Ben Charny had a great post on the backlash of VoIP in Germany. Vodafone Germany made it known to German telecom regulators (during a tariff filing) that it plans to disable calls from Skype and other Internet-based VoIP operators.  Obviously, wireless operators are feeling threatened by VoIP - that is pretty much a similar reaction to their wireline counterparts.  However, with the advent of seamless roaming ,VoIP running on a flat-fee based WLAN model and a pretty decent QoS (using CODECs such as GIPS) can certainly be a big problem to wireless operators.  While the article does state that "Vodafone's other 15 divisions serving nations in Europe and Asia have not enacted such a policy", French operator SFR made a similar announcement back in March (i.e. that it will block VoIP and peer-to-peer streaming traffic).

I wonder what legal recourse Skype would have against this, but these are yet another couple of examples representing proofpoints that whoever owns the last mile typically has a huge turf advantage.  And even companies such as Vonage can be quite vulnerable.  OK, so Madison River Communications was caught in the act of port blocking and got slapped on the wrist by the FCC.  But that was sloppy on Madison River's part.  What if instead of port blocking, it would have just put on additional traffic, or added some randomly generated noise / delays / jitter / etc.?  Such an action would be much harder for Vonage or any other VoIP SP to prove, and hence would create a big barrier for a wider adoption of VoIP.

Many folks trying to predict the uptake of 3G in regions such as Europe and North America are looking at the Japanese and Asian experiences in order to obtain important insights into how things will develop in their own turf.  However, wireless telecommunication is all about the subscribers' personal choices, with cultural differences definitely playing a key factor.  Therefore, extrapolating the Asia/Pacific 3G experience thus far to another continent is definitely a risky proposition.

Nevertheless, even considering this caveat, there is definitely potential for some takeaway lessons from the Asian development up to now.  One observation that is applicable elsewhere is that 3G rarely changes the popularity of apps - chances are that the same apps that were popular in the 2G world will be the most widely used in 3G as well, with the main difference just being faster download speeds. 

There is much debate on the issue of the uptake of video telephony.  In Europe, for instance, it is regarded as an important component of 3G offers, with operators such as 3 or Vodafone having it as part of their portfolios.  In Japan, despite the fact that it was one of the cornerstones of the DoCoMo 3G portfolio, the uptake has been pretty disappointing thus far.  Culture might play a role here - chances are Europeans are less intimidated by video calls than people in Asia (a similar phenomenon to VM), at least when the call is informal.

Currently, there has been no Asian "killer app" on the data side - albeit data usage is increasing.  News, entertainment, ring tones, sound clips, games and screensavers all compete for the title of most popular non-voice app, but there is no current clear winner as of yet.  This can certainly be the case in other geographies, until some more refined applications emerge. 

So these are a few "uber" conclusions that can be drawn from the Asian experience - 3G still represents a technology in flux, with much growth to come in the years ahead.

It was really interesting to see how many people jumped on the CRTC bandwagon, praising its VoIP decision as being a savvy one, and one that really promotes competition by taking ILECs such as Bell Canada and Telus out of the game (at least on their own home turf – and let’s be honest about it: many folks seriously doubt that we will see those players actively promoting and campaigning VoIP offerings outside their incumbent territories).

Amazing how none of these so-called “expert” analysts (with a few exceptions, of course) picked up on the fact that even under a full deregulation VoIP scenario, the ILECs would have faced margin pressures, and would have had to reduce prices to maintain their market standings and stay competitive. As Michael Sabia himself declared in a Globe and Mail interview a few weeks ago, the telcos would need to cannibalize their own base to keep their market shares. But the consumer would have been the winner in that case, since a new lower price equilibrium would have been reached. Competition and lower pricing is what drives progress, and Japan is a great example of that (check out this TF entry about Yahoo! BB).

However, by preemptively taking the ILECs out of the VoIP game, the CRTC pretty much assured that the existing status-quo on pricing would continue (there will be some competition, but price drops will be small compared to what they would have otherwise been. Let’s take a look at the MSO VoIP launches thus far: most cablecos have thus far been pretty “rational” and “disciplined” in their pricing (e.g. Shaw’s $55 / month offering). The lone exception is Videotron, but the fact of that matter is that the MSOs will balance profitability and volume. So it is very unlikely for us to see a major price battle happen any time soon.

There is some hope that to stem the loss in local market share, Bell and Telus might resort to offering some discounts in Internet, video (Bell Canada’s ExpressVu service) and wireless segments, or perhaps offer some bundling savings. However, thus far, Bell announced that it was taking away its $5 offer for 1,000 LD monthly minutes anywhere in North America for customers subscribing to the Bell bundle (local, wireless, Internet and satellite service).

In the meantime, the incumbents are appealing the decision to the federal cabinet, a process that can take at the very least 6 to 9 months, particularly considering the current turbulence in Ottawa.  The fact that there were two dissenting opinions should provide the ILECs with some valuable ammunition during the appeals process. 

On a separate note, Industry Canada recently formed a 3-member panel to review the Canadian telecommunications policy. This initiative is essentially a broad review and is not expected to affect current CRTC proceedings. Chances are that the panel will probably zero in on less sensitive matters like broadband access and deployment, rather than VoIP and/or competitive issues, and will provide its recommendations to Industry Canada before the end of the year. The findings may have implications on the role of the CRTC in telecom regulations in the future.

SiliconValleyWatcher reports on a brand new VC fund totally devoted to investments in RSS (Really Simple Syndication), the syndication technology that has been made so popular with the advent of blogging. RSS Investors has been launched with $100 million to finance startups "championing RSS-related technologies, including news aggregation, blogs and new classes of search engines". RSS Investors will not only examine startups using RSS for news aggregation, but also "RSS applications that aggregate data, particularly in the financial and medical industries".

