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At the start of 2008 I had the pleasure of doing a pre-conference interview with good friend Martin Geddes. We had sat down together for a 15 minute chat. But before we knew it, we had chatted away for over an hour, which we were only forced to terminate only because the batteries of the recorder died. Due to time constraints, only part of the interview was ever published. But since the content quality was so high I put it on my to do list to publish it in full at a later date. I'm glad to say I finally got around to have a new and full transcription done!

(Note: other "Martin media" was his appearance twice on video during the 2008 conference, once for his keynote and once for the wireless innovation panel)

The full audio of the transcript below is also now also available for download here (96kbps, 114meg, MP3).

In the huge transcript below, I've blockquoted Martin to distinguish the pair of us from each other.

So tell me about your Telco 2.0 initiative? What is the Telco 2.0 initiative?

The telecom industry is in a state of flux and it's following a path that other industries have followed in the past. If you look at the physical logistics industry, containership came along and it broke apart the vertical integrated break box system. Instead you got this big steel packet that's been moved around; it became very modular horizontalized industry. The financial services use to be very vertically integrated. The same company that you went to, to go buy a mortgage from, you spent the next twenty years paying that same company and they had a loan on their books. That was it. Now, the moment you've taken out your mortgage, they go and resell that debt on the mortgage market. There are all kinds of specialists who package up and resell it. Telco 2.0 is about moving to a world where vertical integration in the telecommunications industry is coming to an end. You're seeing new industry structures emerge. It's how to remain profitable and alive in that environment.

When you say vertically integrated, my mind instantly jumps to applications. Are you saying that telephony and SMS, these are what I understand to be vertical products, are you meaning by vertical the industry as a whole in some kind of business fashion, or are you meaning applications when you spoke there?

There are many parts of this puzzle. So you are right; there is a question like the macro organization of the industries. Once upon a time AT&T also had Bell Labs. AT&T controlled local and long distance and the technology side.

There's also the vertical integration in what we call the applications stack. Between the application itself, the session control or whatever goes underneath the application to enable it; what pages you have, HTTP; you know they are separate things on the web. Then you have the core transport, the protocols like TCP and IP. Then you have the low level stuff like Ethernet and physical infrastructure. There's a question of integration in that.

There's also a separate question of virtual integration. That was kind of the technology integration. Did the application at the top have to care about what kind of network it was running over?  Is there stuff in the middle hiding that away from it? 

There's also a separate thing which is the commercial integrations. You mentioned telephony and SMS. What's interesting about them is that when you make a phone call or send a text message, it isn't just what goes over some dedicated network specifically for telephony or text messaging. Also, the money flows in the counter direction.

When you send a text message, you go and get charged 10p for sending that message. It's the combination of technical vertical integration and commercial vertical integration that makes different patterns for different types of system for distributing data to users. Let me give you some examples of that.

Take something like a content delivery network that your iTunes, Apple - you want to go and deliver movies over the Internet to end users. The end users will then download it over their standard Internet connection. It's a very low amount of technical integration between the movie and the ISP client. They don't need to know about each other.

But there's a content delivery network somewhere in the middle that Apple is paying that content delivery provider to cache and deliver that movie. So there's money flowing back and forth. It's based on the volume of movies. There's some degree of commercial integration. So you can move the levers back and forth and look at different parts of the puzzle of delivering voice and video and other forms of data. You can get varying degrees of technical and commercial integration.

It seems somewhat complex to say the absolute least. Would you agree with this?

It is complex [laughter], but what's interesting about it is that we currently have this utter total fixation on the broadband ISP product, which is one where the applications have access to no means of transferring money based on who's going to pay for delivering this movie. There's no API for payments to an ISP. I'm happy to go and get the user to download this movie from this website and please, I'll pay for its delivery. Don't count these bytes against the user's monthly usage cap. This is what the application provider would like.

So you've got this total fixation with the broadband ISP product, which has the benefit of separating the applications from their delivery, but also loses in that process the commercial richness of the telephony and the SMS. That's a problem. Although it's complex, the model of different kinds of vertical integration be it technical or commercial, it's very important because the future of the Internet and the future of broadband is largely about putting back into it some of the rich commercial models from other delivery distribution systems like the PSTN fixed telephony system, but without all the technical limitations of old legacy systems.

Surely, if you pay for connectivity, you decide how many Gigs you want, what speed you want, you purchase connectivity as a product, surely it should not be bound in any way to the application. An application you may pay for, you may not pay for, but these are separate things?

There are a number of subtleties to that question. One of which is basic connectivity, what do we really mean?  There are really two parts to that. One of which is getting the pure access part, which is how do I get from my mobile device to the cell tower, or from my device in my home up to the central office?  It's renting that copper pair or that co-axe cable, the fiber that gets me to the place where telco things start to happen.

Then separately from that there's a question of getting the data across the world to where ever it needs to go. What we're seeing is that the access component is relatively steady over time.

Steady in what fashion?

In terms of how people are going to pay for this. Here in the UK, you pay 12 pounds a month to BT for your line rental. That's the access component and separately you pay for an ISP plan; for 17.99 pounds a month you go and get Tesco Broadband [a no frills service]. Now for you the broadband service is at the top.

So, what we're going to see is that the users don't like having to think about how many megabytes and megabits they need. So if you want to go and access the new BBC iPlayer online, and you're on Tesco value broadband, you've only got a one Gigabyte usage limit in the month. The average user is not going to want to start thinking about the bit rate to this streaming video. All they want to know is "Either I'm buying some product, which comes postage and packing included, or it's some ad funded thing from YouTube and Google is paying for the whole delivery of this thing."  What they don't want to do is have to think about megabytes and megabits themselves.

Also, they don't want to have to provision a new set of access every place they go to. So when you go to your parents at Christmas and you spend all Christmas trying to recover from the turkey and pie in the bedroom; to surf the web [laughter] rather than interrupt the relatives, you don't really want all your usage at your parents house to be counted against your parent's ISP plan because they might be on Tesco value broadband and not on the super business class version that you prefer.

So we have to work out how to go and package the access, the data service itself, and the application devices in new and different ways to sell the user exactly the thing they value and no more or no less.

I think one of the best example at the moment is Amazon's Kindle product. You buy this device. It's got EVDO or whatever it is, built in as a network access. It does exactly what it says on the tin; this device will deliver your ebooks. You don't have to think about megabytes and megabits. You don't have to think about where it's provisioned. You don't have to think about hot spots and "Gee, I get the WiFi here and only have cellular there."   It just does it. It's been packaged up perfectly.

So bundling connectivity with a device, a specific device, I can see how it has value. Look at SMS. It's something which is bound to a device and connectivity and it just works. Do you know what the value of the SMS market was last year?

It's about one hundred billion dollars a year.  The figures obviously for 2007 aren't all out yet, but it was pushing one hundred billion dollars, which is bigger than movies and music and the game software industry all put together. There's something special about it, clearly. For the few gigabytes worth of traffic that all the SMS adds up to be, it's a relatively small amount, the users are paying very, very large amounts of money; only if you view that purely from our technical viewpoint. What it's telling us is a couple of things.

One of them is that when you break apart a product into smaller pieces and sell it, by the sachet rather than buy the big bulk bottle, you get much higher margins. When you buy something wholesale, it's generally bought in huge amounts at very low margins. By the time you're selling it in a tiny sachet, the margins go up.

Another thing is that SMS is a distribution system for messages and data. Each of these distribution systems has a large number of attributes, one or two of which are what kind of technical data can it carry and how can you make payments through it? But it has a whole lot of other attributes as well. For example, the difference between SMS and the Internet is that SMS is based on phone numbers; phone numbers are attached to countries. So if you are running the Eurovision song contest and you want people to vote for songs, but they can't vote for the song from their own country, with SMS it's easy to filter out those votes; if Germans vote for the German entries, ignore it.

With Internet you can't, with high certainty, know which country or jurisdiction an IP address is attached to. It's easy to fake it as well. So there is tons of cheating, if you try to do Internet voting for the Eurovision song contest. So it's only by understanding the full suite of attributes that these distribution systems have and their cultural context and their expectations? 

Like Telex, it has particular laws. It has legal force in the way that other forms of communication maybe don't. You have fax and it became a legal form of communication ten or fifteen years ago, even though it existed for longer. You have to look at the whole context of each of these systems.

The clever thing you can do as a telco application provider is to blend together these different systems, to create in effect, new communications media. I think an impressive example at the moment is something like The Sky Anytime box, where it downloads ...

You just mentioned Sky but that is British only?

Sky is a multinational satellite broadcaster but I don't know if this box is available outside of the UK market. This box is their way a telly takes content from the satellite; it caches it on the hard drive inside the box. You can also plug into broadband and download content over broadband. It's a clever little box, they can push down to you what you might want to watch. It merges together broadcast and broadband. Of course, you can have your DVD player underneath the telly as well. There are multiple ways of delivering bits to the user. Sky has blended together the best of several different distribution systems into a new one.

To passive consumers, this is an interactive thing [the Internet]. I am getting slightly scared in case we end up with glorified CD players hanging off the end of networks.

What's the lesson from that Sky example? Or Netflicks. Netflicks is using the Internet as a signalling mechanism and the postal service as the bearer. The postal service is a very efficient way of transferring tens of hundreds of gigabytes worth of data.

I think the important lesson is when you take this to where the cash is; the money is in voice, there's been this fixation with Voice Over IP for a number of years and actually maybe - this is heresy - but maybe the good old-fashioned phone system is really good at transferring voice [laughter]. Time-division multiplexing?  It does constant bit rate voice very well. You have to throw an awful lot of technology at a problem that doesn't exist to try to persuade anyone to move over to Voice Over IP.

Anyone understanding the full context and capabilities of each of these systems should start to think, "Hey, actually maybe what the Internet is good at is allowing new forms of signalling to evolve faster than SS7 or whatever might otherwise allow. Even those things in principle could evolve."

Well it allows niche signalling systems instead some large monolithic controlled block.

