Tech Untangled - Information at the intersection of Technology and Business

Last month Skype announced an agreement with Digium, the primary developer of the asterisk open-source IP-PBX software, to enable Skype from Asterisk. What this means is that one could make skype calls, even long distance and International telephone calls, from your office office phone as well as receive skype calls on your office phone. The initial versions will only support voice, with video support to be supported in the future.

Let’s see how this would work: When a Skype username and password are provisioned in the asterisk IP-PBX, calls to the Skype username will ring an extension (as well as on any Skype clients logged in with the same username). Outbound calls from an extension to telephone numbers and Skype users can be configured to go via the skype network. Thus, Skype acts as the VoIP gateway service to an IP-PBX.

of course, one must keep in mind that the Skype network uses Voice over Internet or Voice over IP (VoIP) technology, so the quality of the service will be much like what you see with Skype - its pretty cheap service, but it comes with occasional hiccups during calls.

Clearly this is a very smart move by both companies - and one that has been in the waiting for several years. For Digium, the primary commercial entity supporting the open-source asterisk software, this makes the Asterisk IP-PBX a better proposition for small and medium businesses. Digium will benefit through sales of its hardware, software, and maintenance agreements. For Skype, this means better access to the same businesses and will benefit from additional lines, minutes of use, and plans. On the losing side will be VoIP service providers (both wholesale and retail).

Overall, the biggest winners will be small and medium sized businesses that use asterisk and are looking for a better VoIP service provider or those small and medium businesses that use Skype, but want additional call features (e.g. call park, ring groups, monitoring) and use with

Harris Interactive, a market research firm, has conducted a survey of 9,132 adults conducted in 4Q of 2007 to find out the telephony usage patterns of U.S. adults. The survey shows that about 14% of adults are cord-cutters, up from about 10% in 2006. The percentage of adults with landline phones has dropped slightly to 79% from 81%. This shows that the number of people who use a cell phone exclusively for voice communication (i.e. have no landline phone), also called cord-cutters, is increasing.

The Chart and the table below show the telephony usage patterns among U.S. adults, as depicted by the survey taken in Q4 2007 through Q1 2008.

(source: Harris Interactive, techuntangled calculations)

Amazon has the Amazon Unbox on Tivo service, and both Netflix and Apple recently announced online movie rental services, and eventually you will be able to see Joost and Babelgum programs on TV. All this point to a market crowded with new ways to get movies fast and cheap over the Internet

Naturally, the incumbents - cable TV providers such as Comcast that deliver movies and TV programming over cable and satellite systems risk getting swept aside. Comcast is not waiting like a sitting duck. In early January, Comcast, the largest cable MSO in the U.S., announced Project Infinity to upgrade of its video-on-demand offerings and boosts the number of on-demand movies from 1,300 a month to 6,000. The cable operator says its video-on-demand services account for roughly 275 million viewings a month.

What Comcast has done to expand its movies-on-demand offering is to leverage its existing deals with Time Warner’s HBO, CBS’s Showtime, and Liberty Media Corp.’s Starz, something most others will find hard to do immediately.

At the same time, Comcast also announced the launch of Fancast, an online service at fancast.com [http://www.fancast.com] where subscribers can watch more streaming videos of TV shows from the likes of CBS and Fox and also use the site to order videos, get iTunes downloads, and program their digital video recorders to record TV shows while away from home. Comcast also plans to offer the service to other cable operators, making money from advertising and affiliate fees from DVD or download sales.

In the voice telephony world Comcast and others Cable providers are successfully taking on both VoIP providers such as Vonage and telephone companies such as at&t. In similar fashion, Comcast has a strategy to ward off anyone in the Movie and TV programming space. Comcast will not be able to stop Apple, Amazon, and Netflix completely, but will make a big enough dent in their profit plans.

In the short history of Vonage, 2007 is the year when Vonage ended up losing four patent suits, and in each case, having to pay huge sums of money. Vonage has pay AT&T $39 million, Sprint Nextel (S) $80 million, and Verizon Communications (VZ) $120 million to settle patent infringement lawsuits.

However, Vonage’s patent dispute with Nortel Networks has a less-bitter ending for Vonage - the settlement allows for cross-licensing of each companies’ patents, but does not involve any payments by either company. These patents are related to making emergency calls and dialing 411. Vonage was dragged into this legal battle with Nortel when it acquired three patents from Digital Packet Licensing (DPL) in 2006. DPL had filed a patent infringement case against Nortel in 2004 alleging violation of those three patents, so Vonage continued with the lawsuit. Nortel countersued, claiming that Vonage violated 13 of Nortel’s patents, and asked that Vonage be kept from using the technology. The settlement is subject to final documentation.

