PhoneGnome launches virtual PBX features

Today PhoneGnome introduced the new “PhoneGnome for Business” product with “Virtual Receptionist” for small/medium business (SMB) communication.

The service works with or without the PhoneGnome box, but one of the unique things about it is that when using it with the $100 box, you can use any existing number with the “Virtual Receptionist” (as your company’s main number) and get free inbound minutes. If you set up each virtual location with the box, all inter-office calls and transfers will be 100% free - even if those locations are oceans apart.

And what’s nice about the PhoneGnome approach is you don’t have to be a SIP or VOIP expert to set it up - the box self-configures when you connect it, doesn’t need a computer, and you use your existing regular phone numbers to call and transfer.

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SIP, Interrupted

Brough Turner in his post SIP revolution, massively delayed speaks about why SIP has not taken off for user-to-user VoIP:

When SIP emerged in 1996, it’s support for direct connections from one user to another was extremely compelling. This was the VoIP protocol which would lead to a complete revolution in communications. Yes, you might refer to a directory service, but you wouldn’t need an operator to make a phone call. You could do it yourself, directly. Unfortunately, that revolution never happened.

I think this misses the mark just little. What was really compelling about SIP is that it gave us the hope that phone calls could work more like email. In fact, SIP addresses looked a lot like email address, e.g. sip:sales@sip.televolution.com. The issue of whether a service provider, or central server, was in the loop (or not) is really a red herring, IMHO. The point was that we could have a public address that was reachable directly from the Internet that could be used to call us, thus completely bypass the traditional PSTN (and telephone company carriers).

Unfortunately, that is what never happened - it’s not that P2P didn’t happen - it’s that (almost) no service providers offered publicly reachable SIP addresses to their end-user customers.

Instead, VoIP vendors used SIP behind the scenes only, and never exposed it to customers or to competitors the way Email services do. With email, a hotmail.com email address is public and a hotmail.com user can receive email from any other domain that supports the Internet Email protocols (standards). That didn’t happen with VoIP and SIP. The VoIP products like Vonage (and all Vonage copycats) built their system to use SIP to get the customers from the Internet to Vonage servers and to the old PSTN (existing telecom network), but not beyond. The old PSTN telecom network continued to be the only way to pass calls between providers. It would be as if hotmail.com refused to accept email from yahoo.com users via the Internet and instead delivered all inter-provider email using traditional postal mail (snail mail).

More importantly, these decisions as to what calls stay on the Internet, are controlled by the VoIP providers, not by VoIP end-users. End-users have no directly reachable VoIP address on the Internet, even though the Internet Standards exist for it (SIP) and in most cases these protocols were already being used internally by the providers, so it should have been easy to make them public.

I was writing about this as far back as 2003, such as:

There is the open standards based global SIP network, where like DNS or e-mail, everybody speaks the same protocols and can talk to each other, regardless of hardware or service provider… Services that do not support the global SIP-based VoIP network aren’t participating in the Internet. They are using the Internet as a pipe for their closed systems and getting in the way of progress toward making VoIP just one more interoperable application on the Internet. Whether a VoIP provider is using SIP ‘behind the curtains’ is irrelevent if it does not connect to the global SIP network.

Or Why AT&T, Quest, etc. VoIP announcements are lame among others.

In short, SIP’s problem has nothing to do with NAT or any technology aspect. It has to do with who funds what and, nobody has wanted to fund inter-provider VOIP. Likewise, grassroots efforts like FWD, Gizmo, and PhoneGnome, have not not succeeded in tickling the Internet’s fancy enough to get much viral traction.

Part of the problem is the difference in cost and speed between email and postal snail-mail was dramatic and clear. Even though email didn’t do that much new, it delivered messages much faster and cheaper (especially globally). VoIP has a similar appeal in terms of cost and, like email, that benefit is most noticeable to those making international calls. But as phone calls kept getting cheaper, the cost difference is more subtle with voice and therefore VOIP requires more “selling” than email did.

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Diversion: SF Giants 2008 HDTV games

For 2008, the San Francisco Giants TV rights were sold to NBC-11 (KNTV) and Comcast Sports Bay Area. The SF Giants site has a cool feature to download a CSV game schedule. Unfortunately, it doesn’t include data about TV or radio broadcasts and the broadcast schedule on the site doesn’t specify which games are Hi-def.