Why don't we focus on enabling the IP parts to the thing it does well, which is, "Hey how do we enable the rendezvous in front of this phone call?  How do we send signals and presence data and the picture of where I'm at or vacation information wherever it might be, to help people make phone calls at the right time, is getting it to both of them. " 

Then, stop worrying about trying to do Voice Over IP until the technology is upper duper mature and people decide that we can't possibly afford to maintain two networks, which is quite a long way away still. Let the phone network do what it does well, which is phone calls.

So, for 2008, you're promoting TDM? [laughter]

Oh, yes. [laughter] TDM ... the future is in...

In TDM. We bypassed it and now we realize we should have just stuck on it. [laughter]

Embrace, extend, extinquish - yes - as Bill Gates would tell you.

I cannot help, and there's so many topics you've cast up and so many things I want to ask as usual, but immediately on that point what do you feel will be of BT21CN then?  Because with British Telecom's 21st century network they are going to switch off their TDM in say 2011.

21CN is a really big thing. There are lots of different parts to that project. If we're just focusing on the voice network part itself, I'm not privy to how they start paying their suppliers for the TDM equipment, and what the situation would have been with end of life-ing support for their equipment and the like and spare parts.

Well, BT is on record as saying they're going to be saving one billion a year in OPEX.

So by spending a large number of billions you have CAPEX you get OPEX savings. I am not privy to the figures. But, what I would be tempted to do was look at how long it's been from inception to delivery for 21CN.

How it was sitting now, I went to the BT website and it said 21CN will be turned on at this road in Edinburgh in 2011. It's the beginning of 2008 and in my book, that's an awful long time to be planning a technology project over in this environment.

You could have built a wrapper around the existing voice network, offering web services and other capabilities, and started to enable lots of the quote "advanced services" that the 21CN would offer years earlier if you had wanted to.

Maybe this [BT21CN] is a longer term approach. Maybe it [not doing BT21CN] would have given you incremental services whereas with BT21CN it is going to give you something which is going to be suitable longer term. You can do more with it because it's an entirely new network, a very fast network.

You can see the allure of moving to an all IP network, but you also have to understand the high risk of having any project that has a five to ten year implementation timescales. Because remember that whatever protocol and architecture that you are choosing at the outset might be obsolete by the time you get to the end. Look at SIP, which was the obvious clear winner out of all the IP signal protocols, even that has its problems. It's got it's architectural mistakes.  It's got incompatibilities. It's been an absolute nightmare to get everyone to have the same understanding of what this particular SIP message...

You mean it's not the session initiation protocol, but the subject to interpretation protocol?

Yes, absolutely [laughter]. And as a result, the chances of SIP itself being exposed to the application developer and being in the interoperability layer, probably isn't going to happen.

Then how do you expose it to the application developers?

I think that these things, if not IMS is all about 'they're good at certain things' and you need to understand what they're good at. What is SIP or IMS good at?  Well, it's good at provisioning, doing signalling to say, "Hey, Tom over here has paid a certain amount of money to have a certain kind of traffic be hauled over this network", over some kind of virtual overlay or whatever they are going to do on top of it. It could be a full capacity reserve pipe we're going to pretend runs over this network. Or, it's going to be something that's prioritized; it's going to be best effort or whatever. It's [IMS] good at managing that, provisioning of virtual circuit.

What it isn't necessarily good at is trying to have a common understanding of what some presence message might mean in the future, because it's all contextual to the user. You go on-hook or off-hook even. Even something as trivial as that, having a common understanding of that would be, you might say, if people have speakerphones, or they go three-way calling;  you add these new features in and suddenly what does that old message mean in this new context?  It might not mean the same thing as it used to. Even if technically you get these networks to inter-operate, it doesn't necessarily mean they're inter-operating it in the users mind.

So let the signalling protocols do what they're good at which is help the telco be a logistics provider; a personalized logistics provider for data. That's what telcos are. They haul data around from point 'A' to point 'B', but they do it using a number of means so it could be broadband, could be content delivery network, or edge caching which is where you broadcast something out like Sky, cache it at the edge of the network and then you can redistribute it to other people who on the edge of the network.

You can do this with Sky?

Whether the Sky box has peer-to-peer redistribution, I'll need to go and have a look, but certainly edge caching is a capability that some of these set top boxes have.

What the telco does, just like a logistics provider for atoms blends together rail, sea, land and air transport, telco blends together all these different types of delivery. In voice you have prioritized networks versus best effort versus full circuit switched and packages them up with the application and the device, but it doesn't get involved in the applications themselves.

All they are doing is helping these people get the data from 'A' to 'B', which isn't being just a dumb pipe. It's a lot more complicated than being a dumb pipe. Because you have to slice and dice up that pipe, enable competing and contending uses of the pipe to be prioritized against each other to be able to have much finer grained provisioning of the pipe.

For example, when you're at home and you're accessing your employer's internal sites over VPN, surely your employer should be paying to have all that VPN traffic being hauled. You shouldn't be saying, "Well, I'm paying 20 pounds a month for my broadband. Maybe I'll expense 5 pounds a month to my employer." No, they should be paying for it, even if you haven't got broadband at home at all, as a retail ISP for yourself, you should have to have access to your employer's stuff [via broadband].

Is this not like beginning to say that if you buy a kettle, that somebody else should be paying for the electricity that goes into the kettle and maybe somebody should pay for the electricity going into the washing machine?  Shouldn't connectivity, the ability to haul bits - bandwidth - into the home, shouldn't that be treat just as electricity coming into the home?

It's interesting.

We're falling into the net neutrality thing here.

There are some specific things about the power industry and electricity distribution, which are interesting. This contrasts with the postal system. When you have something delivered over postal system, you can either buy a stamp or you can go and get a prepaid envelope or you can just put it in the postal system and have it run off and not pay postage at all and somebody else then has to go and pay penalty postage at the other end. There are all kinds of different ways of deciding who pays for the thing being posted. It could be the person at either end.

Electricity distribution, a bit like broadband, doesn't offer these different payment mechanisms. There are good reasons for this. It could be tied to technological issues. It could the history of the medium itself. In some ways it could be a good thing that appliance has to account for its own usage.

I'm thinking accounting for CO2 production or something. If some old appliance that you have in the house is rated to use 1kWh a month and suddenly it's using three because its fuse is burning out or something, and de-provisions itself from the network, that would be a good.

But, there are actually good reasons why the power network doesn't have this capability. If you take a slightly different example, like the great blackout in the Northern US a few years ago, that was partly caused because they were trying to move to a more horizontal industry structure. They forgot that power distribution was vertically integrated for a really good reason, which was that no matter what you're abstraction was in terms of energy trading, the reality was that you had currents flowing through wires. When you have too much current going through wire it gets hot and it starts to sag. If it sags too far it touches the wire below and they short out and your power system fails. That's what happened. The power line network literally melted because too much power started to go in the induction loop pattern and it all went wrong.

So, you needed someone end to end to be able to manage the whole vertically integrated distributed system. There are historical reasons, not technical reasons why some of these networks don't develop sort of modular layered interfaces.

Sounds to me like you would like to apply a signalling system to the electrical system, by analogy and have our kettles and so forth signal their usage etcetera, and put toll booths in there.

What we're leaning towards, the whole network neutrality debate. Should your power company be able to say "Well, you're British, you live off tea. Without tea you'd perish. So, we're going to charge you lots of money for kettles. But perhaps this house heating, well the Brits are pretty used to living in the cold and damp. They won't notice much if their houses are still cold and damp. We won't charge them very much for heating the house by electrical power." 

If you only had a choice of one supplier, then that would be a bad thing. Because it would allow them to price discriminate amongst all the different uses you have and basically reclaim all the value of electricity for themselves. In a competitive market, it would be a good thing. Now it seems utterly bizarre to think of having to provision a device before you plug it into the power socket, but if you really wanted to manage your power usage better, or be able to go and compare a Bosch refrigerator. On the refrigerator there's the little EU mandated power efficiency chart. It turns out that basically all the refrigerators in the row all say "A", because in the six years since they started or ten years that they started to scheme, refrigerators have all got much more efficient. They all got to the top of the scale. There's nothing best on list tells me, really. . .

But they may never have got there had they not put this A-to-F label on there...

Imagine for a moment, I could go and buy a refrigerator and it came with twenty years of service and electricity included. I could see the full price, the lifetime price of that appliance there in front of me. I don't need to go and say, "That one is 700 pounds but it uses 22 kWh a year and this one..."  The whole thing would be bundled there in front of me.

It would be a good thing and a bad thing in the white goods appliance market, you could argue. But at least have the option. If the power socket was able to say, "Ah, the power going for this device is provisioned to this other account."

But for that to happen you have to have a very rich wholesale market in electricity for the refrigerator maker, to have a refrigerator work regardless of which power company you happen to have chosen as your retail provider for power, so you'd have to various intermediaries and a new market structure.

So then how do you stop them reclaiming all the value?

As long as there's competition at the retail end, so you have a choice...

But that's a major thing; "as long as there's competition."  Most of my American buddies are claiming there isn't competition, there's a duolopy in the US.

And they are right. There's a duolopy in the US. There are some pros and cons of that model. You ask the people who are in the lucky areas where Verizon FIOS has been deployed because the Verizon model said this is a zip code with a nice high income of people who pay their bills and would quite like to have lots of premium direct TV. Well it works to some degree. But unfortunately I think that it will also greatly inhibit the growth of the necessary economic models that will be needed in the future; particularly growth of rich wholesale markets in access and connectivity.

What will inhibit it?

The vertical industry structure you see in the USA; where AT&T and Verizon and a few other companies, dominate the market and you have very limited retails choice; you have choice of either one or two broadband ISP's.

Now the UK market has a thriving, vibrant wholesale market, France has a thriving wholesale market, as a foundation from which to grow new wholesale products, which would enable new kinds of connected appliance to be offered.

So you go out and you buy the Apple TV box and plug it in, you don't have to think about which broadband plan you're on, is it the right broadband plan and fast enough and enough megabytes and gigabytes per month?  It's Apple and it's the iTunes service that has to worry about getting the content onto the box and paying for it.

