Enough Of These Damn VoIP Silos

29 Comments

If you are a consumer going shopping for VoIP-related product/service, welcome to land of confusion. And if you are looking at CES for help, well you are out-of-luck pardner!

You can walk into Radio Shack and look hard for the much vaunted Skype kit; you can go to Fry’s and assaulted by scores of phones and networking products that work with either one phone service or the other. An ATA for Vonage, another one for AT&T and on and on. All these choices, that work with one service at a time. Time to switch? Well, perhaps its time to go and buy more gear. Dano is right…every VoIP is a silo!

This boneheaded approach is on display at CES 2006, again.


Over past few days, we have been bombarded with one announcement after another from handset makers who are touting WiFiphones for Vonage or some other phone service. Bunch of speaker phone and USB handsets that work exclusively for Skype. Netgear is pushing routers that work with Skype, no PC required. Even Microsoft jumped on the bandwagon, where Bill-G in his big CES keynote showed off two wireless handsets from Philips and Uniden that work only with Windows Live Messenger, and MCI powered PSTN service. Does anyone else see this as the continuing balkanization of VoIP?

This is a honey trap for the VoIP industry. Just like the cellular industry, the closed handset model popularized especially by CDMA-based carriers in the US, has forced the carriers to underwrite the handset costs, just so they can lure the consumers and restrict them to a specific service. At least, the cellular service industry has the economics to support this cost structure. In case of VoIP, the carriers will be spending like drunken sailors, forced eat the costs of the hardware, because consumers sure enough are not going to pay for every gee-gaw. (I bet chip makers like Texas Instruments are the only ones who come out winners in this madness!)

Want proof of this? Vonage is giving $100 rebate on any hardware you need to buy in order to sign-up with Vonage. When the price of voice is falling to zero, how long before this starts to cut into a company’s skin, much like a pair of trousers, three sizes too small.

Forget the financial apocalypse for a minute, just wait for the consumer anger. Anytime a new technology wants to ingratiate itself with consumers, the focus is on making things easier. Not VoIP. No Sir….no way!

Imagine mom’s confusion when she finds that here Microsoft phone only talks to Microsoft phones, or Skype phones don’t play nice with others when it comes to free phone calls. Sure you can make PSTN calls on the cheap, but hell you can do that even with your mobile phone. Just wait for the clock to turn 7 p.m. in the evening. Someday Microsoft’s Live Messenger will talk to Yahoo, Google Talk will call AIM, but don’t hold your breath.

The silos of VoIP are going to come and haunt the industry eventually, especially those who are banking on VoIM. But then it is a perfect opportunity for one smart entrepreneur, someone with a devotion to consumer and ease of use to build a “Trillian” or “Adium” of VoIP. [That should be a start, before we get to real interoperability.] All you need to do is channel your inner Steve Jobs!

29 Comments

Greg File

I have recently joined 5linx telecomunication,and I was searching for other VOIP phones that offer a video phone that has live stream.Meaning simply you can see the person you are talking to,even overseas,or any where in the world that has a internet hookup in Broadband.So far I have not found any.So in short,I was trying to make sure I made the right choice in commiting to this company.I think I have.

Frank Bulk

Perhaps we need to ask: where’s the equivalent of a SIM card for the ATA?

In spite of all the IP, the PSTN remains the common point of intersection, perhaps to the delight of the RBOCs and IXCs?

In any case, the legislated interconnections that were forced over a century ago with the PSTN will hopefully happen on a voluntary basis between every VoIP operator. It was good to see VoIP peering take off last year.

Frank

Dave

The subsidising of hardware is also occuring in Australia where Engin, http://www.engin.com.au, is offering a $100AUD rebate on the ATA when you sign up for 3 months. This is cheaper that buying the box outright and going on a pay as you go plan with other Aussie voip providers. After the 3 months you can use the box with whatever provider you want as long as you can program the box.

Wes Felter

There are two different kinds of silos being talked about here: hardware and service.

Most of the “Skype hardware” will actually work with any softphone, but the marketing people are deliberately under-selling the hardware to simplify (oversimplify?) the message. Likewise, virtually all ATAs are SIP, so if you unlocked your ATA you could use it with any “bring your own device” plan. But just like in the cellular world, why should you bother reusing an old ATA when every provider will give you a “free” one? Bad business models drive out good ones.