It is great to see this story unfold - RSS could very much be the next big core Internet technology (as the article itself points out, it is a "push-me, pull-me" mechanism - neither e-mail nor web page, but having characteristics of both).  More importantly, I believe that the next wave is for applications that manage RSS feeds (for instance, performing searches on key words and routing news feeds containing those words to a mailbox address - where the results could be displayed in an e-mail formatted in HTML with the original links or with a brand new document containing the original text and graphics).  And after that, content-based routing, as envisioned by Solace Systems.

Another nice finding that I made at Supercomm (albeit unfortunately one hour from the close of the show on Thursday) was that the Ontario Government was helping out some Canadian startups by getting a big booth for them (a total of 8 companies were present).  It turns out that the Government of Ontario (through Ontario Exports Inc.) sponsored a Trade Mission at Supercomm 2005, featuring a total of 8 high-tech companies in the telecom space.  The initiative allowed these startups to hold meetings and presentations at the Canadian Consulate, Supercomm and the Chicago area IT Association.  It was nice to run into an exec from Nimcat Networks (the peer-to-peer telephony czars), to get another Dexit demo (the pre-paid fob or sticker innovators) - this time in US soil - or to visit the Plaintree booth (experts in broadband optical wireless).  But even better to see the provincial government step up to the plate in supporting our own startup companies get even more notoriety at one of the biggest telco shows in the world.

Note: I also included a few photos on my album.

Rodrigo Sepúlveda Schulz wrote about a new cool blogging editor/tool: BlogJet. Actually, it is more than just an editor: it is a full blog management tool. BlogJet is compatible with most weblog services, including Blogware (which is used here), Blogger, TypePad, MovableType, .Text, etc.  Its editors features a spell checker, 20 high-quality smileys, the "Now Playing" feature (that detects the song title and artist name for the song being currently played on an MP3 player in the computer), and voice attachments (no monthly fees or external plug-ins required).  There is a free 30-day trial, and I will be experimenting BlogJet shortly...

Blogging was light over the past two days, as I cope with my office move (it is unbelievable the amount of junk that one can accumulate over a four year span). As I took refuge at a local Starbucks, I bumped into a famous National Post columnist who I enjoy reading (Andrew Coyne).  In order to preserve his sanctuary intact (from other avid fans such as myself), I shall keep the Starbucks location incognito. But I do admire him - being able to work in such a prolific fashion, while I was bothered by any single noise being made, from a dog barking outside to a toilet being flushed in the washroom inside.  I wish I could move to another spot which is less noisy - and more importantly having fewer distractions.

But the Starbucks Wi-Fi hotspot got me thinking about the lack of availability of public WLAN access here in Toronto.  After all, we live in one of the most technologically advanced cities in the world (supposedly), and yet, I can get better access in downtown São Paulo than I can in Toronto (and down in Brazil, it is even free of charge!).  For instance, there are many "dead" areas without any wireless broadband connectivity in the downtown core (e.g. downstairs in the BCE Place cafeteria area).  It would be nice if our city did more for the cause (taking an example from Philly, as reported in this forum before).

So Supercomm wound down on Thursday, and here are a few takeaways from this year's edition of the show:

1- IPTV: will be an important driver in the routing market, since the deployment of IPTV will entail a substantial upgrade of the existing routing network infrastructure.  But I doubt that the time frame will be 2 years, as often mentioned by players such as Microsoft and Alcatel.  The resolution of issues such as scalability, maturity of silicon, Microsoft software support, and regulation will take time.  So it might be more a five to eight year horizon for the deployment and actual full blown mass adoption of these services.

2- Chinese are here to stay: vendors such as UT Starcom, ZTE and Huawei had big booths there and there was even a Chinese telecom market mini-show.  Although they are still seeking a greater market penetration on this side of the ocean, they are a force to be reckoned with in wireline (NGN, DSL, triple play) and wireless (CDMA, W-CDMA, CDMA 450, TD-SCDMA). 

3- Blades are also becoming a mainstay - both Intel (ATCA) and IBM (BladeCenter) showcased their blade platforms.  The notion of reusing the chassis and having modules that can be incrementally added for a variety of different applications is gaining popularity.  Intel and IBM are both vying to have their products become the standard platform for carrier-grade applications.

4- IMS was again one of the buzzwords most often heard at the show.  Service providers such as Bell Canada, SBC, Bell South and Comcast are all investigating this framework and evaluating future deployment strategies.  While there were no specific plans / milestones mentioned, there certainly was some optimism vis-a-vis IMS, also tempered with a good dose of realism.

Last night, the Ditech dinner revealed a bit more about its acquisition of Jasomi Networks, yet another SBC (Session Border Controller) company to be acquired recently (following Kagoor, which got snapped up by Juniper).  The final price tag was $20 million ($13 million in cash and $7 million in convertible notes), which might seem a bit underpriced compared to Kagoor (which fetched $67.5 million).  On the Wednesday analyst/press dinner event, the answer given to me about this difference in valuation was pretty much the same as what was quoted on a LightReading article, namely, that Kagoor was funded by VCs, whereas Jasomi got most of its capital from angel investors.  The transaction is expected to close by the end of the month.

The rationale behind the acquisition is to complement the PVP Packet Voice Processor product (an offering that was talked about at the Spring VON show).  The PVP is expected to begin generating revenues in calendar Q1 of 2006.  One idea is to develop the PVP into an SBC, or even perhaps as a media gateway.  In order to shorten the time-to-market, the company chose to purchase rather than to develop such an offering in-house.  Jasomi's 23 employees are mainly based in Canada (the HQ for product development is in Calgary), with a few others working out of Mountain View, CA. 

