultants Liaison Program

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An Intel blade server - or is it? Sure looks like one, but it's actually a cardboard life-size version they passed around so we could get a sense of its footprint. Pretty fun prop...

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FMC demo from Nortel
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Microsoft - nothing to really show, but here's a cool image off their monitor
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Posted by jonarnold at 09:13 AM | Comments (0)

November 09, 2007

Vonage's Q3 Earnings - Signs of Hope

When you're busy making a living, it's tough to blog in real/near real time - but better late than never.

Yesterday, Vonage announced its Q3 earnings, and the results are mixed. Am not going to get into a detailed discussion, but basically the results can be interpreted to validate anybody's point of view - which I find very interesting in itself.

For the legions of Vonage-bashers, it's very easy to point to how the patent settlements have depleted their cash, how subscriber growth is tailing off, how churn is alarmingly high, customer acquisition costs are still out of sight, customer service is a not doing its job, and how the recently enacted VoIP number portability regulations are going to drive their churn even higher. All of this is true, and I could go on, but you get the idea.

Well, call me an eternal optimist, but you can take a lot of good news away from this as well. Namely, how their losses have dropped substantially to only $1 million in Q3 (factoring out the patent settlements), ARPU is up (only slightly, but it's going in the right direction), revenues are up 30% (if you're keeping score, folks, Vonage is on pace to have $1 billion in revenues in 2008 - what's wrong with that???), the subscriber base is well north of 2 million, the AT&T damages can be paid over 5 years, marketing expenses are coming down, and best of all, the worst seems to be over on the litigation front. Hopefully.

Perhaps the best news is that despite all these challenges, Vonage is still standing, and at current performance levels, the business is almost self-sustaining. This basic sentiment was reflected in the stock price which jumped from about $2.10 to about $2.70 on the news. That said, the pricing eased off over the course of the trading day, and closed around $2.30 today.

All told, the company is still very much on the ropes, but I think they at least have a fighting chance now. Of most concern to me is VoIP number portability, which is just coming into effect now. That's going to make it much easier now for unhappy VoIP subscribers to pick up and go elsewhere, whether it be to their cableco or even back to their incumbent telco. SunRocket didn't have this luxury, which left a bad taste in a lot of subscriber's mouths.

The other major concern is that their cash position is getting precariously low. As mentioned, if they can stay the course, they shouldn't need to draw this down too much, and hopefully start building it up again. But, if churn doesn't come down, they'll need to burn cash, and their current levels won't last very long. In that scenario, they'll be in trouble for sure. And of course, new patent suits could come out of the woodwork, and the cablecos won't be going away. Attracting new subscribers will only get harder, not easier, and in my mind, Vonage needs to focus more on retaining their base and making it profitable than on growing the base. I suspect that most of the VoIP adds that cablecos are winning are coming at the expense of the telcos, and not the VoIP pure plays like Vonage.

To me, the path of least resistance would be to protect what you have instead of competing against Goliath for incremental gains. The low hanging fruit is gone, and the competition is much tougher now, especially now that the VoIP pure plays are pretty much out of the game except for Vonage.

The mainstream media has covered this fairly well, and Business Week was nice enough to cite me in their coverage today.

Aside from the business press coverage, though, Vonage's news didn't attract much attention in the blogosphere. Am not really surprised, though, and this is another interesting facet to the story.

In my view, Vonage is a non-starter for people following this space closely. It's all bad news, the company is a hopeless money-loser with a broken business model and is living on borrowed time. They have a 1.0 service in a 1.5/2.0 world, and are fighting a losing battle. Etc., etc. There is truth to all of this, but at the same time, it's actually a good thing that Vonage is flying under the radar now. They've managed to survive a lot of adversity for now, and the less negative attention, the better.

For me, the next quarter will determine if they have a future, especially for getting churn down. This is the time for them to restore trust and confidence with their subscribers, and that's where I'd be spending my money right now. There is enough good news in the Q3 numbers to tell/sell a good story to both subscribers and the market, and if faith can be restored, I think they have a fighting chance.