Om thinks that Vonage’s problem is playing the cheap voice game, but Vonage’s primary risk is not cost management (OK marketing/advertising costs has always been an issue), but that Vonage has no Intellectual Property protection. So far mainly the service providers have filed patent infringement lawsuits, but there are many equipment vendors and with many VoIP patents (much like Nortel) who could go after Vonage. Vonage still has many challenges ahead of it, but this settlement gives it yet another breather.

Back in July of last year, I wrote about Silicon Valley startup Ribbit when it was a yet another startup in stealth mode, surmising that Ribbit is a softswitch-based VoIP telephony service that is accessible from a browser via a Flash application. Well, Ribbit has “come out” - and announced that its new platform is expected to go on sale in the first quarter of 2008. And this prediction turns out to be correct, but there’s a little bit more to Ribbit than just a Flash application.

The technology is designed to work through virtually any Flash-enabled browser and from any mobile phone or fixed location with an Internet connection, meaning that Ribbit is not limited to a particular device. For example, calls placed on mobile phones can be answered via a Flash widget on a Web browser, on a regular phone, on a VoIP client, or through a desktop widget. Ribbit’s platform will even transcribe user voice mail into text messages (another also ran). And it will offer support for existing Web-based voice services, such as Google Talk, MSN, and Skype.

Basically, Ribbit is trying to make voice easy-to-use by untangling voice from the regular (POTS) phone and alleviating the need to download a client. However, this is not new because Jaxtr, Skype, and others are also trying to achieve that.

What’s interesting is that Ribbit is integrating with other applications - One example is the Ribbit for Sales force workflow integration application, which will enable mobile calls, voice messages, and text transcriptions to flow right into Salesforce.com’s CRM environment on the Web. Ribbit will provide third-party partners and application developers tools for integrating voice into their applications using Adobe’s Flash and Flex tools.

Overall, Ribbit is taking the right approach of integrating with other applications - but this is nothing new. For example, Microsoft is also building voice and ‘Unified Communications’ into applications such as Microsoft Word and Microsoft Excel, although Microsoft OCS (Office Communication Server) is mostly geared towards business customers

Ribbit claims to be “Silicon Valley’s First Phone Company”, but there are others such as Ooma, which are also phone companies because they provide call switching. Most importantly, Ribbit is trying to package this as something new - this is nothing but a marketing tactic and smart people will recognize that Ribbit is just one of many in this space.

Have you ever been on a conference call where someone’s talking while on the go and its hard to hear the conversation because there’s a lot of background noise? If you have, and are annoyed by it, there’s a solution for it.

SoliCall, Israeli-based privately-held company, announced the release of its PBXMate – a technology that reduces background noise and improves voice clarity in VoIP networks that use SIP. PBXMate runs on Linux & Windows and can work with any VoIP Network that supports SIP. Of course, this is VoIP only, circuit switched phone users need not apply. The device filters calls entering a conference room to enhance the audio quality in conference calls, and reduces background noise coming from external cellular phones or from other external systems.

PBXMate appears to work alongside the conferencing server, rather than be client based. Given that PBXMate has to process the real-time speech to filter out the background noice, it should add some delay to the conversation. The big question is whether PBXMate can do this quickly enough without introducing noticeable delay into the voice path.

Another question I have is “How big is the problem”. I can only imagine that only a handful of conference calls will actually have voice technology delays. In my experience, background noise is a problem in only a small percentage of conference calls (VoIP and TDM-based), so I question how big a problem this is for those who conference call a lot. I haven’t tried this out, but you can download and evaluate the software from http://www.solicall.com/

Last month, I wrote that US Voice over IP (VoIP) subscriptions are skyrocketing. That was about VoIP in the U.S., but the VoIP story around the Globe was no different. Worlwide revenue from retail Voice over IP (VoIP) services almost quadrupled (4x) from $1.834 Billion in 2005 to $6.908 Billion in 2006, according to research by Point Topic.

North America, with the third highest number of VoIP subscribers (8.6 million), generated $2,411.7 million in revenue. Western Europe, with the highest number of VoIP subscribers, generated $2639 million in revenue. The Asia-Pacific region, a close second in terms of VoIP subscribers with about 14.5 million generated $1750 million,

Interestingly, North America had the highest Monthly average revenue per user (ARPU) at $20. Western Europe and South and East Asia had comparable ARPU at $15, while both Asia-Pacific and Latin America had an estimated ARPU of $10.