The service silos are just an extension of the IM silos; I don’t see this problem ever being fixed short of government regulation. As someone mentioned, any “POTS replacement” system is not a silo.

Jesse Kopelman

I don’t know. You guys are looking at voice as the primary service. I think for a lot of these companies voice is the enticement to get the primary service. They don’t expect to actually make money off of voice, they want to use it to lock you in to their “network.” This concept was executed very well by AOL with AIM. Should you like it as a consumer — of course not. So, avoid it if you can without inconviencing yourself too much. Hell, I’d like to not have to deal with the crap the cable and phone give me and as soon as I can break with them I will. In the meantime though, going SIP is only an option if you can convince all your friends and associates who are already using something proprietary to change. I use Skype because that is what the people I want to talk to use, just like back in the day I used AIM.

Golfinguy

While I liked dano’s analogy to betamax, I see all this as a new version of the IM wars. (You with Yahoo, AOL, MSN, or Google? I’m with Yahoo and can’t talk to you otherwise.). Is it not rediculous to revisit this abomination of non-interoperability? Have we learned nothing?

rick

So Skype’s business model goes with the interop. Where’s the advertising?

rick

Still, the biggest loser so far is EBay. They purchased what others will get for free. Phones will soon be Skype-enabled, not Skype-dedicated.

d.l.

The lack of standardization and interoperability is frustrating for early adopters, but it is probably only temporary. The cable companies will probably drive standardization and interoperability by becoming the first VoIP providers that really succeed in mass markets.

Nicole Simon

Is it really that limited over there?

AVM is a company which does (in Germany) the very famous Fritzbox. Nearly every DSL seller besides Telekom gives it with a new broadband account kind of for free.

It does everything you want – dsl modem, router, firewall, lan and wlan, and in the configuration I have even voip (including traffic shaping so you can enjoy your calls). It is not restricted to any special provider but to a protocol, SIP.

Most of the SIP networks are limited to their own customers, but we do see a little bit of connecting networks. As the box I am having ALSO has a built in telephone access, I can use my normal telefon and either receive normal phone calls or I can receive sip calls.

I don’t need to worry about special hardware, I just can use my fritzbox and do not even need to have my pc running in order to receive voip calls. Well, I could enjoy it, if I would not be on Skype as my im/voip client of choice.

If the fritzbox would include the possibility to go skype, that would be awesome, but as it seems, they are not interested (be it avm or skype).

Unluckily, AVM does work with Siemens on some solutions for extending voip to the PC, which means you still need a pc running.

So from my point of view there is only the difference between SIP and Skpye. Providers in Germany do preconfigure the Fritzbox with their SIP service, but you can have two of those SIP entries without a problem, it is just a configuration thing.

Dave Taylor

You’re missing an important facet of this, though, Om: The decent VOIP solutions also have the ability to bridge out to the rest of the telephone network. So my VOIP solution – Vbuzzer – includes a Sipura box that lets me plug my regular old telephone into my Ethernet and voila! No computer needed. If I happen to luck out and call another Vbuzzer user, it’s free. But for $10/month I can call anyone at any phone number and if they happen to have a bridge into Skype, Vonage or whatever, it’s transparent to me. No silos. See what I mean?

I’ll be at CES tomorrow. Let’s sit down and debate this one, eh? :-)

Martin Weiss

This behavior is absolutely not surprising. The main leverage that these nascent VoIP providers have is their network. By making it exclusive, they compete not on price but the size of their network, much as AIM et.al. have done (programs like Trillian spoil this party, though). This (network exclusivity) is a grand old tradition in telecom … you can go back to 1892to ca. 1920, when many cities boasted competing LECs that did not interconnect.

If you are interested in more about this, check out the book Shaping American Telecommunications.

The more things change, the more they stay the same!

Aswath

The fundamental problem is for all the talk about “Telepocalypse”, everyone including the high priest thinks there is money to be made by Voice 2.0 service providers. This will naturally lead silos – you have to keep all the cows in the barn.

One time you suggested GYM-free diet. How about another resolution: anytime we write about a company that practices silo model, let us add a postscript reminding us of their behavior?

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