I may be a lonely voice for a company that most people have written off, but c'mon, if Vonage cannot provide an alternative to the bundle, then who can? If they can somehow get their mojo back when everybody loved them, I think they can turn this David/Goliath thing to their advantage again. The little engine that could...

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Posted by jonarnold at 02:16 PM | Comments (3)

November 06, 2007

Our Dollar May be Stronger, But Wireless is no Bargain - Will the iPhone Come to Canada?

Here's another post I've been wanting to write since coming back from VON, and I'm glad I waited. Anyone who knows me is familiar with my seemingly odd habit of hardly ever using my cell phone when I'm on the road, especially in the U.S. I know it defeats the purpose of have a mobile phone, but I seem to manage just fine.

While Americans take it for granted that cell phone usage is practically free, that's far from the case in Canada. I may seem like a voice in the wilderness when I try to explain this when I'm in the States, but now I've got some great backup to support my story. I've got two items to share with you on this front, and if you're wondering about the high cost of cell phone service in Canada, you'll find these well worth reading.

First is a terrific post from Friday by colleague and fellow Canadian blogger, Alec Saunders. Alec and I were at VON last week in Boston, and he's a much better technology adopter than me. We're seeing a proliferation of mobile VoIP solutions right now - I've posted about some, and Alec has posted quite a bit more.

Alec's post is a great case study in how a Canadian can use these various solutions to keep their cell phone costs down when travelling in the U.S. Most travelers routinely get local SIM cards to reduce their mobile costs, but as Alec explains, you can take the savings to a whole other level by using solutions such as Mobivox and Truphone. He's got the right idea here, and I plan to follow his lead when I travel next to the States. Great workaround, Alec!

On this note, by the way, I'll steer you to a panel I moderated at VON last week about adding mobility to Skype, which Alec attended. Mobivox, Truphone and others provided a rich perspective on the various ways you can cut mobile costs with Skype. These are all companies to watch, especially iSkoot, who is partnering with Skype on 3 Skypephone, which just launched last week.

Secondly, there was a timely article in today's Globe & Mail about the iPhone's pending launch in Canada. The article brings to light a number of issues that illustrates how the market up here is different, and how the iPhone would be a very expensive proposition based on our existing rate plans.

The print edition of this article provides detailed comparisons of rate plans for Canada, the U.S. and the E.U., and you'll just have to take my word that Canadian rate plans are simply not competitive. You can be sure that Apple is concerned that our expensive service plans will dampen demand for the iPhone, especially when Canadians can see how much cheaper it is to have all these goodies in the U.S.

So, we may have a stronger dollar right now, but this is not a great market for something as game-changing as the iPhone. Apple is setting a precedent for a handset vendor to dictate market terms to the mobile operators, and it will be interesting to see how Rogers plays this card. Regardless of how it unfolds, this article is a big picture exclamation point on what's driving Alec Saunders to do what he's doing - and you can be sure that others will follow.


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Posted by jonarnold at 03:11 PM | Comments (4)

November 05, 2007

Current State of Canadian Telecom Sector

The past few days have seen Q3 earnings calls and announcements from Canada's leading service providers - Bell, Telus, MTS Allstream, Rogers and even Videotron. So, lots of attention being focused on how the sector is performing, and there sure is lots to talk about.

On Friday, I was asked to share my views on BNN - Business Network News - which is Canada's major financial news TV station. Pat Bolland interviewed me, and you can view the segment on BNN's website for the next 7 days. After that, it comes off the site, and if you still want to see it, you'll have to contact me. Our segment ran at 10:40am last Friday, and you can view it from this link.


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Posted by jonarnold at 03:43 PM | Comments (0)

October 02, 2007

AT&T Global Services - Canadian Expansion

This afternoon I attended an Analyst and Media Roundtable with execs from AT&T Global Services. They are launching some new services for the Canadian large enterprise market this week, and I'll have another post about that in a day or so.

Today's session provided a pretty good overview of the scope of what AT&T Global Services has to offer, and when you're talking about providing global services to global companies, you come away with a greater appreciation of what goes into building and running a giant network like theirs.