Another possibility is parlaying Jasomi's SBC competency in the IMS space, albeit thus far Jasomi's biggest customers have been in the enterprise market (versus carriers) - can that be scaled up or is more development needed?  There were rumors from my Wall Street connections that sometime ago, Cisco had tested Jasomi gear in Singapore and passed up on the opportunity, but a good chunk of time has passed since then.  Jasomi's current partners include the likes of Microsoft, Broadsoft, Sylantro, RADVision, and General Bandwidth, among others.

The million dollar question now is: which will be the next SBC vendor to be bought?  I will be willing to make a couple of bets: one is Nextone (since au contraire of vendors such as Acme Packet or Netrake, Nextone's solution can be put on a blade - and hence be a part of the IBM Blade Center / IMS ecosystem).  The other one?  Ditech itself - since the company could be positioning itself to be bought at some point in the future by an even bigger player.

Note: Jeff Pulver was a guest speaker at the Ditech dinner and gave a great keynote.  I have posted a couple of photos of the event in my photo album.

Nortel execs take note: Siemens joins other vendors in exiting markets in which the company underperforms (other recent examples: Lucent, exiting the GSM business, or Ericsson, which left the CDMA market for the most part, except for emerging opportunities such as CDMA450).  In Siemens' example, the Munich-based multi-national finally unloaded its wireless handset unit to Taiwanese vendor BenQ.  As reported here before, Siemens' quest to unload its underperforming mobile phone division has been going on for a long time.  The transaction, expected to close in September 2005, calls for Siemens to purchase $61.4 million (€ 50 million) of BenQ stock, in addition to taking a $429.5 million (€ 350 million) charge.  The division's workforce (totaling roughly 6,000) will remain in Munich.  Siemens and BenQ combined in 2004 to amass about 10% of the overall global market (4th in the world, behind Samsung).  Geographically speaking, the deal makes sense, with BenQ being strong in APAC and Siemens showing strength in Europe and Latin America (including Brazil). 

The two IEC IMS events were pretty interesting (the first one, a full day IMS session on Monday - where I gave a talk - and the second one, an hour-and-a-half long wireless IMS perspective on Tuesday). 

The first day featured the perspectives of SBC (David Deas) and Comcast (Jason Livingood).  David's presentation focused on wireline/wireless convergence and brought up a few key points, including cellular/WiFi integration, and the big divide between wireline and wireless service providers. David mentioned that wireline carriers overwhelmingly believe in FMC (Fixed Mobile Convergence), whereas wireless operators are quite skeptical.  The latter part of his talk was also interesting, as he considered implementation issues (such as Parlay/OSA integration options).  Jason offered a very insightful perspective on the MSO view of IMS, including the ongoing standardization efforts and the issues faced by most cable companies in considering their strategies.  He also mentioned a few IMS applications that could be of interest to MSOs, and the ongoing Cable Labs activities.

 The second day featured the perspectives of Bell Canada (Philippe Jetté) and Bell South (Bill Smith).  Phillipe's presentation emphasized the evolution towards the seamless access in the world of IP (wireline/wireless and nomadic/fixed). IMS will play a key enabling role in the transformation from a single bill to a single network and to a single (user-centric) seamless application space, according to Philippe. Bill's presentation highlighted the IMS view not only from Bell South's, but also from Cingular's perspective.  He emphasized some of the consumer IMS apps, including managing a family's communications, seamless roaming, etc.

Overall, the consensus throughout the two days was that while IMS still is very much a work in progress, it will play a key role in the transformation towards a user-centric world in which applications can be delivered quicker and more efficiently to certain segments in the subscriber bases.  All in all, the IEC put together a couple of great sessions that provided a good current perspective in the world of IMS.

Note: I posted a few photos from my day on Monday (including the IEC session and an evening at Wrigley Field). 

The Supercomm Nortel update included the revelation that the MPE9000 switch/router that was announced last year will finally hit GA by the end of June.  The MPE is expected to be a "big product" (according to VP of Carrier Marketing Jim Dondero) for Nortel within six months, as wireline and wireless operators will begin to rely on it to aggregate ATM, Ethernet, Frame Relay and IP at the edge of their networks.  Nortel has been quoting some pretty impressive VoIP numbers: 55 carrier VoIP customers and 20 out of 35 MSOs that have made VoIP decisions up to now.

Blogging has been a bit light the past few days, as I have been caught up in a lot of work, office move, and a trip to Supercomm.  Speaking of which, a lot of announcements were made during the first day of the show, including, among others:

• Cisco, announcing its DDoS (Distributed Denial of Service) protection offering, which is now a part of the company's NGN IP architecture.
• Juniper giving demos of its newest software upgrade (5.0) to its Secure/Remote Access SSL VPN appliances; the company also unveiled its new E320 broadband services router, the industry's largest capacity broadband router.  The E320 is a pretty good platform for delivery of services such as IPT, VOD, and IPTV.
• ADC, Lucent, Nortel and Tellabs all revealed their new products targeting the emerging FTTX / "triple play" markets.  Lucent announced a collaboration with Polycom geared towards delivering IP voice, video and collaboration solutions.  Nortel introduced next-gen features for its optical network solutions.  These features will allow service providers to deliver high bandwidth content and application-based services in a much faster fashion.
• Sonus unveiled its GSX4000 compact gateway which caters to the lower end of the VoIP market.
• On the M&A front, Ditech announced it was acquiring Jasomi, in a marriage of SBCs and voice processing technologies (I will attend Ditech's dinner on Wednesday evening and learn more about synergies, and the rationale behind the purchase).

IPTV has been getting quite a lot of bandwidth lately, and there have been a lot of stories such as the ongoing SBC effort and the Alcatel/Microsoft alliance, among others.  However, despite all the hype, here's a reality check on the current status of the technology: last week, it was announced that Swisscom delayed its own IPTV launch.  IPTV is turning out to be quite more complex than previously thought; one of the technological challenges is scalability, and it still remains to be proven that IPTV networks can scale.  Another potential headache is regulation, as there are some regulatory risks that can potentially impede the ILEC rollout of TV services.  So in the next two years, expect there to be a lot of access network buildouts, with initial deployments (in small scale) only really beginning to ramp up in 2007.  Therefore, a wider consumer adoption of IPTV services probably will not happen before 2008-2009.