As long as you don't have a bottleneck in that little access loop stopping retail competition, then the network neutrality debate, this whole bogeyman is like a shadow on the floor. But, the shadow is actually something you want, which is a rich wholesale market.

The idea that Google will be charged extra for delivering YouTube videos, here's the secret, it's a good thing when Google could offer YouTube videos and you could sit there and watch them all day, every day in standard definition, high definition resolution or whatever you want, and Google is footing the bill for you. Today this isn't the case.

Martin, these things you mentioned in the start, sound to me are a double-edged sword. What could happen, excuse my instant pessimism, is that you'll get the same Google video quality but the telco will charge you 5 pence or 10 cents every time you watch a video.

The worst bogeyman fear with network neutrality is Google charging you; your ISP will be charging you to go into something you value highly. That isn't going to happen, it's not going to happen.

Why are you so sure please?

If there's going to be any charges, the charges are going to be to those upstream parties like Google [as opposed to downstream to the consumer]. It's going to be to the people like Microsoft for delivering your ...

It may just give you what you have today, that is the fear; that's where the anger, the sentiment is, which you may even be detecting from me.

But, it's [network neutrality] trying to treat the symptoms caused by a lack of competition in the access bottleneck. You can't cure cancer by giving people more morphine. It doesn't work that way. It seems to take the pain away, but you'll still die. 

In the US market, you need to understand the infrastructure is not part of the telecom industry, basically. The infrastructure is part of a multi-utility access business. Their job is to synchronize up the replacement of the gas pipe with a length of new fiber; all the replacement of older street lamps and the digging up of the road with deployment of the new fiber down the road and you do drops off the side. It's to take the cost out of the thing.

It's advertised over a twenty, thirty or whatever years. The plastic pipe itself might be there for 100 years. It's financed differently, maybe under different ownership structures that are designed to create open access and neutrality. If you want neutrality, neutrality needs to be a different layer [laughter]. It's not the IP layer. It's not layer three. Neutrality has to happen at layer zero and one. When you've got the rights of way and the conduits and the access ducts and maybe the physical fiber or copper, that's where the neutrality needs to occur. They picked the wrong place to go fight a battle. The good news is that if you started initiating network neutrality legislation, I don't think anyone could actually write anything down that would be meaningful and enforceable. So it's largely hot air.

Network neutrality means to me to sell me something called Internet, let me shunt bits backwards and forwards, and don't discriminate those bits in terms of pricing. Is that not something simple?

Let us understand this right. You'd have broadband service providers, people who are selling access to a broadband pipe, and within that today, most of their money comes from offering the Internet product through ISP. Now, within that product, there's clearly a problem today, which is that some or many users have been misled as to what they're being sold. They've been told unlimited, asterisk. What the asterisk says is not unlimited. They've been told Internet access and in practice they're finding that certain protocols and certain destinations are being throttled. It's the mismatch between what the consumers been told and what the reality is, that's the problem; not that less traffic should have been going on.

The evidence of that is that there are ISP's like PlusNet in the UK, who are brutally honest with their customers. They have whole web pages dedicated to saying, "Here's how we're going about shaping our traffic today."  They publish all their current traffic stats on their website day by day. They tell you when you buy the thing, "Hey, we traffic shape and we love it."

If the user buys it, they have their eyes open. They know what's happening; where is the problem? It's between consenting adults?  The problem occurs, much in the market. People's ISP contracts have this clause that "we can do whatever we like whenever we like without telling you about it."  That's wrong.

There's a consumer protection issue there. That was like Michael Powell's "Fourth Freedom", freedom to know what's in the plan. That isn't currently being enforced. You could call it net neutrality, the neutrality of the network, but can you have a very un-neutral ISP plan if you want to, like PlusNet's. It's absolutely fine as long as the user knows about it; is told about it before they buy it.

What it also ignores is that outside of the ISP product, you look at all the other products that the broadband service provider could be offering, all these other wholesale products to say, "We will give you universal access to all government self-service websites..."

Also, if a doctor goes to any person's house and plugs in a different little modem into the phone socket, they will be provisioned to have broadband access while they're at that patient's house, regardless of whether grandma has actually got broadband herself.

So there could be all kinds of other products and services that the broadband service provider offers, which the neutrality thing is irrelevant to. The government or the National Health Service goes out and buys these business-to-business products. Where's the problem? You have professionals buying off professionals. They should know exactly what they're buying and know how to buy it.

You informed me that you've recently published under STL Partners; - I think is the best place to look for the STL Partners work, am I right there?  You've recently published a future of broadband report?

We've just finished a six month study on the future of broadband, the future business models of broadband. To do that we did an online survey, which over eight-hundred people responded. We've talked to dozens and dozens of people. We did a lot of in-depth research. We have been comparing the broadband industry to other industries like container shipping, and the power distribution industry. We've been trying to learn the lessons, what we can, from these other industries and answer what does it mean for broadband?

Our conclusions are very much what I've been describing, that is, broadband is part of a multi-network, data logistics business. It doesn't exist in isolation. You have to be able blend together multiple different distribution systems. If you're offering an IPTV, for example some kind of enhanced TV service, you ought to have voting. Then that voting might be done by SMS and actually, if in your little set up box you captured a person's mobile phone number, and authenticate it, they may not even necessarily need to send the message directly from their mobile phone. There are all kinds of different ways of blending together these different systems.

Does that not mean that you're saying broadband providers should start going out and buying postal offices and courier vans and jiffy bags?

Yes, it's the digital equivalent to these. What they need to have is they need to get involved in content delivery networks so there is bulk content, that is not time sensitive. It needs to be cached somewhere in the network. Today, companies like Akamai put their caches in a more centralized locations, but you don't find these caches inside of every DSLAM inside every central office. They cache stuff at the edge of the networks, on your PC, in the set up box, in the home hub, and these go on to bridge different systems so it would be able to have BT Vision box where you can take freeview broadcast TV and cache that. You would be able to take broadband and broadcast and these other systems and be able to meld them together into new things.

They also need to deal with we may call the customs aspect of being a logistics provider. So when shipping sea containers around the world, you have these weight bills and manifests and you have to pay customs dues and stuff like that. The digital equivalent of that is being able to deal with authentication and provisioning for all these different networks and connectivity.

Another part of it is you take the postal analogies. You walk to the post office and at the back of the post office are all the counters where you go and post things. But normally, there are racks and racks or wrapping paper and letters and pens and all kinds of other things you need associated to the postal delivery. That's the value of the services. So on top of the basic logistics business, there are a number of value added services.

In the physical world you have insurance as an example of a value added service. In the digital world examples of value added services would be advert insertion, or quick checking;  so the telco knows where you live because they have a copper cable that goes to the front door, they have been receiving payment from you for a certain period and they know if it good debt or bad debt. Recently the biggest credit checking company in the UK is BT; they did more credit checks than anyone else. Yet, if you're running an application over a BT DSL line, you have no means at the moment of interacting with that very private and personal data.

So there are all these value added services - location, presence and other examples where the telco or broadband service provider is a supplier to people who are building these applications at the top of the network. They are doing things which are natural by products of running the network, a logistics business. They're not toll keepers getting in the way of people actually trying to build their application and deliver it. They're suppliers of the things that these people voluntarily draw on and pay for because they add value to their business, not because the telco's getting in the way.

So is it your position on net neutrality that it's a moot point?  Is that my understanding? 

Pretty much yes, because I've never managed to see a really meaningful definition of net neutrality. I've seen lots of high level superficial definitions, but when it comes to applying those ideas in practice, they're far too woolly and vague. It's just a name for a fear, not a name for a viable policy that any one regulation can adopt.

Have any networks ever been neutral? So when you download something over the Internet from Korea, some piece of content you want to download, and you think, "My goodness, it seems to be going down really fast." You download from outer Mongolia, you think, "Gee, it's going down really slowly." That's because of the really big fat pipe that goes to Korea and the really thin pipe that goes into outer Mongolia. That reflects the relative demand for those areas. You could then say, "It doesn't seem very neutral."  We're discriminating against the outer Mongolians. Well what is your the duty?  What is neutral?  What experience is supposed to be neutral that you're delivering to everyone?

If YouTube suddenly explodes in popularity and it is generating tons of transit costs to ISP's, are they suddenly under obligation to maintain a certain ping time and bandwidth through to YouTube when I go to the website?  What is this neutral thing [laughter], tell me?  Do we have to have regulators imbedded every router on the Internet saying, "I'm very sorry, but you can't route that that packet that way. The ping time is too long. It's not neutral." [laughter] The World of Warcraft players won't be happy.

The fear is being very well defined, the net neutrality fear; if you go to a website which isn't on your telco content partners, like their video partner or their news partner, if you go to a news site that isn't on their partner list, you're going to be charged for reading the news on that site. Is this not a well-placed fear?

If you lived in a market where there absolutely no choice as to which ISP you had, or there was very little choice such as the US, I guess it's possible that the Internet super highway man might then come along and rob you of your valuables as you go past and insist on an extra charge to let you pass.

But actually, what we want to see emerge is a rich wholesale market where Google could come along and say, "Hey, you want to watch YouTube or watch YouTube all day in standard or high definition without any charges and you don't have to worry about going over your fair usage limit or your set cap limit. It's all on us [laughter], keep on watching those adverts, keep on clicking on those little contextual ads. Here's the problem. The current ISP model tries to charge everyone the same amount for a very broad spread of actual usage. But you can't remedy that by going back to metered usage because people hate having a clock put on, and they don't understand megabytes and megabits stuff. You can't traffic shape your way around the problem because the users don't really understand advanced network policy enforcement; obviously there are a small segment of users who do. Some gaming users might be more than happy to be on an ISP that tries to prioritize certain real time flows or holds back peer to peer because they want to have priority in the network for the games.