I was especially impressed by the range of services they have around security and how complex this area is, particularly in terms of Web-based threats. Until today, I had no idea that there are cyber hackers out there who literally extort ransom money from large companies in exchange for not unleashing a destructive virus, worm, etc. to crash their network.

Pretty interesting stuff, and in the noisy world of open source, Web 2.0 and SaaS, it's easy to forget that the job of running large scale networks is much harder than it looks, and AT&T isn't the world's largest networking company for nothing.

AT&T management team - Jay Plummer, Andrea Messineo, Steven Taylor, Stan Quintana


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Posted by jonarnold at 08:47 PM | Comments (0)

July 17, 2007

Sun Rocket Refugees - Flat Planet or Vonage?

I'm not a SunRocket watcher, but it's not hard to see the stories about their imminent demise, and recent flight of their executive ranks.

This is a classic reality check sign, as the dominoes start to fall with TDM-style offerings that simply run out of gas. No need to get into the details, as it's plain for anyone to see that the market just can't support services like this for long. Vonage can still survive because they got their first, and in this game, that counts for a lot. They've got the critical mass of customers, and a monthly cash flow to keep their IPO float money intact. Unless they spend it all on marketing, but that's another conversation.

Anyhow, I found it interesting how Vonage didn't waste any time wearing an ambulance-chaser suit, putting out the word last night that they were there for SunRocket customers who are now without service. Hey, it's a very competitive market out there, so this shouldn't come as a surprise. Sure, Vonage is under a microscope of its own with the Verizon case, so they have to be careful too. I guess, for a change, they get to be the big fish going after smaller prey when opportunity knocks. That's fair, but I'm sure the same will happen to them if Verizon has their way in the courts. It's a bit like the oldest sibling beating up on the middle sibling. Well, guess who the middle sibling is going to beat on when the time comes? The youngest one. No different here.

That said, Vonage is offering a pretty good transition, although it's not clear what constitutes a "qualified" phone number that would be ported over them from SunRocket customers. In a perfect world, as their press release touts, "sunny" days are ahead, so long as this happens as advertised. I suspect it won't be that easy in all cases, but all we know is that there are a couple of hundred thousand subscribers looking for service now. And I'm sure they won't be the last casualty in this space, although, after Vonage, they were arguably the second largest VoIP pureplay in the U.S., and that's got to make many of the smaller pureplays just a little bit nervous now.

I think the big takeaway here is where these customers will end up. SunRocket will be a very short footnote in the annals of VoIP, and I could never figure out their model. For all those customers who have prepaid for service, you have to wonder how that's going to play out.

Going to Vonage would be an easy answer for these customers if they wanted to stay with what they had. But how many will come back to their traditional telco? How many will go to their cableco? How many will succumb to the bundle? To me, this will be a real acid test for which way market sentiment is blowing these days. My guess is that the cablecos will be big winners, further validating not just their bundle, but also the perception of them as a reliable provider of voice services.

Well, there's one more alternative, folks - the Flat Planet Phone Company. Regular readers will be familiar with Moshe Maeir, who is usually on the money with his provocative ideas. Well, his post explains why SunRocket refugees would be better off with his flat rate plan - more reliable service and way more features. Well, he's got a point, and as VoIP subscribers get nervous about who might be next, this could be as good an alternative as any.


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Posted by jonarnold at 09:16 AM | Comments (11)

July 16, 2007

Canadian IP Thought Leaders Series - Rod Piukkala and Emergency Communications

This week's podcast focused on emergency communications and the role that Web-based solutions can play for first line responders. My guest was Rod Piukkala, Director for Telus Business Solutions, Ontario Public Sector.

Rod has an extensive history in public service, and knows what emergency communications are all about, both from the front lines as well as what carriers like Telus are offering to the market. We talked about the various challenges around emergency communications, and he provided a good example of this in the health care sector.

You can download the podcast here, as well as read more about Rod.

If you're interested in learning more about emergency communications, Rod let me know that Telus has a white paper on this. It's quite good, and if you've like to get a copy, please drop me a line.