Not to be outdone by BT, Cable & Wireless (the U.K.'s second largest network operator) unveiled plans earlier in April to build its own NGN over the next few years.  The total CAPEX earmarked for the project is roughly $988 million (from 2005-2008).  The plan calls for the collapsing of 70 voice switches to 10 softswitches, to be housed in "IP routing nodes".  Furthermore, the few hundred metro nodes will be replaced by roughly 80.

Last week, C&W announced Tellabs as the first supplier for its NGN.  C&W will rely on the 8800 metro Ethernet multiservice routers, whose strong suit is the aggregation of multiple types of legacy traffic.  Another deal was announced with Marconi (this one on the access side).  Marconi is one of the incumbents on the Bulldog Communications (C&W's access business unit).  However, more announcements are expected within the next few weeks.  Cisco could likely win a piece of the IP core.  Nortel could potentially get a piece of the softswitching piece of the upgrade, thereby capitalizing on its Succession win last year.

A bit more than a week ago, Ericsson became the latest Euro vendor to form a relationship with a Chinese player to jointly develop TD-SCDMA offerings.  Known as the "Chinese version of 3G", TD-SCDMA (Time Division Synchronous Code Division Multiple Access) has been originally specified by the Chinese Academy of Telecommunications Technology.  The standard combines older TDMA with the Time-Division Duplexing (TDD) technique of broadcasting over a single chunk of spectrum, rather than the normal two bands.

The three big Chinese manufacturers now all have TD-SCDMA agreements in place with foreign vendors (i.e. Huawei is teaming up with Siemens, ZTE is pursuing Ericsson and Datang struck a deal with Alcatel).  The announcement was consistent with Hakan Eriksson's statement during the Ericsson analyst day the previous week: "TD-SCDMA has not been prioritized but Ericsson will have a presence".  Eriksson added that Ericsson regards this as a Chinese-centric technology, and as such, the company could rely on partnerships.

It is anticipated that the Chinese government will issue three 3G licenses later in 2005, and chances are each will be for a different wireless technology: CDMA EV-DO, WCDMA, and TD-SCDMA.  There could be some delay, as the Chinese government keeps on promoting TD-SCDMA.

The IMS (IP Multimedia Subsystem) framework is gaining more and more notoriety these days, becoming one of the hottest topics du jour in today's telecom world.  However, much work remains to be done, including issues such standardization, the refinement of voice QoS mechanisms (for a conversational class of service) in the wireless environment, and the availability of some new "combinational" services that can bundle features such as location and presence.  So fittingly (after playing a bit with Photoshop), I spent some time creating the above scoreboard that provides a good snapshot of the current state of the IMS market:  we are still in the 2nd inning of a 9 inning-game.  2005 is shaping up to be more of a year of experimentation rather than full-scale deployments.

Note: I wrote an article regarding IMS that appeared on the May issue of the IPCC Newsletter, and will be giving a talk about IMS at Supercomm.

Looks like this fellow is really eager to buy a computer system (photo credit: my friend Daniel, from Brazil).  For kicks and giggles - if you add the prices for all the equipment shown in the figure (i.e. a brand new typewriter, iron and TV), I wonder if you'd get pretty close to the price of a new computer system (or perhaps even higher? ;-).

Skype Journal reports on the progress of SkypeSee, which is the video conferencing feature that is on Skype's product roadmap (as mentioned here in Toronto during VON Canada last month).  Basically, the latest 17w version beta (IMHO, the product is already in beta, not alpha quality) is pretty light (only 359k) with good video refresh rates and crisp resolution (users can read 11pt. text from the other site - that is impressive).  The GUI still needs some refinements, but the hacker in me finds it OK.  Funny enough, thus far, they are calling this product wigiwigi, and it already has its own forum.

South Korea perhaps represents one of the best examples of where convergence is taking hold.  About 12 million out of a total of 15 million households have Internet access (typically around the clock, 24 hours per day) for a flat rate of 30,000 won (1 US$ is roughly equivalent to 1,004 won, so this is equivalent to under $30). 

There are quite a few reasons why this is happening, including, among others:

• high household broadband penetration: 73% versus 26% in the US and 22% in Europe (South Korea is the global leader)
• high throughputs: South Korea has among the fastest speeds available to consumers (average of 14 Mbps compared to only 4 Mbps in the US)
• favorable demographic characteristics: 65% of the population lives in MDUs (Multiple Dwelling Units)
• excellent broadband facilities for the masses: South Korea counts with roughly 22,000 "PC Bang" cyber cafes and 1.2 million PC terminals

These factors translate to one of the most favorable customer profiles in the world.  South Koreans Internet users spend an average of 20 hours online per week (compared to under 13 for the US).  Roughly 12% of the retail sales are online (versus only 2% in the US) and 68% of stock trading is done online (versus less than 25% in the US).  Interesting to see how pragmatic regulation played a small positive role here - the restriction of Japanese imports made the PC the primary gaming platform in South Korea, and many feel that was one of the drivers for these impressive broadband numbers.

Note: The South Korean wireless market will be discussed in a separate post. 

