August 12, 2008 —
Micah Singer, CEO and founder of VoIP Logic
Thirty years ago, monopoly service providers ruled the roost by mandate. Fifteen years ago, monopolies held sway by virtue of network ownership and ownership of the end user. Five to 10 years ago, it became clear that mobile operators, through an alternate network and an alternate service offering (wireless broadband services), would be competitive. Today, though these aforementioned measuring sticks still are relevant, we are headed into a period where the three parts of the winning equation — network ownership, customer ownership and high-demand services — all have the potential to deal winning hands.
This article will detail the newest area of opportunity for service providers: the creation of high-demand software-based services and how they are bundled into intuitive multiservice communications packages. Not only do these service applications use various forms of communication, they also are, in part, defined by the flexibility with which they allow voice and data to cross many platforms, including: Web portals, mobile portals, e-mail, SMS and unified messaging — all while overcoming previous limitations.
At the apotheosis of software-based service applications, perfect integration of OSS and BSS systems with all flavors of access and control is required.
Judging by the current trend of investment into potentially killer software-based communications applications Voodoovox, Simulscribe (now Phone Tag), Juice Wireless, and Spinvox, etc., it seems the venture capital community believes this point to be true. With the bundling of these applications into multiservice packages, service providers will look to create the “Microsoft Office” equivalent in the communications field (Microsoft Corp. has its own entrant with its Communicator bundle).
Software-based communications innovations typically are referred to as either Unified Communications, Voice 2.0, VoIP 2.0, mash-ups or, more generically, vertically integrated communications software. As usual, when a new classification of services emerges, there are winners and losers. While the industry has seen few (if any) true software communications multiservice bundles, there are some already classic examples of software communications services that have resonated in the market on a large scale: Skype, Yahoo Instant Messenger, and very recently, MySpace and Facebook.
By the same token, there is also a large dead zone of ideas and business models that did not resonate, or where execution and capital have lagged. All of these ideas are measured in relation to their target markets, and the really great ideas add a viral or social networking component which allows them to rapidly acquire customers and exposure outside the bounds of owning a physical network asset.
However, network-based multiservice is fragile. Here is how Wikipedia defines “triple play” — the most widely deployed form of multiservice offering:
In telecommunications, the triple-play service is a marketing term for the provisioning of two broadband services — high-speed Internet access and television — and one narrowband service (telephone) over a single broadband connection. Triple play focuses on a combined business model rather than solving technical issues or a common standard.
The most important competitive barrier for this version of multiservice is closed, or monopolistic, network access. The rules regarding network ownership have changed as a result of new federal regulations — the Telecom Act of 1996 was a dramatic example of this change writ large — and similar trends to open networks and create competition have played out in many large telecom markets around the world. In addition, without common standards and a common OSS, these bundles are more of a patchwork rather than services that easily can be made extensible to mobile devices and other means of access. Third, broadband mobile and other improvements in network technology, such as femtocell technology, are a constant threat. Finally, and very important, is that business support systems underlying the triple play are often a hodge-podge of legacy software and/or oversimplified tools that require significant investment to upgrade or specialize.
The Technology
There are four main components that will allow multiservices to extend beyond the triple play: (1) open access to best-of-breed systems through web services APIs; (2) intelligence and scalable middleware that provides pre-integrated subsystems; (3) ease of service creation across the properties of multiple vendors with a clear and equitable settlement system and; (4) the combination of all types of media into one packet-based infrastructure. Here they are in more detail:
1. Web services programming interfaces — XML-based APIs calls over a common http infrastructure — have created an environment that facilitates the presentation of data and services wherever the Internet reaches. Mash-ups in every sector of software technology development have been the result. The possibilities grow each month as system manufacturers build better APIs with more access. Multiservice communications offerings can be deployed faster and with a degree of creativity that previously was not possible. Iperia, a provider of unified messaging software, is a prime example of a communications infrastructure provider that made the choice to switch platform architecture to allow for easier integration into multiservice bundles and vertically integrated software.