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Posted by jonarnold at 08:55 AM | Comments (0)

July 03, 2007

BCE Privatization Story/Meeting Mr. Sabia

Without a doubt, the privatization of Bell Canada/BCE is the biggest story in Canadian telecom, and has many fascinating angles worth exploring. I've been very quiet about it, simply because it's so widely covered, and if I get started on this, I could be blogging for a long time. I gotta make a living, and have a backlog of other posts to get out from being away last week. Please be patient....

Well, I got my chance to speak my mind about BCE today on BNN - Business Network News. This is one of Canada's main financial news TV networks - it used to be called ROB TV (Report on Business TV), and was recently rebranded as BNN. Same studio, same people, same shows, and same owner - the Globe & Mail.

The studios are right downtown here in Toronto, and I was downtown anyway for a meeting, so the timing worked out well. This afternoon, I was on the After Hours show, hosted by Kim Parlee and Andy Bell. They wanted my take on the BCE deal, and what it means to Telus, as well as the rest of the Canadian communications landscape.

The segment runs about 7 minutes, and you can find the link on the BNN home page. You first need to get to the program listings for July 3, and then scroll down to the 4:40 pm time slot, and you'll see the link there.

If you can't find that, here's a direct link. However, they usually only leave these up on the site for a week, so don't wait too long if you want to view it.

So, what's the connection to Mr. Sabia? Michael Sabia is BCE's CEO, and figures prominently in most of the coverage of this story. Well, who do I run into as I'm leaving the studio? Mr. Sabia - he was on his way in to do the next BNN segment. If you want to hear his take on things, here's the link to the SqueezePlay show which follows After Hours. His interview starts at around the 13 minute mark. Strange, huh? Never met him before, and I may never meet him again - at least in his current role. You never know whose path you will cross - I wonder if he saw my segment?


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Posted by jonarnold at 10:50 PM | Comments (0)

June 21, 2007

Video Calling - Ready for Prime Time - But is Verizon?

One more quick entry for today. SightSpeed CEO/fellow blogger Peter Csathy has brought this story to my attention. It may not be news to many of you, but it's still worth noting. Peter cites a WSJ story about a new service launched yesterday from AT&T called VideoShare. While not the first to do this, it's a huge validation for person-to-person mobile video calling, and as Peter notes on his blog, it opens up huge opportunities for creative applications.

Peter and his company, SightSpeed, are major advocates of video, and this is great news for companies like his. Video calling has always been slow to take root for all kinds of reasons, but people seem to be far less inhibited on their cell phones, and in some ways, video is really a natural extension of a voice call for mobile users. As Peter suggests, it won't take long for businesses come up with all kinds of applications that will totally make sense. An example he cites is for real estate agents, who can show their clients listings in real time when they're somewhere else. Couldn't agree more!

Peter also brings up the inevitable iPhone question. They won't be supporting video calling in the initial launch, but if uptake is slower than expected - and there are all kinds of reasons for this to happen - you can bet that would change. Video calling will sure have a cool factor for a large segment of the market, and it could turn out to be a great value-add to compete against Verizon, who will be doing whatever they can to retain subscribers lured by the allure of the iPhone. I suspect we'll find out how cool video calling will be when the iPhone era officially kicks off.


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Posted by jonarnold at 10:55 PM | Comments (0)

Bell/Telus Merger - See Me on CBC News Tonight - Twice!

The latest wrinkle for the fate of Bell Canada is a possible - and much anticipated - merger with rival Telus. It's front page news in Canada right now, and there's a lot at stake on many levels. Not a lot of technology to talk about, but it's a story that will alter the course of Canadian telecom like nothing before - once it unfolds. Right now, there's a lot of talk and speculation, and it's being widely covered in the media and the blogs.

I haven't been commenting so far, but today I got my chance. I just finished shooting two video segments for CBC television about this story. One runs on the local CBC news at 6pm, and the second segment runs on the 6:30 broadcast right after, but on the national CBC network. So, regardless of where you live in Canada, if you're watching TV during dinner tonight, I'll be in your living room, at least for a couple of minutes! Hope you tune in.