Om Malik writes about VDSL2, and how much bandwidth it can deliver. It turns out that the new VDSL2 specification is about to be ratified by the ITU sometime next week, and that seems to be generating a lot of excitement among FTTN / FTTC proponents. Does this mean that last-mile copper solutions will be in fact effective for all customers, no matter how many miles they happen to be away from the CO?  As I wrote before, there is an inverse relationship between the loop length and the bit rate that can be supported by such last-mile copper solutions (be they ADSL2+, VDSL2, etc.).  For a minimum level comfort zone, for HDTV, around 19 Mbps are necessary (from a future proofing network perspective).  This means that the maximum loop length supporting that would be somewhere between 5 and 6 kilofeet, which won't cut it in about 57% of the cases for a carrier like SBC.  So FTTN or FTTC solutions represent a "go after the low hanging fruit" type strategy. 

On the other hand, in Canada, the situation is quite different, as Canadian carriers such as Bell Canada and MTS have very good loop length profiles.  In fact, according to Bell, 85 to 90 percent of its customer dwellings are within 1,200 meters of the node.  So FTTN with VDSL2/ADSL2+ seems to be the right approach for Canadian ILECs such as Bell to bring the triple play to all of their customers as quickly as possible.

A new concept is getting a lot of attention in the UK, namely that of a virtual broadband operator. An FT story documented the advent of a broadband Internet service that is custom-tailored to a football fan (ed.note: in the UK, as in my native Brazil, they call the game football, not soccer ;-).

Viatel, a UK-based broadband operator, introduced earlier this week a new branded broadband service specifically geared towards Chelsea FC fans (ed.note: Chelsea won the English Premier League title this year).  Chelsea Broadband will cost fans £28.99 per month and offer a 2Mbps high-speed Internet data connection with unlimited monthly downloads and up to five personal e-mail addresses.  Another "sticky" element added to the bundle deal is a free year subscription to Chelsea TV online, and as an added bonus, for the first 1,000 subscribers to sign on, free video highlights from Sky Sports. Chelsea will promote the service online, in its matchday program and around its Stamford Bridge stadium.    

Undoubtedly, this is yet another major coup for Viatel, which already had similar deals in place with Manchester United (from the English Premier League) and Hearts FC (from the Scottish Premier League).  The company also has a site (www.fastfooty.com) where fans can register their interest in having a similar service for their own soccer clubs.  But the math is impressive: between Chelsea and Manchester Utd. alone, the fan base represents a huge total addressable market opportunity of 14 million fans in the UK alone (about one fifth's of the UK population). 

Here are a few more ideas added to the mix: what about a similar MVNO type deal for wireless operators?  Special screens, ringtones, phone updates, and video streaming of a few highlights can be a part of a great "sticky" wireless bundle.  Would a player such as Virgin step up to the plate?

I wonder if on this side of the Ocean, other broadband service providers would consider a similar play.  Closer to home, here in Toronto, Rogers could definitely come up with a similar type packaging for a Blue Jays (owned by Rogers) branded broadband service.  And they can even include a few free tickets as an extra bonus.  I know a few die-hard Blue Jays fans that would definitely find this idea very appealing.

Microsoft and Sprint are teaming up to introduce a wireless location based service geared towards helping businesses locate, track and direct mobile workers through the use of text and voice messaging.  The service is expected to be available across all of the US and is part of the Sprint Business Mobility Framework, which is being introduced after recent successes with some target customers over the past few months. 

Sprint will rely on Microsoft's Map Point Location Server (MLS), which can do a lot more than just mapping and routing information from the MapPoint Web Service.  The MLS software also can perform real-time tracking and management of highly mobile employees (such as "road warriors") or vehicle fleets.  This requires a partnership with a service provider and Sprint represents the first US operator to sign on.  Last year, there were many similar deals announced with service providers in Sweden and the UK.  Closer to home, Bell Canada was the first carrier to provide the service, in a deal announced last year.

Location and presence definitely are part of a recipe for a potential killer app: the possibilities are endless. Imagine an end-user getting pushed with some information when he/she is at a mall, being able to find out a movie is playing in that complex, and then finding out a person from his/her buddy list happens to be there as well, and can receive an SMS invitation to watch the movie together.  The IMS (IP Multimedia Subsystem) framework can be instrumental in allowing service providers to start experimenting with these so-called "combinational services".  Therefore, expect location based services to get more and more sophisticated in the future.

A week ago, Trapeze Networks announced yet another partnership, this time with Enterasys.  Trapeze was picked as Nortel's WLAN partner after Cisco bought Airespace (the previous WLAN partner that Nortel had).  As I already pointed out earlier this year, the WLAN space will still see some M&A activity happening this year, given the continued growth (despite the fact that Cisco pretty much owns half of the market).  So after seeing Trapeze engage in Airespace-like behavior and establish other relationships with vendors such as 3Com, Enterasys and D-Link, will Nortel risk having its own WLAN product roadmap derailed again (in the event that one of the above companies decide to acquire Trapeze)?  Stay tuned - we will soon find out the answer, but I am willing to make a strong bet that Trapeze is the next WLAN company most likely to be bought.

Note: Airespace had OEM agreements with Alcatel, NEC and Nortel before being snapped up by Cisco.

Note2: Proxim can also be a potential acquisition target, as there are continuing rumors that the company is in a messy financial situation.  Last week, Proxim shares dropped almost 60% after the company revealed it had "an immediate need" for additional financing, and might seek bankruptcy protection unless it is able to be sold or obtain enough financing in Q2 of fiscal 2005.  Many feel that the Orinoco product acquisition from Agere did not go well, and then, the failure of Proxim to introduce a WLAN switch further exacerbated the problem.  But Proxim still has some good IP (Intellectual Property), and the last drop in the stock might also present an opportunity for a perspective buyer.

I had an interesting chat with a friend of mine (from the VC industry) this weekend about the recent success of Huawei and other Asian vendors.  We talked about how India and China have become impressive powerhouses in the telecom world, given the recent trends of outsourcing, the vast human and capital resources available at their disposal and their focus on trying to achieve a huge technological leapfrog that would put them in equal footing with the West.  In other words, modernization of the telecom infrastructure was achieved without necessarily going through all the evolutionary steps that a country like Canada went through (a jump made possibly partially due to the advance of wireless broadband technologies).  Based on this, my VC buddy firmly believed that the next major Silicon Valley would be over in India or China (arguably one might already exist in Bangalore or Zhongguancun).

