Dinner Talk - Part 1 - "Telephone Company Telephony"

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In conjunction with Thomas Howe, I held a private dinner on November 13th in San Francisco. There was near zero planning so a few labeled it afterwards an undinner. I'd simply wanted to meet with a few friends pre-Christmas whilst I was in town (and I guess for Tom likewise). But some of our friends invited some of their friends, leading to 55 people turning up.

Tom had suggested that I give a speech. So 10 minutes before the dinner I found myself wondering what to give a speech about (yes I agree that advance planning is a great thing, it just never seems to happen that way).

I decided since it was friends and some friends of friends, and since the venue was a private room, I thought it first apt to share one of my personal stories; something that you will not hear me disclose to the wider public.

I can say however that I provided some coverage of my school years, which were rather extraordinary; including an extraordinary case of miss-dialing at age seventeen which changed my "life fortune." I linked these stories to the building that we were in. This allowed me then to move onto some industry topics which hold my personal interest; these were:

  • "Telephone company telephony" will be eliminated. This is where huge money will be lost long term.
  • In the medium term what was the "telephone company telephony" will be broken up into voice enabled vertical application "contexts." This is where money will be made.
  • In the long term devices, software and networks will become increasingly sociologically aware. This is where a lot of money will be made.

I'll provide some brief coverage in order to kick-start this blog back in the run up to the 2009 conference.

Telephony belongs to a past era. It's paradigms and conceptualization was suitable for the 20th Century. It was great during the 20th Century and was the most popular means of person-to-person communications. I loved it and have built a satisfying career on its underlying control protocols.

However due to Moore's law and the Internet, it's become irreversibly dated - a trend which will only accelerate. Worse still it's inefficient and built on the wrong set of paradigms going forwards. Chiefly, it was built such that the network was the scarcity; that is the network itself was the primary cost consideration. This had huge ramifications - a primary one being that the 'A' party gets to summon the 'B' party with a bell. As such the 'B' party is then expected to drop their current work and/or social context, and provide near exclusive attention then-and-there to the 'A' party. This is regardless of the workflow of 'B' or the value of the social context of 'B' when the ringer summoned. This is no longer acceptable.

If you take labor rates as a measure of the value of human time and plot that against call cost then something interesting has occurred. It shows that a minute of wasted human time (i.e. answering a call to ask you to pickup ketchup, but you've already left the shop), is more expensive than the per minute call cost.

(wireless and wireline costs were taken from the 12th Annual CMRS Competition Report, Wireless Telecommunications Bureau, FCC)

The 'B' party is completely unaware of the importance level of the call; it could be a request to pick-up something from the shop on the way home or it could be that their child is ill. Since 'B' is unaware he has to treat every call as potentially important and relevant (caller ID does very little to fix this).

Or as STL described it in a report:

Given the many claims on our time, the ability to have anyone in the world summon you at a whim appears increasingly anachronistic. This has been described as 'the hegemony of the caller'

Operators have very little incentive to start respecting people's time and attention. Yet there is ever-greater pressure for people's time and attention - it's the new scarcity. Operators are not likely to strive for successful communications anytime soon; i.e. five 9's of fulfilling intention rather than electrical circuit availability. Their legacy binds them to the notion that connectivity is the scarcity not human time and attention. Their business model is one of charging according to time (minutes) spent using the network. Efficiency in most cases would mean less minutes.

Aside from billing minutes, operators make money from termination fees. This further bolsters their incentive to disregard people's time and attention with calls that are better suited to other channels, other modes, a different time or are simply not relevant for one or both of the parties, it's the reason for the voicemail non-sense that goes on today; culminating with games of voicemail tag. If a call goes to voicemail, cents are still collected for terminating the call. It's a further example of how the value around telephony is increasingly shown to be broken. Operators are being rewarded for failure.

Again as the STL report states:

As a consequence of people's scarcity of time and attention, we think the business
model for telephony will invert over the long term. Rather than money being given
to the telephone company at a constant rate during a call, we will see a completely
different pattern. This pattern will require an understanding of the objectives of the
caller and callee, and the ability to deliver a successful outcome from the user's
perspective. Today, a telephone company is rewarded for failure - the call that
goes through to voicemail that you immediately terminate. No industry with such
misalignments in value can prosper in the long term.

Something which represents "modern telephony" will continue to exist but it's paradigms will be different (i.e. the 'B' party has the majority of control), the money will not be made from minutes and termination and it will represent just a piece of the increasingly long tail in communications arsenal. Even though it will represent just a slice of the communications long tail, even that part will be increasingly fragmented. Rather than the notion of a monolithic-fit-for-all voice application, it's far more likely that voice will be an addition to applications instead; i.e. increasingly bounded within specialized vertical applications.

As the edge gains ever more processing power and bandwidth the demise of telephony becomes ever more apparent. With increased processing and bandwidth, other forms of communication appear and the ability to re-invent voice outwith the dated paradigms of telephone companies, becomes greater.

(There will be a number of companies at the 2009 conference which will be enabling developers to work with voice. Some of these players will be the first to challenge the dated telephony paradigms and will be offering products that are superior to "telephone company telephony")

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This page contains a single entry by Lee S Dryburgh published on December 7, 2008 2:45 PM.

Skype Sponsors and has "Big Plans" for the Year 2009 was the previous entry in this blog.

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