We filmed the segments outside, which was very fitting, since it's the first day of Summer - much nicer outside than at my desk, that's for sure. My son Max just finished his last exam, and was home in time to join me, so he took a photo during our shoot. So, here's a glimpse of how TV actually gets done.....

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Posted by jonarnold at 02:14 PM | Comments (1)

June 18, 2007

Mobility + VoIP = $$$ Calls

This equation doesn't sound right, does it? Calls are supposed to get cheaper with VoIP, right? A lot cheaper. That's what all of us want - unless you're an incumbent, who typically doesn't want to change the status quo unless it's for the better.

That seems to be what's happening with startup Truphone and wireless giant, T-Mobile. The details are well covered by bloggers closer to this space than me, notably Om Malik, Alec Saunders and Thomas Howe. Their posts will tell you more than you need to know about how T-Mobile is blocking traffic from Truphone in the U.K. unless they pay the price they set to access their network.

I'm not that steeped in the technical and regulatory issues around this - especially in the E.U. market - but it just looks like VoIP all over again. We all know VoIP is better and cheaper, and it poses the same threat to the wireless operators as it did to the wireline carriers a few years back. Economically, there is zero incentive to embrace it - at least until a tipping point is reached - and that's a long way off in the wireless world. In the wireline world, it looked like Vonage would create that tipping point, and maybe they did psychologically, but the real inflection point in the U.S. came with the cablecos, and now the RBOCs have no choice but to fight back.

Oligopolies behave the same regardless of what industry they're in, and T-Mobile's behavior here is exactly what one would expect from someone who holds all the cards. Wouldn't you? They have the customers, they own the network, business is booming, and profits are fat. Truphone may have a great solution, but right now, they're a pesky annoyance, and T-Mobile can afford to act like the schoolyard bully and basically hold them ransom. Sure, Truphone can interconnect, but only at a price that loses money.

At this point in time - as good as Truphone's offering is - and it's great - a full house beats a pair of 10s - which is about how this hand looks to me. T-Mobile will win this hand, but if Truphone can stay in the game long enough, things will go their way. Until the mobile carriers feel a lot more pain, the Truphones of the world - and there are a few - will have a tough go.

That's why it's so important for anyone following this space to be supportive and remind anyone who's listening that history repeats itself. What happened with landline VoIP will happen in the wireless world, and solutions like Truphone are the enablers. If they can find a way to hang in long enough, their turn will come.

On that note, what makes this story rather concerning is the way T-Mobile can be so arbitrary about this - because they can. It's not unreasonable for the owner of the pipes to set the price for using them, and with limited competition, it's clearly a seller's market. However, T-Mobile is now an investor - along with Intel - in Jajah. You don't have to look far to find out what that's about, and it doesn't take much to see that T-Mobile is simply protecting their investment here. Again, a perfectly reasonable thing to do.

Fair enough. But let's see what happens if somehow, Truphone could make their own deal with another wireless carrier and will only take Jajah's traffic at a certain rate. I don't think things would - or could - unfold this way, but at this stage of the game, Truphone needs to find some friendly ground and work it really well until the time is right to go up against the giants.


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Posted by jonarnold at 09:16 PM | Comments (1)

May 31, 2007

Wednesday - Part 2 - Canadian Telecom Dinner

Following the Microsoft Canada analyst day downtown, I had to drive up to Caledon, a small town north of Toronto. It's really nice up there, but getting there during rush hour was brutal - almost 2 hours for what should be a 45 minute trip. Of course with Telepresence, this would not be a problem....

Anyhow, yesterday was the annual golf tourney and silent auction put on by Henry Dortmans of Angus Dortmans Associates. Henry is a real mainstay in the Canadian telecom community, and aside from his consulting, does things like this tourney/auction, as well as the Enterprise Networks conference.

I was only able to attend the dinner, which was a lot of fun. Lots of vendors and carriers there, and outside of conferences, these types of social settings are pretty rare for all these people to be in the same room together. Here a few photos, courtesy of my Nokia N93.


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A nice plug for the Canadian Telecom Hall of Fame.


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Posted by jonarnold at 04:55 PM | Comments (0)

May 18, 2007

Vonage - Is Peer-to-Peer the Answer?