But by and large, none of those things work out. So, the way to solve it is to take the voice and video traffic, take it out of the ISP product but to do it in a way that is beneficial to the user. The user actually wants it to happen. An example would be that you could watch YouTube videos until your eyeballs fall out because you know that it isn't costing you a dime. You can make phone calls from your mobile device to your work colleagues through your exchange server, to your prospective date through and all these separate voice enabled applications just work and it's all charged back to the appropriate person; back to your employer or back to

Net neutrality fear is that a bogeymen will come a long a rob you. But the bogeyman really is just a shadow of something we actually want, which is a rich wholesale market.

You said at the start, that there isn't such a rich market in the United States. So their net neutrality fear is therefore very real then?

It's real in that there is a gap between what's being sold at retail by an ISP and what you're actually getting, that Comcast could suddenly come and decide that "we don't want to have this peer-to-peer traffic even though we sold you Internet access." But the solution to that is to restructure the industry so that users have retail competition. They have lots less people trying to compete for their business and if one of them turns out to be a two-faced liar, then you just don't renew with them, you go with somebody else.

That's not going to happen within the current US industry structure. The consequence is that probably the US will fall behind as an industry leader.

Have you given any consideration to open wirelessm, in the 700 MHz type stuff? 

It's very hard to make a call on some of these things because there are certain benefits to vertical integration. It helps to pull more money into the infrastructure layer. You cross-subsidize infrastructure from your overpriced application services because you can control what runs over the network. The problem is then you end up with a very stagnant set of services in the network because everything is gate-keepered by telco. Telco's idea of progress is not the same as everyone else's idea of progress.

So, superficially, open access is pretty attractive. But, it's really unclear how this tension between the commons of the network and the need for innovation and the need to be able to ration out a fixed amount of space is going be worked out. I'm really keen to see the experiment and I think the experiment should be well-run; there should be enough spectrum given enough open access rules. There are a number of different models, potentially. Something like WiFi, which was a bit of a free for as long as the power levels not too high, some were it's open access bits or wholesale; business to business types of transactions going on.

Lets see the experiment run because I don't think anyone is sufficiently clever to understand all the variables involved and how it will work out. Let's see the experiment run many times over in different places and learn from it. At the moment nobody really knows what the outcome will be.

I noticed that you were the only keynote speaker who still hasn't put a final title on his keynote [for 2008]. You haven't submitted any talk text. What are you going to speak about?  You hinted it was different distribution models?

What we've studying is how telecoms is just one of many distribution systems of data and how telco's can turn themselves into being logistic service providers for data. I've been doing a six month study on that.

I was procrastinating about what to talk about because I've also been thinking about the future of telephony, voice and personal messaging. Another option, which I won't talk about, was just how telephony and phone calls are just one layer in a nice, rich, thick five layer sandwich. The sandwich, the pyramid of these things, goes from the top where you have communities. There are a small number of communities which are made up of relationships, which are people. Below relationships you have conversations going on. You don't talk to someone for twenty years if you really don't have a relationship with them.

Yeah, communications are required to have a relationship, right.

The conversation is made up of things like phone calls. I think below phone calls is an interesting extra layer - rendezvous. Although some phone calls are being used to try and help organize the real phone call. There we find the real conversation. Not all the conversation occurs through telephony. Some of it occurs face to face. Some of it occurs through other media like email.

People are often phoning up to say, "I'll be there in five minutes, I'm just running a little bit late. I'm on the train."  There are all kinds of manual transfers of location and presence data, which are being done through telephony, but they aren't phone conversations in that sense. Today's telephony product is very broken in terms of helping people to meet up at convenient times. If I want a call with you, I can't just send through into your requested call list, like your missed calls on your mobile, "Martin would like to have a call with you. At your convenient time, call Martin back."  If I'm unavailable the message temporarily disappears on your phone. If you're on another call, it doesn't try to invite you to call me at the same time.

There's an opportunity to fix the whole rendezvous process. There's an option to fix the conversational process as well. For example, dictating your name, address and credit card number and security code during a conversation with a call center is very inconvenient and painful, whereas, you'd like to just press "1" to release that information.

I think there's a lot of opportunity in terms of money to be made in fixing the problems of telephony. But, in a fifteen minute keynote you couldn't talk about so much. I think I ought to focus on what the phone company becomes which is the logistics service provider for enabling the transport of personal communications data and generally get out of the way of running the phone business.

But you try to milk the existing phone business for all it's worth and help integrate it with all these other revenue generating businesses like ecommerce or vcommerce.

So, why are you coming to the inaugural Emerging Communications 2008 Conference, eComm, March 12-14, 2008, at the Computer History Museum, Mountain View, California?  Why are you coming along?  Why are you putting your ass on a plane in order to do a long haul flight to go over there?

I'll tell you, it isn't for the frequent flyer miles. It's because there's been quite a lot of talk recently about how VoIP has become boring and dull, there's no money in voice and voice is going to be free. That's rubbish and nonsense. It's a complete misunderstanding of the size of the opportunity and how voice and telephony and personal communications are the anchor in which the whole of the telecommunications industry revolves. Despite the fixation on media and entertainment, which seems to drag people off to false alleys all the time.

There's actually a huge amount of opportunity for telcos to turn themselves into platforms that are suppliers of personalization and rendezvous and authentication and payment, credit checking and all kinds of other data than enable conversations to occur. There would be a lot of money in doing this. It's part of the big picture of being the logistics service provider, which would help actually deliver stuff, but don't get in the way of whatever is in the packet.

It's also to share some ideas that we've had within the Telco 2.0 space and our understanding of two-sided business models and some of the key issues and concepts around that.

Plus, look at the speaker line-up. It's such a concentration of the top people in the industry. It was just irresistible to come.

When you said that voice or VoIP is not exciting, why do you say this?

That's what many of people are saying. I think it's because they've got trapped in the idea that the value is all in the media itself. It's in the Voice Over IP. Actually, the value is somewhere else. The value is in avoiding wasted phone calls, people making phone calls and getting to voice mail when they shouldn't get into voicemail.

They've [VoIP crowd]  focused on competing with the existing telephony system on the thing it does best, which is transferring media and not the things it does really badly, which is location, presence, all these other things.

I think voice is going to be an integral part of almost every online application in the future. There will always be other people to talk to. There will always be support and service to talk to. It's a massive opportunity.

Are you saying that voice will become an adjunct to other things of value?

Yes, but it will be done different ways. Not everything will be synchronise voice. There will be a lot more voice messaging going on. People want personal touch. They want to have a sense of the other person they are communicating with, because they hear their voice. But, people won't always necessarily want to have synchronise voice.

But today's voice mail, which is completely disjoined from all the other online activities you engage in, isn't the answer. If I want to send you a voice message without your phone ringing, and do it with and instant online application, how do I set it up so that it delivers at the right time?  If you are off on holiday half way around the world, it doesn't arrive at 3:00 a.m. and wake you up saying, "Beep, beep", and you open your phone, when it's not something urgent. 

I think voice will be a story of the evolution of the web in the next ten years. It probably isn't so much around semantic web all this other geek-friendly stuff. It's around the touchy-feely side of how do you label relationships, conversations, and human touch?  There ought to be a lot more of a woman's touch around some of these conferences; understanding the less logistic side of communications.

When you spoke of that pyramid with communications at the top, actually communities at the top, and relationships underneath and communications underneath that; can you relate that pyramid to social networking sites and telecommunications companies?

Social networking sites are the top three layers of the pyramid then there are communities, they are formed of relationships, and then there are conversations. You can find people, get model groups of people and you can send messages to people.

Phone companies are the bottom three layers of the pyramid, which overlap. They enable conversations. They enable calls, and they enable rendezvous. The rendezvous is that you're setting up a mutually convenient time. I text message you and say, "Call me when you're ready."  It's part of enabling the rendezvous.

These two people over lap, but they aren't necessarily conflicts. So should Facebook spend lots of money enabling voice in their applications? No because we already have mobile phones and desk phones and voice capabilities. The PC is a terrible telephone. Why make it into a telephone?  It's not. So how do you capture someone's mobile number or some other identifier for them and integrate their mobile voicemail with the Facebook voice messaging?  That's the problem it's going to solve.

How do you enable someone to make a phone call within Facebook to somebody else in a way that they can see that the other person is available and wants to talk at the moment and is in a certain context and location?

So in summary where do you see the opportunity in voice?

There is a number of parts. One of which is simply enabling new forms of minutes; new applications which will carry voice and don't necessarily do it using phone numbers or traditional means of telephony. Another one we might call vcommerce which is all the ways consumers interact with enterprises; so it's communications enabling business processes like delivering a parcel to your house and making sure the guy only comes when you are home. Some of it is around vcommerce type activities where you register your credit card number with your phone company or bank details and when you interact with the call center, there is non of this "Habla espanol?"  They know I speak English. It's in my telephony profile.

There is plenty money in enabling these experiences, there is plenty money in eliminating the waste in today's telephony.  Every time I spend minutes looking up someone's number, dialing them and finding it's voice mail, a minute of my time is worth more than the ten pence it cost me to make that call. Actually, a minute of my time, during the day, at billable rates is a lot more than the 10 pence call. If you can save me wasting that minute, trying to phone someone who isn't there, that's worth a lot more than the phone call is worth.

It seems that many people are still living off the ten-year old VoIP as an exciting thing when we don't care so much about the cost per minute of your call anymore, especially with a crash of TDM prices. You seem to be saying let's stop worrying or thinking it's an evolution to try and drive cost of calls down. The electrical path, the physical connectivity costs are nothing. It's really the cost at the social level. The cost of human time and attention seems to be where you're saying the cost is. This is where communications must aim at solving these wastages of human time and attention?

the rendezvous layer, the driver has been the increasing cost of human labor and time, compared to the cost of the phone call. Above the phone call layer, there is the conversation layer. It's mostly enabling better conversations between users and merchants.

I like this very much. You're saying it's not five nines of reliability that matter, unless you're calling emergency services. When you call to say, "I'm at the supermarket; do you want ketchup," you don't really care about five-nines of circuits, I assume is what you're saying?  What you care about is five-nines of successful communications, which mean you don't want to wake your baby up when you call about ketchup. Is this what you're saying?