I combined data from the SF Giants site “broadcast schedule” and the Comcast Sports Net Bay Area “Giants HD schedule” to produce a list of all games planned to be broadcast in HD this year. It assumes NBC and FOX are available in hi-def.

Enjoy

Download CSV

Update Wednesday, June 18, 2008

DirecTV is changing the channels for three stations as of today:

Comcast SportsNet Bay Area: 696; CSNBA HD: 696-1; CSNBA Plus: 697

Unfortunately DirecTV’s on-line guide (and DVR guide for that matter) don’t keep these channels up to date so it’s a real pain in the neck to set up recording.

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Craigslist - Who do you love?

There has been an ongoing battle between spammers and Craigslist. More recently, VoIP bloggers like Dan York, Cory Andrews, and others took note of a thread on BroadbandReports.com discussing how Craigslist is preventing VoIP users from placing ads.

The blocking of VoIP and prepaid cell phone numbers by Craiglist points to the larger question of identity and trust on the Internet. There is no love between Craigslist and users.

1. Users don’t trust Internet sites with their private information, like email and phone numbers. And rightly so. Users are constantly bombarded with email, phone, and fax advertising - the last thing they want is to let their “real” email addresses and phone numbers leak out to yet more potential spammers. Therefore, users have valid reasons for wanting to give out disposable email addresses and disposable phone numbers.
2. Craigslist doesn’t trust users to behave. And rightly so. Fraud is rampant. Vendors and merchants of all kinds are overwhelmed by e-commerce fraud. It’s a much bigger problem than consumers, users, and the media appreciate. Therefore, Craigslist has a valid reason for identifying users.

It’s a question of accountability too. Both Craigslist and their (legitimate) users “share the love” of users being accountable for their actions. However, anonymity removes accountability - There is no “party of the first part” in the formal or informal contract between user and website.

Some people believe the solution is OpenID. Maybe. The problem is there is still a disconnect between the OpenID community and the commercial Internet e-commerce ecosystem - to the typical CFO, OpenID appears to be an “elitist” geek thing - not something for a conservative businessman to consider. Not enough sites support it - and even if they did, is an OpenID account really enough? Won’t spammers simply create “disposable” OpenID accounts too?

In the end, there are “good sites” (they don’t cause more spam for users) and “good users” (that don’t hack, spam, or steal). These good guys actually share common ground. The problem for both is identifying the good guys from the evil-doers. They both start from a position of “trust” that says “I trust that the other guy is an evil-doer until they prove me otherwise” - this is where they have to start because they have no history except “bad” history.

At one time, the Ebay trust mechanism based on reputation worked. I’m not a big Ebay user, but I’m told that it doesn’t work as well as it once did. There are scammers “buying” reputation there too and therefore diluting the value of “reputation” through this “feedback fraud”.

In short, this is a BIG problem - the kind the Internet, historically, has not been very good at fixing (like DNS, SMTP, NAT, IPv4 , the list goes on). The bad news is, by not fixing it, it invites government and “big corporate” to step in and fix it for us, or replace the open Internet with a closed “safe” one.

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Gizmo5 “backdoor dialing” restrictions kill value of it

The VoIP press jumped all over “backdoor dialing” when Gizmo announced it. This is (or was) a catchy name for peering relationships that allowed Gizmo5 users to make free calls to a portion of US phone numbers. But there are problems in using the service in practice and the VoIP press and bloggers have not picked up on that side of the story with nearly as much gusto (read zero coverage).

There appears to be a “byzantine and shifting algorithm” that Gizmo uses to establish whether an account is permitted to use the backdoor service. These restrictions are not fully disclosed and accounts can switch between qualified and unqualified status without notice.

There doesn’t appear to be any way to tell whether your account is permitted to use “backdoor dialing” short of trying a call. You throw the dice as to whether the call will be charged or not. If you don’t have funds to pay for the call, in my experience, the destination “backdoor” phone number rings, and when answered, the call simply disconnects immediately.

Here’s what the Gizmo5 web site itself says about “backdoor dialing”:

Because these calls are bypassing the traditional phone network entirely there is no per minute fee or other charge…

If this is really true, then these calls should have no cost (or nearly zero cost) for Gizmo5, so why do they place these inscrutable restrictions on the use of the service? Was it just hype all along and really these “peering relationships” are paid terminations?