A confluence of posts and emails today has prompted me to add something to the mix about Vonage's current state. I came across a couple of posts earlier today citing a New York Times article about Vonage. Basically, it's a rundown of alternatives people have for Vonage-type services, both for consumers and small businesses.

Most of these alternatives are first nature to industry watchers, so there's nothing really new there. However, to see Vonage get this type of attention from such a mainstream source says something about where VoIP is on the public agenda, which is great.

More troubling, however, is the underlying message that there's a "Vonage watch" going on out there, and it is the media's obligation to inform the public that alternatives do exist should Vonage somehow meet its demise. I really don't see such a terminal scenario unfolding any time soon - unless Verizon gets dealt a royal straight flush in the courts - and I just don't think it's going to come to that.

Much of the issue here rests on the patent infringement litigation with Verizon, and which way the courts will rule. Vonage has been a yo-yo in regards to whether they have a "workaround" or not, with the latest version being that they do. Regardless of how the trial turns out, it's pretty clear that Vonage will have to come up with a better of doing VoIP that doesn't step on anybody's toes - and the same more or less holds true for all the other pureplay VoIP providers.

It's not known how effective Vonage's workaround is/will be - nor do we know yet whether it's homegrown or based on a third party solution. Lots of mystery here - but intrigue too - which is why people like me keep writing about it.

So, here's the twist to the story, and I think I'm the only one out there making all these connections, and I hope there's something new here for you to consider.

There's a really interesting article - 2 actually - that ran on TMC's site today. It's written by Medhavi Bhatia, the CTO of 3CLogic, and the basic premise is that peer-to-peer solutions - such as theirs - can address Vonage's patent problems, and serve as an effective workaround. I've been following this company for a while, and this could be their moment. Both articles provide some technical insights about what P2P brings, and I suspect that if it could help Vonage, it can probably help a lot of other VoIP pureplays.

Would love to hear your thoughts on this one!

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Posted by jonarnold at 04:48 PM | Comments (0)

May 11, 2007

ANPI AGM Highlights

Just got back from the 2007 AGM for ANPI - Associated Network Buying Partners. I posted about this earlier, and I was there speaking on a panel about trends in the VoIP market, and how they're impacting independent operators. ANPI represents about 400 of these carriers, so they have a lot of buying power in the rural market. Very interesting market, with all kinds of challenges, and I was one of the people there to tell them about all the opportunity they have before them. I really enjoyed being part of this, and ANPI put on a very nice event.

I'm not going to pass on details of the presentations, as it is a members-only group. Fair enough, but I'll just say that the carriers I spoke with have a pretty good understanding about how the market is changing, and I wouldn't be at all surprised to see some of them adopt some of the newer technologies in a creative way.

What I will do, though is share some photos of the event and our surroundings, which were just great. Here's my N93 doing its thing...


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Dave Lewis, ANPI's CEO

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Jonathan Askin - Pulvermedia - very thought provoking keynote

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San Diego - what's not to like....


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Posted by jonarnold at 09:42 PM | Comments (0)

May 08, 2007

San Diego - Next Stop

Been very busy finishing up client work the past few days, and tomorrow I'm off to San Diego - whoo hoo. I'm presenting at ANPI's AGM - am part of a panel talking about how current tech and market trends are impacting the independent operator market. I presented there in 2005, and am looking forward to coming back. Hope to post some photos once I'm there.


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Posted by jonarnold at 08:32 PM | Comments (0)

April 26, 2007

Vonage - Rallying for the Little Guy - Will You Vote?

In the wake of Vonage's "permanent stay" reprieve this week, things are quickly falling into line as a David and Goliath story, and Vonage is taking up the mantle now in the name of competition, choice and free markets.

Yesterday, they launched a "national grassroots communications campaign to educate and mobilize consumers about preserving the freedom to choose their phone service provider." That pretty much says it all, and when you're fighting for your life, this is a pretty noble cause to initiate.