Yes, at the moment my kids are off with my in-laws. They're two hours ahead of us. I'm not quite sure exactly when the kids are having their afternoon nap. They might still be on British time or on Eastern European time. The last thing I want to do is phone up my wife on the mobile when she's just trying to put one of the kids down to bed for their afternoon nap. What I do want to do is ask her to call me at some point in next half hour because I'm free now. I don't send a text message because that will make the phone go "beep, beep" and will suddenly make the child who is trying to fall asleep go, "What was that noise?" 

So I want better telephony. I want the phone company to help me realize that. To let me have spy holes as to what's going on at the other end of this line, before I press the green button, to make a phone call.

What is the opportunity space?  Is this a large financial opportunity space that you see?

Yes - have I modeled exactly how you do it?  If I had worked out exactly how to make money from it, I wouldn't tell you [laughter]. I'm pretty sure that there is a lot of money in it. Because everyone has been looking under the wrong stone for the last ten years. They've all been looking at how do we arbitrage the metered-minute model. It's just irrelevant. Almost all of the voice 2.0 start-up companies have been centered around this, with a few notable exceptions. It's the exceptions that are the ones that are going to be the seeds in the new business model of save users time, give them convenience.

Who do you think is best leveraged to seize these opportunities, this new land-grab?  Do you think it's the likes of Google or do you feel telcos also are going to play a major role in achieving this land-grab of the financial opportunity space?

A few telcos that open up in terms of application platforms will be successful. They'll be successful because they've turned themselves into logistic service providers for everyone else, not because they can stand in the way [laughter] of people delivering applications they want to deliver. I don't think we've really seen yet, the new raft of communications companies of the future. There are a few I've seen that I've been impressed with, like VoiceSage, who help enable communication business processes, how to integrate telco capabilities with general business processes.

But for the most part, I think these companies have yet to come into existence. The current social networking sites are based around entrapment of the users and trying to capture their personal data, resell it, and do it in the ways that I don't think users will allow them to monetize, ultimately. I think we're still in the early phase.

Social change requires a user attitude change. The Internet mass-market phenomenon is twelve years old, thirteen years old. Despite all the hype, it's still early days. Things don't actually change that fast. People's behavious don't change that fast. I think we've yet to really see the communications companies of the future, but hey come to eComm to start finding them. 

On that note, and especially as you're looking so tired, after sitting here for an hour and a half, chatting with myself, which we all very much appreciate. It's always a nice time to speak with you, Martin. I very much look forward, and I'm sure other people do also, to the half an hour keynote at eComm. I very much look forward to seeing you in Mountain View, California, Martin. Thank you very much for your time.

Thank you, Lee.

(Martin is also on schedule for the 2009 event to give a keynote entitled 'Where is the Money in Voice 2.0?')

Last month at the inaugural eComm we decided not to print a programme guide but instead to issue a PDF on a freebie USB keyring. The welcome note read:

We're honored that you joined us at for the first eComm conference. In doing so you've joined history in the making.

This community finds itself --quite suddenly-- in a new world of more open opportunity. Open handsets, open networks and open telecom platforms lend themselves to innovation in the worlds garages and bedrooms. And the signs are promising. Within the last 12 months many important events have occurred. First Apple released the iPhone, a phone running their computer operating system; a high school kid then spent the summer cracking the platform, hacking iPhones went critical, and finally Apple itself was forced to "blink", resulting with the release of an SDK. The FCC stated that the next big block of spectrum would only be auctioned to an open network and Google announced first that it was willing to spend billions to create universal access through wireless spectrum. Then Google announced Android, a new open phone operating system; T-Mobile and Sprint joined the Open Handset Alliance; and even Verizon and AT&T made PR releases about becoming open networks.

We believe a new era requires a new kind of conference. Previous industry talking to the industry type events have yielded nothing save consensual hallucinations. The gap between what telecom operators are doing (or allowing) and what the innovation community COULD do, and where end users are taking us is widening fast.

Communications innovation is being democratized. The winners will be those who embrace it. So welcome to eComm 2008. Let's all create an Emerging Communications Community capable of rethinking the trillion dollar industry together!

Lee Dryburgh
Founder, eComm Media

Brough Turner on Mobile Communications

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Audio interview may be downloaded here in MP3 format (64 kbps, 28 Meg). If you believe you may hear a difference, a 96 kbps and 128 kbps versions is available (42 and 57 Meg, respectively). The run time is 1hr 2mins. Full transcript below.

Lee: Skype never liked your job position by the way... It crashed out so in your job position I will just mentally categorize you as a chief or one of the chiefs, would that be a quick summary if we just call you chief or co chief?

Brough: Chief technology officer?

Lee: You need to add all these extra words in here. It reminds me you know when I was at university, the person who used to pick up the litter; he ended up getting his name changed to litter abatement officer. So I have never been a fan of adding in words but I am only partly being funny. By the way if I ask you a bit something that is a bit cranky and is distressing of any nature, we will chop it out. Can you tell me Brough what NMS Communications does please?

Brough: Sure, the primary business is we produce platforms for people who are developing mobile value added services. We sell boards and software and media services, specialized media gateways, both voice over IP based connectivity, traditional PSTN connectivity, everything you need to do if you want to launch something like a ringback tones or voice SMS or video portals over 3G mobile video. We sell in the Americas, Europe and through the Middle East and Africa and all over Asia. In fact, Asia is our fastest growing area. It accounts for more than a third of our revenue. It is quite a bit ahead of Europe at this point. The sort of applications our customers make are all over the ballpark. There is plain old things like Converse is a customer and they make voicemail plus some newer applications. We have a lot of the large equipment providers like Alcatel Lucent and Ericsson use our components in various value added services but the interesting thing is the startup companies. You have somebody called Green Tomato in Hong Kong who has got an interesting mobile video dating site and things like that people using our video technology to do mobile TV on the Hong Kong CSL network and all sorts of interesting things going on inside China.
That is the primary business that is NMS communications. We have a separate wholly owned subsidiary called Livewire Mobile which focuses on actually delivering one particular service and that is ringback tones, basically caller personalization. It is very, very widely adopted in Asia. It has been launched in Europe and the US. So far, adoption in Europe and the US has been lack luster probably less than 10% in most places but is beginning to change. In Asia, ringback tones are 35 to 55% adoption so it is very, very popular thing and I see that happening eventually in the other parts of the world. So Livewire Mobile actually delivers services to operators like Vodaphone and Virgin Mobile USA and things like that. NMS communications delivers the platforms that people build interesting applications on top of.

Lee: One company, NMS is selling hardware in effect for others to build with whereas Livewire Mobile is a completed solution or set of solutions?

Brough: Yes, Livewire Mobile is delivering complete solutions and also offering complete managed services, white label services if the operator does not want to run it themselves so we do it both ways. I guess on the NMS side, yes, we are selling hardware. Of course the reality of anybody selling hardware is 95% of your development engineers are software people not hardware so the delivery vehicle is hardware but the reality is a development platform for software people which means it has an enormous software content itself.

Lee: I have understood and we have not actually chatted about NMS much and we have not even planned to chat about NMS but it is a burning question I have is that for me at least, I know the name NMS but it is not one that instantly spring to mind. But I have been told, not from yourself that actually behind a lot of large name providers, vendors and maybe Alcatel Lucent or one of these names, it is actually NMS is bought by these and then packaged, is this true?

Brough: Our components, subsystems and development software and so forth is inside a lot of major things like products from Alcatel-Lucent and Ericsson and Converse and so forth. The only place that I can think of it being repackaged is Ericsson resells the Livewire Mobile application, the solution as the Ericsson personal greeting service. Otherwise, we see Alcatel-Lucent, Ericsson, Converse and people like that as application developers who are using our development environments and our components.

Lee: That has at least clarified that. It is kind of funny, I have known you for so long and yet we have never chatted about NMS before. We always chat about everything else in communications. So what I wanted to do, what I was meant to do first was say Hey, Brough, please tell me why you are attending eComm? Why is eComm important? Why does it excite you, why are you coming along and why are you investing your time?

Brough: That is pretty simple. I go to shows for one or two purposes. Number one is probably to meet people and/or quickly grok a particular industry or an area that I am interested in and so I go to a lot of different conferences in the course of the year. I speak at a lot of different conferences.

eComm stands out because it brings together a bunch of innovators who are typically lost in the other shows that I go to. There is also a set of advance thinkers. Some are people I have met and know but who I only see once or twice a year and others are people that I know the name, I have read the blog or seen them quoted in the press and they are people I want to meet so I guess the issue innovation. I do not see a lot of that in a lot of the shows.

The other thing is the sessions look to be a lot more real than the majority of the shows I go to. The majority of the shows I go to, you are hearing people stand up and give product pitches and they have been lumped together into so called panels of related product pitches but even there, they are like arbitrarily lumped together and here, we are looking at a completely different format that focuses not on people giving product pitches but on people exposing innovative ideas and directions the industry might go in, emerging concepts and a fast pace, not... it is a very different looking show so I am very optimistic that this is going to be a good use of my time.

Lee: Great, you may know, I think I have said to you before, I try not to attend conferences because I get bored to tears. Because I hate marketing brochures, just give me the URL please. I only want to hear things I cannot obtain on the web. But it actually reminds me if you do not mind me going off topic is I have heard when I went to the NMS Connect 2007 and hopefully you do not mind me bringing up what you said there and you said there has been no innovation in 10 years. I am laughing here. Except Skype. When you said that when you were in a panel, an Alcatel-Lucent person sitting next to you, I do not know if you noticed but he did not give you a very good look when you said that hey, there has been no telecom innovation in 10 years.
He said triple play and you said no, that is a marketing construct. Can I get you officially on record as saying there has been little or no innovation in 10 years?

Brough: Sure, I think I would be cautious. I would use the word little but the disappointing thing about the whole voice over IP and I have been literally pursuing voice over IP since 1995 to 1996.