But interestingly enough, my friend never mentioned Eastern Europe.  And there has been a lot of action happening in that part of the world recently.  The region counts with a highly educated and motivated workforce and lower labor costs than Western Europe.  That makes countries such as Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Poland, Romania, Serbia, Slovakia, and Ukraine, among others, ideal for establishing both business and manufacturing hubs, particularly in the telecom space.

One success story is Estonia, where Skype has setup its lab with 75 developers, engineers (operations and network) and some customer service functions.  In fact, most of the company's development gets done in its Tallinn office, including new features that are on the roadmap, including video telephony.  So what would make Niklas Zennström consider putting his major R&D center there?  Well, for one thing, a history of success (his previous startup, Kazaa, also had its development in Estonia).  Niklas was impressed with the quality of the country's developers, which he felt was second to none.  Another factor was the favorable labor cost (a developer makes between €1,000 and €1,300 a month, which is about $1,230 to $1,600).  But there is a lot of innovation there.  Take even parking, for instance. The Estonian incumbent (EMT) has an innovative system for municipal parking: drivers pay via an SMS message to the parking authority.  The country's mobile teledensity is about the same as France's (65 subs per 100 people, compared to the French figure of 69).  According to the ITU, Estonia also ranks ahead of countries such as Hungary, Greece, Ireland, Poland and Spain in terms of Internet penetration.  These are impressive numbers and a testimony of how far along the country moved from a technology standpoint since its emancipation from the old Soviet empire. 

I will post future similar Eastern European success stories.  But one thing is for sure: the region presents an excellent opportunity to attract foreign high-tech investment.  Moreover, Eastern Europe is also very strategically important to the US (witness the acceptance of a lot of countries in NATO).  History has shown that wherever US interests are, the money tends to flow.  So aligning geopolitical interests with a talent-rich workforce, attractive labor rates, a more advantageous time zone difference (when compared to India or China), and a smaller cultural gap (vis-à-vis the same countries), and the answer becomes obvious: chances are the next Silicon Valley will be in Eastern Europe.

There was a lot of interesting coverage on the newspapers today on the aftermath of the CRTC VoIP ruling.  Mark Evans and Paul Vieira had a story on the National Post (where my opinion is stated).  I egregiously mentioned the fact that there is nothing in the ruling to prevent the MSOs from engaging in anti-competitive practices - ironically the very same behavior that the CRTC wanted to prevent the ILECs from adopting - not because I am actually 100% certain that the MSOs will do that.  Rather, my message was that should any player engage in such conduct, the CRTC always has the option to step in.  If that's the case, why not do the same with the ILECs and start from an even level playing field?  Also interesting to see the regulator quote right at the end of the article:

"No persuasive arguments were presented to the effect that ... the phone companies would not have the motivation, the means and the opportunity to engage in below-cost pricing that would have the effect of stifling competition."

Again, in an unregulated regime, should the CRTC notice this, they could always step in.  The MSOs would always hold the ILECs in check, until the equilibrium price is reached.  So would a pre-emptive salvo against the ILECs further the cause of competition?

Tyler Hamilton from the Toronto Star had a piece with the views from the incumbents, cable operators, and new entrants (Vonage, Primus, and startups such as Montreal-based BabyTel).  I am glad to see that Steve Dorsey, the BabyTel CEO (also from my alma mater, and a seasoned executive and entrepreneur in the telecom world) is right in synch with my own opinion that there is nothing in place to prevent predatory behavior from the cable companies.  BabyTel represented the lone voice of VoIP SPs pointing out this fact, given that Vonage, Primus, etc. were all praising the ruling.

Simon Tuck of the Globe and Mail also included a view of the dissenting voices in the CRTC in his article (ed. note: the final voting tally was 7-2).  Two commissioners (Andrée Wylie and Andrée Noël) were more avant garde in recognizing the fact that VoIP is different than regular telephone service. Ms. Wylie went as far as saying that the commission should have let market competition set the tone, rather than issuing “static” restraints on some VoIP providers and not on others.  I could not agree more with Ms. Wylie's opinion. VoIP should be an information service, not a telecom service.

And the final verdict of the CRTC VoIP decision announced earlier today was pretty much what most expected: nothing more than a rehash of their original position made public earlier last year.  The chances that the public hearings held last September would have changed the final outcome would be really slim. 

The key question is: will it really promote the growth of a nascent industry?  Again, the key mission of a regulator is to attempt to set the course for a market to be as competitive as it can be.  And by taking out the incumbent telcos (including Bell Canada and Telus) with a pre-emptive salvo, it is my belief that competition was not best served.  By constraining the ILECs to a certain VoIP offering price level, there is nothing preventing the MSOs (the other major VoIP players in terms of human and capital resources) from setting a price just below that level. 

From a pure microeconomics perspective, no matter what duopolistic model one chooses (Stackelberg, where competitors move sequentially, the Bertrand oligopoly, where competitors simultaneously choose prices or Cournot's duopoly game, where they choose quantities simultaneously), the "equilibrium" price level will always be smaller than for the case that one of the players (in this case the ILECs) cannot match the MSOs with a competitive move.  Let's take broadband access as an example in the US.  Some would model this as a Stackelberg game, in which the ILECs were the first to move (with DSL), with MSOs making a move in response offering cable access at a lower price.  It took the RBOCs a while to match the price, and eventually there were other pricing moves downwards.  But the fact is, there was competition - albeit not a perfectly competitive market. 