To get behind this, Vonage has launched a website, "Free to Compete", where you can hear what they really think, and more importantly, sign a petition. The site makes it very clear they think Verizon is trying to patent VoIP, and use analogies like "Can you patent an orange?". Well, of course you can't, so the logic makes sense, but - I couldn't resist - we're really talking apples and oranges here (and I don't mean Apple...). That's a bit of a stretch, but I will say that I don't think Verizon can patent VoIP, but it's a much grayer area than Mother Nature.

The site also mentions that Vonage has taken out full page ads in national papers about this, but being in Canada, I wouldn't see these, but I'll assume they're a variation of what's on the site.

Anyhow, so what is this petition all about? Well, if you go there thinking it's a vote for free competition and preserving choice for the consumer, you may be surprised. Those are the reasons I would go there, and those are solid reasons to be voting.

However, the petition is for Verizon to drop its case against Vonage. Well, that's very different in my eyes. Ultimately, yes, it's about choice - if you follow the logic that if Verizon wins, Vonage is out of business, and consumers have less choice. There's a lot of causal logic going on there, and Vonage needs to be careful that this doesn't come across as a pressure tactic to rally public support behind them to get Verizon to back down. Public sentiment may be favoring Vonage in the David/Goliath scenario, but am not sure it will be this favorable.

The campaign could work very well, but it could also backfire. What if people don't sign it? What if people are worried about somehow getting on Verizon's bad side by doing this, and their phone service or Internet service all of a sudden starts acting up? Do you really think Verizon will just stand by and ignore this initiative? Maybe they will - deliberately. Or maybe they'll launch their own counter effort to tell their side of the story. They've got pretty deep pockets, and am sure they don't like being painted as the bad guy. They do own these patents after all - for better or for worse.

I definitely have mixed feelings about using public forums like this to sway opinion and rally support. Vonage's survival cannot be regulated, and in a free market, consumers make their choices, and that's what determines who wins and who loses. If it comes down to who uses PR more effectively, Vonage might be on the right track here. Or they may not.

If the glove fits....

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April 16, 2007

Vonage - More Bad News - No Workaround In Sight

This ran in today's USA Today, and is not good news for Vonage - ugh.

Reading this article makes it very clear that it's going to be all or nothing with this Verizon patent claims issue. The language they're using indicates that if it all goes Verizon's way, Vonage simply does not have a future.

This just shows you how much their backs are to the wall. At this point, without a workaround, they have to convince the judge and jury that these broad, sweeping patent claims are indefensible, and that in essence, Verizon didn't invent and doesn't own VoIP. I think they have to bet the farm on it, and my guess is they will win.

Admitting they have no workaround may in fact, be true, but the way it's positioned now, this seems like a gambit to raise the stakes and show how one-sided this thing really is. If the ruling totally favors Verizon, then Vonage's days are numbered. And once that happens, they'll be emboldened to go after the cablecos. They could go after the other VoIP pureplays, but that won't be necessary, since once Vonage is vanquished, the others will simply go away on their own (mind you, 8x8 is rightly making a lot noise lately about all of its patents, so they may be spared).

The potential domino effect here is ominous, and while I don't think it will all come to pass, the possibility alone should be enough for the judge/jury to see things in a more balanced light. If Verizon gets all the spoils, competition would be crushed, the price of VoIP will surely increase, and consumers would have less choice and less innovation.

The plot thickens...

Hat tip to Alec Saunders on the USA Today story. And if you're wondering how the bad weather looks in Ottawa today, you gotta check his blog...

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Posted by jonarnold at 01:12 PM | Comments (0)

April 09, 2007

Verizon Boxing Vonage into a Corner

Friday's news about the Verizon injunction on Vonage is not good news unless you don't like competition. I was in transit most of Friday, and haven't been able to comment about it directly until now, and I'm sure you've already followed as much of the story as you care to.

That said, the media did find me Friday morning, and before leaving for the airport, I managed to do one print story for Business Week and a radio spot for CBS Radio about the news.

I don't have a clip of the CBS Radio segment, but it would have played nationally throughout the day. If you caught it, please let me know - I'd love to know how it turned out.

The Business Week story did run on Friday, so that will give you a sense of my initial reaction to the news.