While some of the better known U.S. based VoIP providers, ala Vonage and Skyrocket, may bring up concerns about the viability of VoIP (and there are strategic issues with standalone VoIP service), VoIP is a phenomena that is here to stay - primarily because of the cost advantages and the flexibility and extensibility that comes with IP technologies. The cost advantage is because an IP network can be shared by multiple services or in other words, IP allows multiplexing of services. For example, with an IP network, a user can have both a VoIP session and a Web browsing session at the same time (whereas with traditional circuit switched voice service, both voice or fax cannot be used simultaneously on one connection). The flexibility and extensibility comes from the ability to transform voice into multimedia seamlessly as well as transform the service experience with enablers such as Presence.

Skype and UK-based cellular service provider “3” have launched the 3 Skypephone, a mobile phone that allows users to make free Skype calls via the Internet. The 3 Skypephone could also send free Skype Instant Messages (IM). Right now, SkypeOut calls, SkypeIn calls, and voicemails are not available, but the phone makes conventional calls.

The phone is being launched in nine markets including the United Kingdom, Australia, Italy, Hong Kong, Sweden, Denmark, Austria, and the Republic of Ireland. In Britain, the phones will be available for sale in 3’s UK stores on Friday November 2, 2007. It costs 49.99 pounds ($102.6) with pay-as-you-go service, and free with a contract. The company hopes to sell “several hundred thousand” units worldwide in the fourth quarter of this year.

Skype acting CEO Michael van Swaaij expects the launch to boost the group’s 246 million-strong registered user base because “the service was now available to people without computers”. I doubt that the skyphone will make a dent in Skype’s customer base for the following reasons:

1. 3 subscribers are likely to have access to a computer. In other words, many of the users of the 3 Skypephone will be current Skype users.
2. “3” is a relatively new company and doesn’t have a large subscriber base.

The 3 Skypephone does not work in the U.S. spectrum bands, so Skype enthusiasts in the U.S. will have to wait!

I wrote an article recently on “4 Reasons you won’t have Skype on Cell phones anytime soon”. Interestingly, “3” is the first operator to open up its network to Skype. For “3” it makes sense as an upstart 3G/UMTS operator, but I highly doubt that the major cellular operators will open up their network (hey, they have to protect their primary revenues) anytime soon.

Fixed-mobile convergence (FMC) and the quest to make quick, smooth hand-offs between cellular and WiFi got a shot in the arm when Agito Networks formally launched this week. Agito Networks is founded in 2006 by Pejman Roshan (VeeP of marketing) and Timothy Olson (CTO), both formerly of Cisco’s Wireless Networking Business Unit, and backed by $9 million in investments led by Battery Ventures.

FMC is one solution to spotty cellular RF coverage within buildings (another answer is Femtocells, which Sprint Nextel launched recently). Furthermore, FMC helps leverage the increasing number of WiFi networks in offices and hotspots to make low-cost VoIP calls.

So why jump into a pit with hundreds of FMC players such as Tecore, T-Mobile HotSpot@Home, Kineto Wireless, LongBoard, and Motorola? Turns out that no-one has adequately solved the problem of transitioning from cellular to WiFi quickly and smoothly.

Agito Networks claims to achieve sub-second handover between WiFi and cellular RF networks through a patent-pending location-aware technology that utilizes RF to tell when an individual is approaching “predefined points at an enterprises WiFi coverage edge” after which a mobile-based client cooperates with a RoamAnywhere router (which integrates with the company’s IP PBXs) in order to hand the call over.

Agito Networks’ is targeting its products at medium-to-large businesses looking to save on cell phone bills – Agito claims a 60% reduction in phone charges by routing in-building calls over dedicated IP infrastructure and connecting outgoing calls originating indoors over VoIP.

Agito plans to introduce models ranging from $9,995 to $24,995 in the US later this year. The RoamAnywhere 2000 series Router is designed for small to medium deployments and scales to 100 simultaneous users per appliance, while the 4000 series, designed for medium to large deployments, can handle up to 1000 simultaneous users..

Agito also provides “Zero touch” client deployment which helps administrators to pre-provision groups. In addition, the location-aware policy engine enables users and administrators to create and enforce corporate-wide mobile policies. The Network/IT Admin can even set up RoutePoints and instruct calls to be directed to voicemail when users are off duty.

Seems like an interesting approach – but the FMC space is still at the early stages and feasibility cannot be assessed until products/trials are available.

By mid-2007, there were 11.8 million consumer VoIP subscribers in the U.S. (more than 10 percent of U.S. households), according to a recent report from TeleGeography. By the end of 2007, this number is projected to reach 15.2 million subscribers and to 23.3 million by the end of 2011.