2. Middleware. Oracle Corp., with the former portfolio of BEA Systems Inc., is a leading example of middleware that can be used generically across many industry types and deployment scenarios. Its Oracle Fusion Middleware product provides out-of-the-box clustering, high availability architecture and a generic messaging bus for external integration. For systems that are more specific to VoIP and related subsystems — a fundamental building block of multiservice offerings — middleware such as VoIP Logic’s Cortex system that pre-integrates a range of leading platforms allows for a dramatically reduced time interval and cost to deploy a multiservice bundle. Currently, service providers offering advanced software-based services tend to spend a lot of their resources developing and maintaining cutting-edge service platforms. Ultimately, as the tool kit of software options becomes more robust, smart middleware should allow for the creation and sustainability of services and the underlying OSS/BSS without having to re-invent common processes and software integration.
3. A service creation environment that brings together a variety of software, subsystem, network and media content vendors in a common framework will allow service providers to navigate the variety of business relationships they must initiate to create a service. Some MVNOs are examples of this not having worked well. While there are many vendors that maintain advanced integration systems that approach service creation, such as MVNEs like Telspace and Visage Mobile, the key ingredient of service provider control of the offering is missing because mobile network operators maintain closed and inflexible networks. The open Internet offers a remarkable democratic opportunity for a successful multiservice service-creation environment. IMS has been the most recent attempt at a service-creation protocol. This idea may return, but rather than being a common protocol, there will be a company running the platform. There are a number of initiatives under way to re-invigorate the promise of IMS.
4. Finally, to overcome the limitation of different services using different protocols and sometimes different OSS and billing applications, true multiservice offerings can flourish on a network with shared Layer 2 and Layer 3 protocols, and a common device managing the full variety of sessions and policies (Layer 5). Vendors like NextPoint Networks and Airvana have tapped into the promise of fixed-mobile convergence by building access devices that seamlessly manage sessions and policies across network types. While this technology is still in the nascent stages of development, it promises to be central to integrated service delivery for multiservices offerings.
Multiservices Examples
We are on the cusp of many exciting software-based, multiservice offers. Predominantly, the services that are available today are either blends of existing applications, innovations and enhancements on mobile or MVNO services, or tie-ups between Voice 2.0 companies that are greater than the sum of the their parts.
CallTower is a hosted VoIP PBX provider that has bundled a series of service applications beginning with the hosted PBX functionality and extending into several vertical markets with specific software tools to each vertical. For instance, specific to the health care industry, they have created dial-out features for appointment scheduling and reconfirmation. For the hotel/hospitality market, they have incorporated features that allow in-room marketing and ease-of-billing and account management. These are early indicators of how the traditional PBX can extend or be shaped to different milieu. CallTower has shown strong growth attracting more than 10,000 end users to date.
Cincinnati Bell has incorporated voicemail-to-text conversion. This service add-on available to Cincinnati Bell subscribers through SpinVox allows its users to receive a transcript of each voice mail as either an SMS or an e-mail. In this age of mobile number portability, it is dangerous to lag behind these innovations, especially as they draw the appeal of a large population of mobile service end users. Both SpinVox and Simulscribe, which offers a comparable voicemail-to-text service, will work with SprintPCS in a work-around mode that requires the user to forward unanswered calls to a separate voice mail system (at a cost of 20 cents per minute). Thus, SprintPCS has imposed a restrictive and artificial barrier in addition to not providing a comparable service to its users.
One last example of multiservice application deployment is a recent strategic partnership between VoodooVox, a provider of audio advertisements into the call stream, and Talkster, a provider of international calling from mobile phones using a callback/call-through hybrid dialing system. These two companies have built specialized software-based systems that act on voice telephony calls. They believe that together, they can create an advertising-supported application for international calling that generates profit.
Strategic relationships between niche Voice 2.0 companies seem like a smart way to achieve multiservice software communications bundles.
Software-based communications applications are revolutionizing the services that service providers bring to market by allowing innovation to happen more quickly and in more meaningful ways. Integrated software mash-ups and creative add-ons will lead to higher ARPU and stickier, more customized and customizable applications catering to specific demographic sets and the granular needs of vertical markets. Even more important, software multiservices and packet-based networks scale with enormous economies of scale, making services like SpinVox, Simulscribe, Skype, etc. exceedingly inexpensive to deliver and open to many different revenue models.
The key element under way is the split between software-intensive and network-intensive services. Networks will always be expensive to build, maintain and scale incrementally, whereas software is inexpensive on all counts. In a service creation environment, it will be crucial that network operators collect their commodity toll for transmission. However, the belief that owning a network will guarantee strategic position will one day be a thing of the past.
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