Finally, the week before, I was interviewed about the Verizon/Vonage situation by IT Business Edge, and you can read it here from their website. Michael Lindenberger, one of their writers, referred to the interview in his blog post on Friday, so he's added an update to my perspective.

All of this coverage took place before news of the reprieve on this injunction later on Friday, so it looks like Vonage has a bit of breathing room. But not much.

Taking all this into account, though, it's still not clear to me just how restrictive this injunction is - or could be.

- Can Vonage pursue new customers in the business/SOHO market, where Verizon isn't really selling VoIP?

- Can Vonage pursue new customers outside of Verizon's geographic footprint?

- Can Vonage pursue new business outside the U.S.? Of course, I'm thinking in particular about Canada. What are the implications here?

I suspect that all of these are/could be off limits to Vonage, and that's a pretty tough spot to be in. Ultimately, if the courts rule in Verizon's favor - regardless of how real or frivolous these patent claims really are (and that looks to be very debatable) - Vonage will likely be the author of its own demise. In that event, you could conclude one of three things - i) they underestimated Verizon's claims, ii)they didn't see this coming at all, or iii) they were aware of its potential, but gambled Verizon would never make a case of it - or never thought they would be able to make a case of it. You could also argue they never would have expected Verizon to take such an anti-competitive stance and use this as a basis to put them out of business. But that sure looks like what's happening.

Maybe I'm the eternal optimist, and maybe I'm the only one holding out hope for Vonage, but they do have one thing going for them that could come into play if they can somehow devise a workaround and keep going independent of Verizon. Being a virtual operator, they can do business wherever they can get last mile access, and are not limited by the footprint of a wireline network.

As mobility continues its ascendancy, this factor becomes less important, but still, I think this can be a virtue for Vonage. I may be grasping at straws, and lacking a network is the true Achilles Heel of any virtual operator --- but if they can somehow extract themselves from this mess, they certainly have many options to do business and steer very clear of Verizon.

I realize network access is a different issue from this litigation, but ultimately, Verizon is trying to bury Vonage, and this is the only way they can really go after them. If Vonage can survive this, I'm sure they'll find ways to do business with anybody but Verizon. And if they can't, Verizon will only succeed in hurting the biggest VoIP pureplay. They don't have a monopoly on VoIP, and everyone else in the game will find ways to do business without them.

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Posted by jonarnold at 09:41 AM | Comments (1)

March 29, 2007

Will Bell Canada Be Taken Private?

Quite the story in today's Globe & Mail. The Globe reports that LBO heavyweight KKR is in preliminary discussions about taking BCE - Bell Canada Enterprises - the holding company for Bell Canada - private. This is being talked up as a $30 billion deal, which would make it the largest privatization in Canada's history.

A lot would have to happen for this to work, with two of the key issues being foreign ownership restrictions of Canadian telcos, and the large ownership stakes held by pension funds. The details are fascinating, and the article explores these pretty well, so I'm not going repeat things here.

The key thing for me is that Bell has been lagging its peers for far too long, and shareholders must be getting frustrated watching Telus and Roger deliver far better returns. Michael Sabia has been at the helm for a while now, and just can't seem to move fast enough to restore Bell to its pristine image as one of Canada's best companies. Mark Evans speculates further on what this deal may mean for Mr. Sabia in his post today.

With telecom reform looming here, and the Income Trust option now dead, there are many implications in this story for Bell Canada and their options moving forward. They have certainly made some good moves recently to stay focused on their core businesses, but the downside of being so big is the difficulty of moving quickly and responding to changing market conditions. It is not hard to argue that the Canadian telecom market lacks real competition, and this news will certainly highlight the holdback created by limited foreign investment. The pool of domestic alternatives to the incumbents is small, and not getting any bigger. Foreign entries or foreign investment will likely be the only way to change the status quo.

Stranger things have happened. Who would have expected SBC to take over AT&T? My view was that if AT&T could be taken out of the market, than anything was possible. In Canada, this could well be one of those scenarios. If the sentiment from the Globe's reader comments is any indication, then I'd say that many would welcome the change, but alon