On the FAQ, under “Who can call a number with backdoor dialing?” it says:

Backdoor dialing is available for personal and business calling. There are no restrictions on who can call.

Gizmo5 claims that 11% of US numbers are reachable via “backdoor dialing”. In my research, I found that, in practice, I was getting more like 20% - 25% of the numbers I called could be reached free with “backdoor dialing” - that is, until it stopped working entirely about a month ago, as it did for many other Gizmo users.

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Another cord-cutting study shows VoIP users don’t use it to replacing landline

Ike Elliot pointed me to Tech Untangled’s citing of a new Harris Interactive poll on telephony usage.

The Harris Interactive data shows that about 14% of adults use a cell phone exclusively for voice communication, which aligns well with the recent CDC research which showed 15.8%.

One interesting thing about the Harris Interactive data is they separate out Internet Telephony (VoIP) usage.

This data shows 15% of adults use VoIP, a pretty impressive number. But only 0.5% use it exclusively. That is not surprising.

What is somewhat surprising is that almost 60% of those Internet Telephony users use a landline phone too. This suggests that, for most people, VoIP is not being used as a primary service to replace landlines. In fact, the largest portion of Internet Telephony users, 57%, have all three, VOIP, Landline, and Mobile.

This suggests a disconnect with what VoIP users say they want to do, and what they actually do. We see a lot of talk about “firing your phone company” but in reality this isn’t happening, even among these first phase early adopter VoIP users.

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CDC data shows wireless-only households on the rise

There has been a bit of buzz about the latest statistics from CDC/National Center for Health Statistics on fixed/mobile substitution (FMS). As Dean Bubley says “it’s quite refreshing to see a genuinely independent piece of research.” The CDC began looking at FMS to determine whether their current telephone survey approach for collecting data that calls only landline numbers might be skewing their research on health issues - unlike data from other sources, the CDC doesn’t have an axe to grind in the telecommunications arena.

They show a steady increase since 2004 in the percent of households with only wireless service. At the end of 2007 this number was up to 15.8% - it was only 5% in 2004. This roughly three-fold increase over just three years has to be a concern for fixed-line carriers. It must be of particular concern to those without a wireless offering, such as many rural and second-tier local exchange carriers (LECs).

Again, taking from Dean Bubley’s analysis:

What it tells me is that despite the hype, “cord cutting” is not really an aspirational thing at all - it’s more driven by circumstance (economic or social).

Demographic segments that are more likely to be wireless-only include “roommates” (shared-adult homes), renters, and those under age 30. Men are more like than women to be wireless-only, as are those living in poverty compared to higher income households.

One of the only good bits of news for those depending on landline revenue is that the increase in the percent of wireless-only households dropped off in 2007:

In 2006, the percentage of wireless-only households increased a whopping 52%. If that trend of the first three years had continued, we’d have seen a roughly 70% increase in the percentage of wireless-only homes for 2007. I suppose the question is whether the dip in the rate of increase is a blimp or a trend.

What happened in 2007 to cause the drop in percentage growth?

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Why Vonage spending more on marketing won’t work

Ike Elliot suggests that Vonage can’t afford to ramp (down) marking spending. He says:

Vonage’s 2-year public company history suggests that the more they spend on marketing, the greater number of subscribers they add, and the greater number of net new subscribers they add, and the lower their net cost of adding each new subscriber.

Here’s what’s wrong with that logic. Over the course of Vonage’s history cited above, the world and landscape outside Vonage continued too. In other words, the environment in which Vonage operates has changed over that same time.

While others were saying that Vonage’s customer acquisition costs and operating metrics would improve, I was saying they’d continue to get worse. Vonage had enough trouble reaching the early adopters. As they try to move past that segment, into the mainstream, their marketing costs only go up. Further, as all this is happening, with nearly zero barriers to entry, tons of competitors come along, making customer acquisition costs soar even more. This intense competition has even a bigger impact when it tears into your only selling proposition “cheaper phone service”

In summary,

1. Limited market size - Vonage’s niche of people willing to act for cheaper phone service is small
2. Reaching beyond that niche will require Vonage to spend more per subscriber
3. Intense competition and low barriers to entry adds more to customer acquisition costs
4. Market dynamics reduce the value of the “cheaper phone service” message, further increasing customer acquisition costs

So I suggest that Vonage spending more today on marketing won’t produce the same result that it did in 2005 or 2006. If Vonage spends more on marketing trying to push the same old tired story, they will just burn more money quicker. They need to to something radically different, not just increase their marketing spend singing the same old song.