I have gone to all of the VoIP conferences since 1996. I have actually spoken to all of them but if I look at the VoIP industry, most of what has happened is that it is reinvented plain old telephone service as digital POTS over IP. It has not actually done something radically different. The biggest innovation in the telephone industry in the last 20 years is the advent of mobile where you actually get a personal number that belongs to you instead of one that you share with your family and which you have with you at all times. So if I had to say is there any innovation in the telecom industry in 20 years that I would point to mobile not to VoIP and that is disappointing.
Now, the reason I mention Skype was that it combines the idea of chat and voice and video in one user interface. The idea that you can determine if the person, when I start something, I typically look to see if somebody is really available and then I may say hey are you there? Can we talk in terms of typing text and then I actually place the call and talk to them if I indeed need to talk to them. So Skype is actually a different user interface, a different communications and another sore subject for me over the last 10 years has been wideband audio. The first session I ever moderated at VON in 1996, was a panel in which I was trying to promote wideband audio as why are we trying to make VoIP as good as total quality speech when toll quality speech is so poor, why are we not trying for something new and it did not happen until Skype came along and actually had wideband audio so I am on the record as saying

I am very disappointed in the VoIP community in the last 10 years of VoIP during which we have basically changed the underlying technology but not changed the service in any meaningful fashion. We are still doing basically digital pots.

Lee: I could not personally agree more. So in short, I take it VoIP does not excite you?

Brough: The concepts and the opportunity excite me and there are, I did not want to say there has been no innovation. There has been dribs and drabs of innovation here and there and there are many people doing things like Skype and there are all sorts of other things going on right now of trying to fold voice and video modes into different social networking things. There is a bunch of interesting stuff happening.

It is not that VoIP does not excite me. It is that I am disappointed that we have had so little progress in 10 or 12 years of messing around.

Lee: What would you blame on that? Who would you blame if someone is to blame? I get the sense by your laughter there that Lee, these are things I cannot say on the record. I do not know if that is what I am detecting but you can dodge around that question if you wish.

Brough: No, I think it has been fairly hard to get new applications into the telephone network. In the 90s, it was easier to get new applications into the enterprise. After all, that is where we got voice mail and auto attend and all the early speech reco stuff and it all came through the enterprise and worked its way back into the public network. With the advent of mobile which is still being run by a bunch of old line teleco people but in most countries in most of the world, mobile is at least competitive. There are two, three, four or more competing vendors.

So mobile has done a lot more, provided a platform for a lot more innovation than doing things in the fixed line network.
Going forward, I am very optimistic about the next five and 10 years. I do not know about the next one year because we are approaching a tipping point where there will be enough mobile internet bandwidth to allow you to do things like VoIP. We will reach the tipping point that when we got a few megabytes down and a few hundred Kbytes up for fixed broadband access, we suddenly had a whole flock of VoIP companies like Vonage and AT&T call advantage and 20 clones. That same thing is liable to happen in the 3G mobile industry in the next two to three years.

So there is a lot of excitement ahead and it may actually happen with some combination of VoIP and mobile just because the mobile industry has more competition and thus more opportunity for innovation, trying to wedge things into the traditional telco environments, it is a very stultifying place if you will.

Lee: So are you telling me that you find what I call "naked VoIP", that is a place to call, talk and end a call, do you find that exciting and do you think that will be profitable long term?


If you mean naked VoIP replacing a fixed line telephone, which is what it is mostly, if you mean Vonage and things like that or cable VoIP that is what I call digital pots. It is not exciting. It is a commodity business doing something that was done with the old TDM infrastructure using the new IP stuff to do the same service, that is not very exciting.

Lee: I just wanted to clarify there. So when you see mobile VoIP is exciting, I am assuming you do not mean "mobile naked VoIP"?

Brough: No, I was saying that in the mobile space, because there is competition, even in advance of VoIP, we are seeing a lot of interesting applications. The mobile telephone industry invented multimedia messaging, that was supposed to be the coolest thing, it has not been widely used for anything except sending pictures but in Asia, we see voice SMS and video SMS as two services that use MMS if it is there but they work on any handset with a very simple well understood fashion and they respond to a human need.

So those to do not have anything to do with VoIP but they do have to do with communications innovation and they are happening in the mobile space because there is competition there and there is some openness to new ideas which you do not find in the fixed world so what I was saying is that I am optimistic about the next five years or so because I see VoIP capabilities becoming feasible in the mobile space, it is not that I want VoIP to duplicate today's mobile telephony but that I want the capabilities and the fact we have more innovation in mobile than we do in fixed to combine to produce something new that I have not thought of yet.

Lee: I completely accept that and maybe I am driving a point too hard here because I am actually wanting to go to one of my conclusions which I will share and we will see if you agree with it.

For too long especially on Internet, in chats and discussions and so on, people are excited about what we call naked VoIP, place a call, chat and end a call. It went over IP, let us get excited about it and this has been annoying me for a long time because I just see voice as something which can be imbedded in other places and that [telephony] is an application which hung off an electromechanical network and we are not in that position today. So imagine what you are saying is that...

Hey, you are not excited about your VoIP, naked-VoIP, but you are excited about is it being combined into other services and innovative applications, where it is imbedded and not primary focus.

Brough: Yes, exactly, that is the point. I am just saying that more

likelihood that will happen in a mobile environment than a fixed environment just because of the competition and the mind set. The point is to figure out what the new kinds of communication are that may or may not include live voice connections, but include a myriad of other forms of communicating.
Forget about VoIP, we are supplying various forms of mobile video technology most of it circuit switched, that has been embarrassing, but that is the way it works today, to people in Asia who are inventing all sorts of cute services and dating sites and social networking things. These are people communicating non-real time in voice or video driven by their hormones perhaps, but it happening. It is different. That is a form of communication and it includes as one option that actually talked to somebody and maybe you want to be able to talk to them without them actually knowing your phone number and..,yes, it is a whole set of issues.
So you can look down on it as another dating site, but I see innovation there in combination of the Internet and mobile telephony that I do not see so much in the fixed line world.


I very much agree that the innovation focus is definitely on the mobile, on wireless handheld devices. There is no argument there because it is on you. It is personal. It knows where you are and it is with you all the time. So it can learn about your life more. That is definitely the platform as you say over the next three to 10 years is definitely the space in which I see the most opportunities. What has been annoying me aside from this excitement about what you are calling digital pots over IP, this love with a thing called "VoIP", this POTS replacement, is that mobile operators - their services have been very localized. Only within a country and there has maybe been high charges for them. They have not really been taking much and have not been much consumer attraction. I would like to ask and I do not know if you have, done any thinking about it. Do you think the open spectrum is a possible opening up of gates to innovation?

Brough: Yes, but not on a close enough time frame. Most of the open spectrum things are pushing for a different way for a spectrum to be made available.

The arguments in favor are the fact that we took a couple little slivers of junk spectrum in particular at 2.4 gigahertz, which nobody else wanted because microwave ovens and various industrial equipment was already using it. By making that available we have got more innovations there than in practically anywhere else in the entire spectrum
their arguments in favor of open spectrum, but they are of enormous numbers of invested interests and most of the politicians want to make a ton of money by auctioning off spectrum. So, anything that can be reclaimed is liable to be sold for top dollar.
So, I love the idea of open spectrum. I promote the idea of open spectrum, but I do not expect there to be a lot of new open spectrum having an impact on anything in the next three years.
I am hopeful that the white space once analog TV is turned the white space between digital TV channels will be made available. That is an argument going on in the US right now.
But, if that is resolved it might begin to have an impact in 2010 and be a big win by the 2015, but these are slow things because there are a lot of vested interests

So, now if I think about what are hope is for getting global mobile internet access and that is really what you want as mobile open internet access anywhere in the world. It is the fact that the mobile operators are deploying evermore data infrastructure just because of Morse Law and nothing else.
Mobile is at least competitive. Software defined radio technology is coming along, which means it is getting a little bit easier to get phones that have multiple different radio receivers in them. So it is becoming possible to receive several different cellular bands and Wi-Fi and maybe in the future Wi-Max, so if you have a number of different people competing to offer you what becomes Internet access and you have a hand set that can tune to several different choices and pick whatever is cheapest at the place and time that you are at.
We could see mobile open Internet access as reality in less than five years whether we see it in the next 24 months or so I do not know.
We do see it today already at pretty high prices. If you look at what is 3G technology being used for in Europe and the US today the number one purpose is for more voice traffic, but if you set that aside what is the number one data application. The answer is USB modems. In the US for $80.00 a month you can get broadband connectivity for your PC over 3G. That is really a dumb pipe application. Yes, it is an open access with some asterisks with some limiting the terms of conditions and so forth. But it is a competitive market . In the US, we have three nationwide footprints right now and a half in the case of T-Mobile USA. But T-Mobile USA paid a lot a lot for spectrum in 2006 and we will probably be a fourth nationwide 3G operator by 2009 so there is a lot of interesting things happening and there are several things in Europe where you got four more competitive operators including in the UK. So one way or another whether 3G, 3.5G, WiMAX, access to open local Wi-Fi hot spots the chance of getting open Internet access while you are wondering around first with the PC and later with a smaller device down to a mobile handset. It is getting better and better. I am fairly optimistic on the mobile side.
We will get open Internet access in less than five years.

Lee: That is maybe one area where US has won an advantage because you have a large geography there and you can go coast to coast and pretty much go in operator 3G. Where as in Europe - say in Denmark with a Danish SIM and you have unlimited Internet access again via 3G or 3.5G. Once you go into a neighboring country which is exceptionally easy to do in these small European countries and then let see you go into Sweden. You are hit with access rates all over again for data roaming so you just do not use it. Take for example the moment I am in Vienna, Austria. I have got unlimited data access on my UK SIM, but I will not use it because I will be hit by a huge price. Can you respect the difference there, the take up may be different?

