The WAVE Report
Issue #0705------------------3/9/07

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0705.1 Emerging Telephony 2007

0705.1 Emerging Telephony 2007
By John Latta

February 27 – March 1, 2007
Burlingame, CA

This is the second year of the ETel, Emerging Telephony, conference by O’Reilly. Last year The WAVE Report was at the first one and found it of high quality and rich with insights. We were not disappointed in year two. Attendance is at 500. The reason for our assessment is quite simply that the conference is well managed. There are quality speakers, time management is very good and the focus is on relevant topics. Speakers give presentations that are generally well thought out. Lightning talks run only 5 minutes and are just essence of a concept or business. Most of the presentations are only 15 minutes and at times one would like longer ones but this is a small price to pay for the overall high quality conference.

Emerging Telephony represents the convergence of Web 2.0 and voice. This is broad and poorly defined. But the opportunity spurs innovation. Ideally one is not held captive of the PSTN or the notion that voice is just voice.


Microsoft Research Discusses India as an Emerging Market

Following what seems to be the norm in reaching villages in India Microsoft began with the kiosk model. PCs are provided at a central location which is run by a literate individual. Villagers would come to the kiosk to get information or transactions performed. In the Warana Wired Village Project there were 54 kiosks in 54 villages at an investment of $500,000. The focus was on the sugar cane cooperative and connection to the sugar cane factory was via landline phone.

One objective of the system is to provide information to farmers who supply the Warana Sugercane Cooperative, including the current price of the cane. What the system ended up being used for is: to register land, issue harvesting permit, buy fertilizer on credit and to issue pay stubs. The implementation of the system faced significant problems which included: high maintenance costs, intermittent power and a poor network.

As the research project reached a decision point they scrapped the PC kiosks and went to SMS enabled cell phones. This system went directly to the farmers using the existing GSM/CDMA SMS network. The SMS cell phones in the field were connected to a smart phone at the factory. This phone was in turn connected to a PC over USB.

The use of SMS phones transformed how the network was used. The results cited included:

24 hour access to services with 6000 SMS processed

1238 unique farmer requests which went in timeliness from 15 days (original), PC in 2 days to SMS in minutes.

The telecos interest increased in the potential of using SMS      in villages

Other villages expressed interest.

The result was that this saved, over the use of PCs, 1m Rupees a year, which in this environment was significant. Another advantage is that the solution was truly mobile and met the farmer needs. A key finding was that anytime anywhere access to data helps organizations even when the employees are poor.

Microsoft then went on to define an SDK for an SMS Server which linked a back end to SMS phones. This is can be downloaded from the MSR India site on the Microsoft web site.


Google – Building Free Networks is not Easy

Chris Sacca, Head of Special Initiatives, Google gave a compelling story of their efforts to implement the free Google municipal network in Mountain View, CA. This went operational in August 2006 and is still being refined. Key points made in the presentation included the following:

The US is 16th in the world in broadband penetration.

Only 1 out of 10 have access to broadband in homes with income less than $50,000/year.

A major impediment to the implementation is the dinosaurs – the incumbents who will take every opportunity to block a free municipal network. 2 years ago they sought to file suits to block these networks but these suits have largely been halted. Google and others had to lobby Washington to counter the powerful presence the dinosaurs had as they sought to protect their market position.

Another barrier is red tape – the level of detail and barriers to creating a network was a bottleneck.

Another unknown barrier are those who seem to be against everything. They always have a no-based argument no matter what happens.

Google sought to protect the privacy by the sign on procedures.

One of the major technical issues is that 2.4GHz, the free spectrum, is poor quality spectrum. This required a high density of antennas per square mile and as a result they ended up using many lamp posts. There are 397 nodes.

Building penetration is about one wall deep and thus the ability to serve many buildings was substantially diminished.

One of the surprises has been the usage patterns. It was originally expected that geographically the usage would be concentrated in the affluent areas. However, the usage has been evenly distributed across the community with a surprising level of use in the poor areas which have traditionally not had Internet access.

It was originally expected that the usage would level off but this has not been the case. It continues to grow.

The business use has been interesting. For example, a dealer cited that they are losing service business because customers would go to a dealer in San Jose because they had wireless access in their waiting room and the Mountain View dealer did not. That has changed with the local network.

Google stated that there are 425 RFPs currently outstanding to implement municipal WiFi networks.

One of the major limitations is the poor quality of the WiFi spectrum. It is unfortunate that none of the 700MHz spectrum which is coming available will be allocated for unlicensed use.