However, if one of the players is constrained on pricing moves (at least on their incumbent region), the resulting price would be undoubtedly higher than the Nash equilibrium of the duopoly.  This is just plain old simple Economics 101.  So the best prospects for lower VoIP pricing would be if the ILECs decide to attack each other's territory as a CLEC, albeit it might be costly for them (in terms of defending their own turf).

Mark Evans made a good point about which players got the early control of the VoIP market in the US.  After Vonage, Cox, Cablevision and Time Warner, the rest of the pack (about 396 players) each has roughly $70k in annual sales.  So what that really means is that the bulk of the market belongs to the MSOs and an xSP (Vonage).  Let's take this to Canada, in one region (say out west).  Shaw now has a $55 VoIP plan and is no rush to lower that down, because it does not have to.  Maybe it will a bit when Vonage will compete more, but that's about all.  Telus will not really be able to match any price drop in the future with their consumer offering, due to ruling.  And Bell West probably will not engage in a lot of competition in the Telus footprint (knowing that this move would be matched by a similar Telus move in Ontario and Quebec).  Is this the competition that the CRTC hopes to achieve?

Regulation is necessary as a tool to guarantee that players do not engage in anti-competitive practices and to ensure that some public service goals such as emergency service (E-911) and law enforcement (CALEA) are met.  The FCC showed that this model worked - and it would have been wise for the CRTC to have taken a similar approach. VoIP is still in its blossoming stages and innovation in this area should not be choked before the industry has a chance to grow.  Therefore, in my humble opinion, the CRTC should have created an even level playing field for all the industry participants.  And, in the event that the ILECs would engage in anti-competitive practices, the CRTC could always have the option of penalizing them in order to avoid a large-scale industry consolidation.

RIP, Western Digital WD1200.  Blogging has been light because my home hard drive decided to go kaput on me on Tuesday night.  I had it replaced today, but finished installing new software, etc. late, so there will not be time for too much blogging. 

But just enough to point out a few things.  First of all, the fact that probability is really no more than a religion: either you choose to believe in it or not.  For a low-event probability (e.g. 1 in 1000), for 999 people out of 1,000, the probability is zero and for 1, the probability is 1.  So what does 0.001 really mean?  Similarly, what does an MTBF (Mean Time Between Failures) rating really mean?  Well, if you choose to believe it, it means that if there are 8,760 hours in a year (365 days by 24 hours per day), and if we have a HD with an MTBF of 50,000, that means that on average, that HD should run for 5.71 years without any failure.  Not bad, except that just like any other statistic or probability, there is an element of "religion" here, as this figure (5.71 years) represents both an average and an estimate.  There is always the risk of odd statistical aberration or other anomalies that are smoothed out by statistical averages. 

Moreover, sometimes, environmental factors can play a role as well, and elements such as heat and power can definitely have an impact.  What about the PC configuration?  Ever heard of a Microsoft Office utility called Findfast?  As written in this PCWorld entry:

" Findfast occasionally indexes every Office document on your hard drive. It's supposed to work only in idle time, but what it thinks of as idle time (when the hard disk isn't working) usually doesn't jibe with how you see idle time (when you're not using the PC at all). You can't help but notice Findfast doing its job: Suddenly your hard drive starts spinning wildly when you're just typing or reading."

Funny enough, my HD went when I was using Microsoft's defrag utility, although that might have been just a coincidence.  But I have turned off Findfast on my new Seagate HD.  However, I am still choosing a new backup source as well.  Maybe Om Malik or Tom Hardware's Guide can come to the rescue, but in the meantime I am open to suggestions.

Update (21/05): A TF reader e-mailed me that Findfast was discontinued after Office2000, having been replaced by the Microsoft Windows Indexing service.

For many followers of the speech industry, this was a scenario that was envisioned years ago as a way to further establish the speech technology industry, namely a merger between giants (and arch-rivals) SpeechWorks and Nuance. 

Well, that was no longer possible after ScanSoft bought SpeechWorks back in 2003.  At that point, ScanSoft was a MA-based imaging company that started up gobbling up speech companies such as L&H and Philips Speech Processing.  But why an imaging company with expertise in technologies such as OCR (Optical Character Recognition) would want to delve into speech in the first place?  Because many of the algorithms used in OCR have some commonality with those used in speech processing (e.g. recognition). Similar discrete-event simulation and Markov chain models can be used in both cases.

Fast forward to 2005, and the news today was that ScanSoft was about to acquire Nuance for $221 million in a stock and cash deal.  And hence, a speech giant was born, having a full portfolio consisting of engines in speech recognition, text-to-speech and speaker verification.  In the ASR (automatic speech recognition) market alone, the new entity will have a 75 percent share of the market.  Will regulators allow this transaction to go through?  Probably so, due to the increased traction of other vendors such as IBM and Microsoft.  But the integration of these two companies will be a challenge, as they compete in many product lines, so there is a lot of duplication.

In the meantime, another interesting thread on this story is that private equity company Warburg Pincus will buy $75 million in ScanSoft common stock in order to help finance the merger.  Warburg Pincus is the same company that has invested in companies such as Avaya, BEA Systems, Proxim, SS8, and Veritas Software, among others.  The company obviously believes in the potential of the speech industry, particularly with the proliferation of shrink-wrap or built-in small vocabulary speech engines in mobile devices. 

I just wanted to write a quick note to acknowledge my gratitude for the Tucows team to keep adding value to its Blogware software. The latest build has now support for trackback anti-spam. Spammers apparently had raised the "art" of spamming to a new level (i.e. the spam links on comments were not enough, and they resorted to doing trackbacks from blog articles automatically linking readers to the spammers' web pages. So Blogware came to the rescue of bloggers willing to keep their sites spam-free: spammers can now also be blocked from trackbacks if their sites are added to a block list (this is managed in a very straightforward way from the Blogware dashboard control).  Spam trackbacks can now be easily deleted an blocked at the click of a mouse button.