Brough: Yes, the unfortunate thing is that the problem of Europe has is the result of some very well intentioned regulatory actions that with hindsight were a big disaster. In US, we had a place where it was an early AT&T wireless at that time not the current one, but the one that existed in the late 90s struck some deals to basically provide a high priced national roaming thing...and when they rolled out, that was called the digital one rate program and when they rolled that service out, no one else could match it and every other operator was scrambling to come up with some sort of alliances and interoperability things so they could match this AT&T service to AT&T digital one rate. The same thing happened in Europe, in the US, no regulator intervened and the result is we ended up with many competing people offering nationwide roaming. In Europe I think it was a Vodaphone. There was a set of acquisition things with Vodaphone in the UK acquiring a German company.

Lee: Mannesmann

Brough: exactly and the EU regulator freaked out about possibly monopolist activity on Vodaphone's part not realizing that there were other competitors in the market and so they basically forced Vodaphone to back off and maintain each country as a separate domain and the result is there is no European wide roaming and the prices are ludicrous and the regulatory intervention, now the regulator is trying to come back in and repair the damage

but it may take a few years to straightened out and there are so many vested interests now because of course, the operators make more money this way by not having to compete for EU wide roaming.
It is a complicated situation but it...

Lee: It is certainly not a good situation, I can tell you that much. Just before I came on to interview yourself, I was out to lunch with someone and he is another Scotsman here in Austria and he badly needs email access so I showed him here is my N95, but I won't load Gmail because it is my UK SIM and I do not want hit with this silly data roaming rate. He said good "I will get an Austrian data roaming SIM and it is only 20 euros a month". It is unlimited Internet. It is high speed circuit switch data. You should get 1.8 MG in Austria but he is out of Austria at least once a week in some other European country and so I say and he is not such a technical person- but I had to say look if you go out of the country, you are not going to be able to check your mail and so on without an extortionate cost. You can access the Internet but the costs just would not be worth it. He was completely puzzled as to how he could be paying for unlimited access. But as soon as he stops outside a little European national border, he is being clobbered again so it is a very unfortunate situation.


The point is there is a lot of outcry right now and presumably the regulators will figure out how to fix it but it is a place where we just lucked out in the US because the regulator was not trying to do anything good or was not paying attention so there was no any intervention
and mobile is actually a competitive market so the reaction was when it looked AT&T was going to sew up a nationwide thing, within less than nine or 10 months, they had two competitors who had also put together a hodgepodge of roaming deals and whatever so they could offer a nationwide package also and since then, the prices for that nationwide package have kept coming down to the point where most people have the nationwide package just thrown in.

Lee: But when you say nationwide and roaming, you mean data roaming, Internet access?

Brough: Either. It started with voice but it works the same way with data.

Lee: Okay, our hope, when is I say our hope, I mean us who are having to suffer doing the SIM card juggle every time we land in a plane and acquire SIM cards in every new country we go to. We have a lot of hope in the open spectrum because for example in UK, I should not mention large company names. But they are looking at acquiring analog TV channels. I just have to watch because the information I have got, I cannot guarantee it is on the Internet [it was and is public domain], so I turn from 700 megahertz, Google's Android, have you had much thought about that?

Brough: The number one thing that interests me about is not just Google Android although NMS communications is participating or our Livewire mobile group is participating in the Android, the Open Handset Alliance.

But from my perspective, the thing that is interesting is a series of attempts to open up the network and the first one that got broad consumer awareness was obviously the iPhone. Steve Jobbs and Apple made a wonderful thing where consumers, non techy people are suddenly aware that there is an issue about being locked into networks and having this capability and so forth. Then with the Google Open Handset Alliance and Android comes another wave of stuff that got broad coverage in not just the techy press but also in nighttime TV and so forth . So it takes a series of these things to get awareness to the point where non-techy consumers understand that there is such a thing as having an open device that is not locked to a particular operator and where politicians and regulators understand that issue.
I think we are we are making progress so that is the first thing where the Google Android helps. The second thing is all and I do not know how much this has made it out to consumers but it certainly had some impact in the US Congress and that is all the discussions of the 700 megahertz auctions and what is Google going to do and so forth. Again bring up the whole question of open.
I have written a few blog posts about what I think is going on with Google and 700 megahertz but it is just speculation.
The one important thing is that it is another piece of raising awareness with consumers and raising awareness with legislators and regulators about what open access means.
Any raising awareness in that grounds is good.

Lee: In the 1990's or at least the very end of the 90s, the hype was amongst all other hype was that 3G was going to change society fundamentally. We were going to be browsing the web, walking down the street and consuming lots of videos pushed to us by mobile operators and content partners.

It is 2008 now and that has not happened, at least not in Europe and the US. Do you think that with the iPhone beginning to warm up especially the US market to the notion of open handsets and innovation on the handset, the Google 700 megahertz, possibly going in that direction, Android, do you have the hope that almost 10 years after the hype, that mobile is the new frontier?


Yes, I am very optimistic certainly in the three to 10 year timeframe, I see open mobile internet access at the rate of a couple of megabytes down and several hundred Kbytes up becoming a reality in certainly the US and probably in any competitive market over the next three years. I see just competition driving people to open things up and that is a wonderful platform in which to build all sorts of new services.
You mentioned everybody waiting to see if any video would happen. I have looked a mobile TV. I have looked at various video services. I have experimented with a bunch of them. It is pretty clear that there is interest in mobile video but it is video on demand and not broadcast and it is short subjects, short clips and three quarters or
80% of the stuff that those people who do things actually look at is stuff that has been sent to them by friends or referred to them where friends sent the equivalent of URL and what is going on is it is not about a limited amount of content that is on the operator's WAP deck. It is about a bunch of user created content. It is about access to YouTube. Being able to refer people to weird things and we are not quite there yet.
But the big break though this month, January of 2008 is that YouTube finally has a mobile version. But that is not going to get us anywhere unless the operators actually allow everybody to connect to it. I suspect there is a large untapped opportunity for video short subjects three or four minute things or one minute things that you might watch in an odd moment or that you might send to a friend and I think that will be realized but only after we get away from the walled garden and there is some easy user interface that allows people to pass this stuff around.

Lee: So, you are saying quite clearly there that people are more interested in sending content to others and sharing their own produced content, user generated content than they are in consuming little say MTV snippets?

Brough: Even if they are interested in consuming professionally prepared mobisodes, that is cool, it is just that you need the broad range of content that you cannot get from mobile operators today. At least in the US, about a year and a half ago, I was on a panel about mobile TV with people from Verizon and ESPN and mobiTV and Sprint and I cornered the guy from Verizon at some point and just said how do I cut a deal with you if I want to put my content up and his answer was basically we only have one and a half full time equivalent people involved in business development so we do not have time to talk to anybody who is smaller than ESPN or Disney, in other words, you cannot.
So until that changes and it actually becomes an open garden, not a walled garden, that is open access to YouTube and the 20 YouTube clones, the world is going to remain the way it is for the last eight years but the moment they open it up, I am quite positive that people will be passing round things including passing around pointers to lost scenes from Star Trek and weird professionally done mobisodes and the point is, people are looking for some breadth of content and what they are getting on the current services is really lame.


When you are talking about when things open up, the way I understand what you are saying is when there is open Internet access and when there is open Internet access, the mobile operator does not make money per video, they just have their dumb pipe once again and it is the likes of YouTube who make money through advertising deals but it is splitting the application away from that kind of connectivity or are you still trying to say that the mobile operator is going to be the content provider?


My guess is that the mobile operators are going to become dump pipes.
I think Martin [Martin Geddes, STL Partners] and I are in agreement on a lot of things but Martin is very focused on trying to tell the operators how they can remain relevant by opening up some of their platform capabilities to third parties.
I am not as optimistic as Martin. I do not think most of them ill open up soon enough and I think there is a second problem that most mobile operators are national or perhaps regional. They are not global so my guess is that a few of them will figure out some of the innovative things that Martin and STL Partners are talking about and the majority of them will just become dumb pipes.
That is not necessarily bad. A lot of people say I do not want to be a commodity that is low margin business but you have to remember that a commodity business is also by definition it is a high volume and there is a different business model but there are plenty of ways to make money in commodities so.

Lee: So this may be an awkward question for you and particularly in the position you are in but I will still ask anyway.

It seems to me you are accepting that over the next five to ten years there will be an operator mass consolidation?
You do not have too many commodity key players let's face it. You get fewer and you get bigger.


Yes, I suspect that is true. Certainly as I look across countries. There is already a lot of consolidation going on.
There are three mobile telephone groups that control about 80% of all subscribers in South America. A year ago there were eight mobile phone groups that controlled three quarters or maybe 60 or 70% of all the subscribers in Africa. What has happened in the last 18 months is that group of eight has dropped to about six.
There are going to be some major international brands that cover much of the globe, but as long as you can have ideally you would like to have four competitors in any one location because that is the thing that tips the balance and causes ramped competition.
One and two are monopoly, duopoly is hopeless. Three, can be sort of stable, but four gets you ramped competition. If you can keep four people and they are global that is okay, when you get down to three it becomes a problem and if you get two to one, it gets to disaster then you are back to the old fix line monopoly and no innovation for decades.

Lee: But, hopefully, when we get there and it is a dumb pipe largely then I do not worry hopefully. I do not have to worry too much about innovation [because over the top players will innovate]. You would like the dumb pipe to be innovated?

Brough: I want the dumb pipe to keep getting faster according to Moore's Law. The wireless mobile dumb pipe. There is no reason why it cannot get keep getting faster in decades.

Lee: In Europe in particular, because of the whole SIM card juggle and you cannot data roam without being slaughtered. In particular there is a lot of hope that with consolidation that it will end up in pan-European players. But hey we can see what happens. If it does not happen that way I hope we get access on fatter [pipes] to the Internet some other way so that we can communicate without huge toll booths in the way so that we can innovate together and co-create value at the edge. And talking of co-creation at the edge of the network, I should I ask you what are your current interests and kind of what you are focusing on at eComm?