VoIP and SIS Scares

Dan York, Mitel, gave a smooth flowing presentation on VoIP security using basically one word per chart. Dan stressed that as voice migrates from the PSTN network administrators must be very cautious that the security they assume with the PSTN does not extend to VoIP. His example, focused on internal hacks to the network. Examples included the ease of conversation recording, the ability to inject audio into the voice path that only one person could hear and the ability to extract PINs from voice calls. The bottom line is that network administrators must enforce strong security procedures when VoIP is a part of the network, begin with the design of a secure network for handling voice, to exercise diligent personnel policies and to implement defense in depth.


Truphone – Making Your Phone Disrupt the Cellular Operator

Truphone has implemented a download to cellular phones which have WiFi. Its technology enables calls to be placed and received over the Internet. Think of truphone to cellular as Skype is to the PC. Using Open Source truphone has developed code which will run on Nokia phones via download. One gets a truphone number. Any calls to that number are routed over the Internet to the phone when the phone is connected to a WiFi network. As truphone states: Competing with the Mobile Network Operators by using Open Source components is their mantra.


GeoVector – Point and to Learn

GeoVector is as simple as pointing the phone in the direction of interest. It is deployed in Japan on the KDDI network as a BREW application with 700,000 objects in the location search. These objects are identified based on the user location and heading. One only has to point the phone at an object, be it a building or a retail establishment or a scenic location. This launches the local search based on the position and pointing direction. An enhanced version goes live 1Q 2007 with KDDI. It adds sponsored channels, banner advertising, maps, point to call and guide me. Impressive.


Future of Asterisk

Mark Spencer, Digium, outlined future development in Asterisk. This includes:

Improved user interface – GUI Framework
Improved developer programs
Improved desktop experience
Overhaul of voicemail and the queuing
Expanded event model
Emergence of the Asterisk Appliance and an end user product.


Other Observations

Nokia stated in its presentation that by the end of 2007 there would be 3B cellular subscribers and 4B in 2010.

Trolltech provides open source to create a GSM/GPRS phone. This is an open mobile phone platform for the development of 3rd party Linux applications.

Yahoo feels that voice based search will be a major opportunity.

Jaiku presented a presence application on cell phones. The level of detail includes where, who and what a person is doing. Is this an invasion of privacy?

GrandCentral described is service as letting the user have control of a telephone switch on an individual basis. A user gets a number from GrandCentral, or transfers a number to them, and that number can get routed to a home phone, cellular or any other phone including Gizmo. There is voice mail support and spam interception. The service goes live in April and there will be a free version and premium service. Fulfills a unique need.


1 trillion SMS in 2006

US is the largest MMS market.

85% of the new cellular subscribers are in developing countries

India has 142m subscribers at a 50% growth rate

China has 440m subscribers; 14b SMS in 1 week; 5800 SMS/sec

MySpace & Cingular did 75M SMS in one year

Mobile phones

Market saturate in parts of Europe and US – more than 2 devices/household

Fight between fixed line and mobile

Shift to India and Africa as emerging cellular markets, including VoIP and data

Mobil phones based on Linux are emerging: OpenMoko, Trolltech, and Memo.

GPS will be standard on cell phones. New opportunities for buddy locator, geotagging and communities. Presence ombined with maps.


WAVE Comments

There was an abundance of open source enthusiasm from the interesting to the absurd. We might call interesting the botanicals project done by students in New York, which allows individuals to call their plants to determine its condition. The foundation of many of the open source projects is Asterisk – the Open Source software PBX. This is a significant accomplishment and we found the potential of a small box called the Asterisk Appliance important. The disruptive potential of Asterisk has yet to be realized in the market.

Most of the projects/products described at eTel were on cell phones including an Open Source phone from Openmoco, the open module communications platform and the truphone which uses Linux to accomplish VoIP phone capability on an existing celluar phone which has WiFi connectivity.

Presence is seen as an important future opportunity. But we have doubts about the degree of invasiveness presented by jaiku. We wonder if the public would accept that someone could know your physical environment and future plans as a part of presence. At the same time, integrating location (GPS) with presence and buddy lists provides the opportunity to link up with individuals one cannot readily see but who are nearby. The WAVE came away with the impression that most speakers talked about social networking but few had any ideas on how to improve it and to help create a market beyond what exists today.

What about new applications on the cellular network? This was bashed multiple times. Any excitement about bringing a new revenue stream to the market is quickly dashed by the 65% or so toll the carriers charge as the participation fee on the network. We found none at eTel interested in playing this game.

If eTel is representative of the future of telephony, the opportunity space is quite limited. It is just impossible to get traction with arbitrage; the carriers are very reluctant to let anyone provide services, and Open Source as not shown significant market penetration in telephony.


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