Note: It would be nice to capture these updates in features in the User Guide, so one idea I would like to suggest is that of a Wiki for a Public Blogware User Guide.  I believe there are plenty of users that would gladly give a bit of their time to contribute to such a Wiki.

Earlier this year, I had the opportunity to catch up with Owen Matthews (Sir Terry's son and CEO of Vancouver-based startup NewHeights Software, a maker of PCM - Personal Communications Manager - software).  It was a great chat - Owen certainly showed some of the same character traits that have made his father so successful in the telecom business: enthusiasm, persistence and vision.  The interview can be viewed here (ed. note: no registration necessary) and it provides us with a great insight into the mind of an up-and-coming tech entrepreneur.

In case you are not familiar with NewHeights, the company designs a personal desktop application (Desktop Assistant) that manages an end-user's communcations.  Desktop Assistant manages voice, presence, IM, directories and all other aspects related to an end-user's communcations needs. The company has gained quite a lot of acclaim over the past year, including a deal with Bell Canada, acclaim from the VC industry and partnerships with vendors such as Ubiquity and Marconi.

Linux enthusiasts got yet another reason to smile when mobile chipset giant Qualcomm announced on Thursday that it would support the operating system on its chips for CDMA mobile handsets.  The built-in Linux support will come on the company's Mobile Station Modem (MSM) 6550.  Running Linux on the cell phone eliminates the need for a separate co-processor.  Qualcomm also plans to embed Linux functionality in future chipsets that support future generations of 3G (i.e. HSDPA and 1xEV-DO Rev. A), which will likely be introduced by mobile operators around 2006.  Up to now, Qualcomm phones typically only had its own proprietary OS (called BREW real-time operating system), so this is the first time that the company supports another third-party OS. 

The CRTC got some praise by issuing its VoIP operator 911 service mandate, albeit the Commission has moved slowly in some areas such as VoIP and local number portability.  The sluggishness in taking and implementing a final stance on VoIP has been blogged ad infinitum by many, and the overall consensus is that the CRTC will hold its initial view on the subject.  In other words, that the ILECs will be subject to the same rules and regulations as traditional voice services in their own incumbent areas. 

This will restrict Bell and Telus inside their own regions, but not so outside their incumbent areas.  However, the costs to deploy VoIP remotely can be quite high, so there probably will not be too much action in that direction.  This will give MSOs (most noticeably Rogers, Shaw and Videotron, among others) and independent operators (such as Vonage and Primus) a chance to take market share away from the incumbents. 

Subjecting ILECs to having to file tariff applications is onerous and limiting to them, because every time a player wants to change the rates, it must file an application.  The new pricing, if granted, has to be applied across the band.  The only way out of price regulation is if the CRTC believes that the particular market is competitive.  Then, price regulation can be achieved via a forbeareance application, a slow process that could take up to two years.  Therefore, the only recourse of the ILECs (other than forbearance) is more aggressive bundling and/or pricing.  So under this scenario, we can expect more Michael Sabia-like moves of offering 1,000 monthly minutes worth of LD in North America for an additional $5.  The cablecos and other VoIP service providers will have an excellent opportunity to take market share away from the incumbent telcos in the highly competitive residential voice market.

But the key question is: will the key goal of creating a market as perfectly competitive as possible be served if the CRTC's initial stance is held?  I have already stated my case and believe that heavy-duty regulation should not be applied.  In due time, however, the details will be uncovered and we will know which way the CRTC is leaning towards.more »

Back in March, I wrote the following in a note regarding the importance of five 9s reliability:

"Of course five 9s is highly desirable, because of the possible consequences of a service outage (even as temporary as it might be).  Here, the notion of expected value takes hold - i.e. even starting with a low probability event, when factoring in the bad consequences associated with it, the expected value could be high (e.g. someone who is relying on VoIP service as a primary line and all of a sudden cannot call an ambulance due to a service interruption)."

Not surprisingly, a Florida couple is trying to shut down Vonage service after they could not reach 911 during an emergency, resulting in the death of their baby girl (hat tip: Om Malik).  Regardless of the stance of a regulatory body on VoIP ("light" versus "full" regulation), there are a few social obligations that have to be fulfilled no matter what.  E911 and CALEA should be addressed (at the very least, if there is no reliable E911, consumers should be warned, and any provider claiming to offer this feature is obliged to comply with the strict guidelines for the enhanced emergency service.  If it cannot, then it is incumbent upon that provider to explicitly state that the end-user is on the hook for another E911 alternative (e.g. cell phone).

Three states (Texas, Michigan and Connecticut) are now taking action against Vonage due to the E911 issue.  The emergency service does not come pre-installed with the basic Vonage VoIP package; in order to activate the service, users need to provide the company with their addresses. In Vonage's defense, the E911 technology is typically handled by the local carriers, and getting them to open up that technology is a challenge (as claimed in this Technology Review article).  Thus far, only Bell South has been responsive, albeit it is demanding Vonage to get a CLEC certificate.  In Rhode Island, Vonage could get an E911 trial off the ground because the state owns and operates their system.

Also not surprisingly, the new FCC Chair is rumored to propose at the May 19th meeting that the Commission should require VoIP service providers to begin delivering 911 calls by September.  In other words, Martin would give a 120 day warning for all these VoIP operators to implement the service or else... Now, the "or else" clause can range from explicitly state that the VoIP service is strictly "add-on" and not a "replacement" of traditional telephony to a drastic, outright "shutdown" of the service.  I am particularly in favor of the former rather than the latter measure.  Under such a ruling, Skype, which clearly states that they do not recommend that people drop their regular phone, would be OK.  But in either case, the FCC should demand that RBOCs should open up their E911 centers to VoIP operators - and why not?  Those ILECs are losing money with E911, so this should give them an ability to cover some of their costs.