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Another mainstream reality check

Tom Keating notes research indicating that one fifth (21%) of U.S. households have never used email. The source is a survey by National Technology Scan. Age is clearly a factor - 50% of those who have never used email are over 65. However, beware of discounting the result based on age. If we look at distribution by age group of the U.S. adult population we see that the 65+ segment accounts for 17.4% of the adult population:

Half the 21% of people that have never used email are coming from these other segments. I wonder which ones?

As can be seen in this chart, the largest segment is the 35-44 age group (22.5%). It would be interesting to compare the overall U.S. adult population above to a similar chart for the facebook population, or perhaps twitter. In practice, this could never be done because nobody has accurate data on the ages of facebook users (not even facebook themselves).

Those of us that are close to the latest technology trends tend to lose perspective. We assume the general population is like our friends, using twitter, AJAX, Python, or whatever the latest buzz is buzzing about. Research like this, showing 1 in 5 people don’t use email and don’t plan to, are good reality checks. My personal benchmark is PTA meetings (or the rough equivalent) - that’s where you can learn how deep a technology has reached into the mainstream. A PTA meeting will be populated with the larger age-group segments above (the big part of the bell curve) and with a wide spectrum of people (culture, education etc.) When you ask these people, most of them have never even heard of Twitter, DIGG, or whatever latest technology may be percolating among the tech-savvy - to say nothing of using it. Even something we think as general, like Skype, will be suprisingly unfamiliar at a PTA meeting.

The companies and products that get most the attention tend to be those appealing to the 18-34 segment, the proverbial “hot” age group. But cooler heads (those looking for revenue instead of hype) may want to take note that this “hot” 18-34 segment is much smaller than the 35-54 segment - and other research shows that the dollars of consumer spending are even more shifted to this older more mature segment.

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Andy points the way

Andy offers some ideas for what’s next in communications in a very thoughtful post. Unfortunately some of the responses have been a little less thoughtful, to the point of being downright acerbic - which is to be expected, I suppose.

Andy takes two bits of news from the past week: rumors (theories really) of the telcos putting together a Skype competitor and the WiMax consortium news, and suggests that an interesting resulting play could be video.

Instead of simply being another voice play to battle Skype or the mobile operators, the WiMax companies and the cable operators, and heck, even Ma Telco may all may find that they may be better off looking in another direction.

That direction is real-time video communications bundled up along with other IP related services like voice and text, all in one neat little package.

It’s an interesting idea. Like most ideas, it is being discarded out of hand by many. Oh well. A lot of trash talk.

Frankly, I’m not a fan of video as it has been attempted over the years (going back many many years). I’ve done a lot of research with video and all that research took me to a place I did not expect to go regarding video - in the end, I’ve come to believe that video as we have ever seen it used, such as in “talking heads” applications, conferencing, and such, has essentially zero utility. That doesn’t mean Andy is wrong. I could be way wrong and Andy doesn’t necessarily suggest just “talking heads” video anyway.

I will put out a couple of teasers about why “talking heads” video , while very flashy and appealing at first glance, in reality has a tough row to hoe:

1. real people are not attractive - we are not movie stars or models. people on TV are not normal. we are not used to seeing normal people on “TV” (in the form of real-time video).
2. we are not directors. we do not know how to properly produce video content, how to light it, frame it etc.
3. we use IM for a reason. sometimes we don’t want the intimacy of a phone call. it follows that we really don’t want the intimacy of video - this is particularly true for females (based on research data)
4. video technology makes people seem stupid when the audio is out of sync or when the video does not meet our TV-like expectations (again, see the research)

The list goes on. The funny thing about this is the research has been here for years. But despite all the available data, as well as the extremely low market acceptance of video, we continue to see vendors offer nothing but “bigger and better” “talking heads” solutions.

On the other hand, video is very interesting when used more as a sensor… but we will leave that for another day.

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