Brough: This has nothing to do with my day job but an interest for sometime has been for sometime in broadband Internet access especially in the fixed fiber to the home, fiber to the neighborhood or other ways of fiber or combinations of fiber and local consumer owned wireless meshes - that has been an advocation for several years and it is a place. I have a number of things to suggest there, things that blogged about and I discussed with people in the community. I figured this was a time to organize my thoughts and make it a straight forward pitch. I think there are three topics but I'll probably only cover two of them. But, the first is just when people talk about how to get fiber to the home and so forth, almost all of the conversations I hear are couched in terms of the existing telephone or cable TV regulatory environments. And very seldom do I run into anybody who actually talks about what you would do, what would make technical and economic and business If you are coming in with a clean slate. I recognize that there is no way that you could get the best way of interests to back down and give you that clean slate. But, if you never thought of what you really would like on a clean slate then even over ten or twenty years you are never going to get there. If we can identify what makes sense, it may take 15 years to change and get there, but at least we have some understanding of what would make sense. I do not see people discussing that. Part of, I have got bits and pieces of presentation which I will have before eComm.

Lee: Please.

Brough: We have gotten a certain amount of material that I have presented in bits and pieces, which I am going to bring together to one presentation. Part of it is, if you look at the fiber to the home question. You hear a lot of people saying, well, it is a natural monopoly, if the telephone company gets there first. They are going to win. If they cable company gets their first, they are going to win and no one else could possibly compete. I guess I object to that because people are saying it is a natural monopoly.

Yes, if the only thing you are comparing is complete services, but if you are prepared to look at other models including consumer homeowner ownership of condominium fiber and other kinds of economic models and go back to first principles what you will find is the natural monopoly is the right of way.
That is the one thing which is either owned by the city or the by a governmental entity or maybe owned by a co-op if you live in a gated community, or it might be subject to some right of way over someone else's land based on common law dating back 1,000 years. But the point is the right of way is certainly something that is a limited bottle neck. When you put stuff into the right of way like conduits and fiber and so forth. You could think about putting competing conduits in the ground. We do have water, sewer, gas, electric, phone, and cable TV already. So you could think of having two or three conduits in the ground. It may or may not make sense since conduits have useful life measured in a minimum of decades. Likewise, if you pull dark fiber into these things, they have got a useful life, dark fiber the minimum use for life might be 20 years and in reality it might be 50 years or 100. The fiber is not wearing out, the dark fiber. So, you could argue that those things might well go with the right of way as things that should be either government owned or community owned or owned by individuals on a condominium basis. If you think of models there...
My problem is the moment you connect any kind of electronics to this you are connecting something that is obsolete in a year or two.
Moore's law causes the lasers that light up the fiber. The electronics that provide the Internet or any other kind of protocol. The routers, every piece of box that you would connect to a dark fiber is subject to Moore's Law, and it typically has a life of less than two years before it is functionally obsolete and maybe three or four years before it is literally long overdue to be scrapped.

Lee: Have you been having chats with James Enck who stopped blogging about a year ago by any chance, when you talk about this community owned glass?

Brough: Yes, I have not talked to James Enck since he stopped blogging, but I was an email correspondence at that time through his blog and independently. Also, Bill at the Canary Group in Canada. In fact back in the late 90's thru about 2002, I was in communication with the then managing director from STOCAB in Stockholm. So there are a variety of people who are understand these issues and talk about them, but they do not get a lot of coverage.

There a half dozen of people around the world and they are not getting through to the mainstream discussion
as nearly as I can see and that is something that I am thinking I may spend a lot more time on in the next two years.

Lee: You have been talking quite a lot on, I hate to say the phrase. "next-generation", that phrase has to die at some point, but next-generation mobile applications that seems to be a big topic of yours. Can you summarize what you mean by next generation mobile applications?

Brough: I think the mobile phone or the mobile hand set, because it is a lot more than a phone is the intimate personal device that is associated with people. I am not advocate of everything being convergent to it. I agree with Dean Bubbly that people will likely have a variety of special purpose devices on their person, but the reality is a device on your person is a communication device or devices that you most favor. I see all sorts of stuff in terms of communication between live talking to each other, two-way voice, and one-way radio. Mom I'm climbing Mt. Fuji look at the view, real time things like that, video sharing will have you two near real time messaging, which is what real instant messaging is. It is what SMS and MMS and a lot of social networking chatting is to slower speeds stuff like blogging to email.

There is a progression of things that involve communications, a variety of media, a lot of information about who is available to talk to whom at one circumstances that is a very rich field for innovation. It probably happens in the context of your personal devices that you carry on your body. In that sense, the innovation is in the mobile domain

Lee: Can I jump in there and add something. Today, people are talking about slow down and so on, economically. I know, and I would not even say impression,

I know as a hard fact the opportunities today in the mobile space is just beginning to break open at the end of last year are just unprecedented and there are huge opportunities for huge winners. And unfortunately, there will be large losers in the mobile space. Do you think it is a good time for VCs to start getting excited again about the mobile space?

Brough: Yes, I think it is a good time in terms of what is happening, in terms of data rates and capacities, things politically opening up and in some sense when business is having problems, when there are down terms recessions or something, it is an ideal time to do something new because as you come out of a recession indoor growth phase, the people that were doing something during the recession have the leg up are poised to get there wheras as the people who did nothing during the recession and start once business is doing well again ,are typically late. I do not know if you we are about to have a recession or not. If the slow down is just in the financial community or it is going to be more pervasive, I don't see it being a slow down in high tech yet, but whether a slow down, I do not think that is any reason not to barge ahead. It's even a compelling reason to go ahead and barge ahead and do something new. Time is right.

Lee: Brough you are moderating what I feel is the most exciting panel at eCcomm., which is on mobile innovation, Can you name at least one person who you are excited to have on that panel that you are putting together?


Among other things for sure is Rich Miner who is one of the architects of the Google Android Open Handset Alliance program. Looking to get a few people together so that we get different views of platforms for example Google is taking a different view of doing their own spin on Java under a different licensing and I have heard people very strenuously in favor of that and people very strenuously opposed. There is a whole question of what layer in the handset does the innovation happen at, strong arguments that could be that it is Ajax browser based stuff might be the answer in the long term. My goal in this panel is to get interesting people who have strong views and not have them get up and present a bunch of boring slides, but for me to quiz them to see if they can not get a little controversy here and at least expose what people's positions are and leave the audience to figure out what the real truth is. Hopefully, we learn a few things form this and I always find panels with speakers who get to the start, I won't say fighting but I will say getting after each others positions, controversy and so forth makes the panel a lot more interesting to listen too. So hopefully, we will have something really exciting here.


Okay because I look forward to it so much - not only because for example Google is going to be on the panel and we ought to have Chris [Allen] who had held the iPhoneDev camp on that panel, almost others. But, I see the opportunity is really here. It is in the mobile space and as I said with the Apple, possible SDK coming up, with Android, with open spectrum. And with other APIed networks I see, massive opportunity and we are talking about what I am told is the largest market in the world. It is mobile market. I am very excited about that. The whole question is how do you going to innovate on that platform. Hopefully this is the debate that you are going to lead the eComm?


The debate I am hoping to get people is why is there particular approach going to attract more innovators and facilitate more applications, that begs the question of what are the applications
, that is completely a subject for a completely different panel or for the individual speakers who are speaking.

Lee: I very much look forward to this panel that you put together and we have been on this call for an hour so I am going to need to go off. I appreciate your time. I really look forward to seeing you their. Thank you very much again for doing this panel.

Brough: Okay, Lee, thank you very much for having me and boy do I look forward to going to eComm and seeing you and meeting many interesting people. Thank you.

One of my favourite speakers at ETel (the conference which lead to the birth of eComm) was Norman Lewis. Norman is the Chief Strategy Officer for the Wireless Grids Corporation, USA. Prior to joining WGC, he was the Director of Technology Research for the mobile operator Orange, UK. Prior to this Lewis was the Director of Technology Research for the Home Division of France Telecom and of

There is so much what I'd call synchronicity between Norman and me at points that one may expect most of the questions had been pre-arranged along with scripted answers. They were not! The only thing I can say is that Norman was chosen for the eComm advisory board because I felt he was in tune with the conference aims. Norman and I spoke for quite sometime, so I will need to split it into a further two or even three parts. 

Norman has also kindly agreed to help the conference out by co-chairing it!

Part 1 of the interview can be downloaded here in 64kbps-cbr mp3 format (it's 12 meg in size and 25 minutes in length). If you think you can hear better voice quality with a higher bit rate, a 96kbps-cbr version is here in mp3 format (it's 18 meg in size) or if you want to waste bandwidth a 128kbps-cbr version is here in mp3 format (it's 24 meg in size). Personally I notice a slight difference but due to the noise on the call, it is negligible.

The usual caveats apply, below is not intended to be an accurate transcript but rather a pretty good idea of what is covered in the audio file (so listen in).

I started by asking about his job as director of research at the mobile operator Orange to which he replied: 

...the job was to look three to five years out to look at disruptive technologies and in my case particularly to look at how those disruptive technologies would interact with user behaviours, in other words what technologies would be taken up, how they would be taken up. And would this be the basis for new opportunities or threats to the existing business.

I asked why he was attending the conference, to which he replied:

because I think eComm is s a very necessary development especially after the cancellation of ETel from O'Reilly. And indeed the problem I always thought with ETel was that it really had the wrong name. Because we are not talking about telephony any longer, that is way behind. We are really talking about the future of communications and communications here means telephony, voice, content, entertainment, all other digital technologies, digital media, all together and how these are going to be knitted together, to what we would call the end users experience of how all this stuff will enter into their [consumer] lives. And from that point of view I am very pleased to be part of this because I really do think this is the direction we need to move the industry in, I don't see much of this happening within the industry. I see a lot of talk about convergence and all those kinds of things, they've been talking about that for a long time, I see very little of that actually happening. And so I think it is a great initiative , that we are going to create a forum where we can bring together, many kinds of people who are looking , who are looking at his space, who are innovating in this space, who have a real desire to work in this space and allow them to meet each other, network exchange ideas, clash of opinions, whatever, and indeed hopefully , it will give rise to new ways of thinking , perhaps getting together, starting some projects together, and hopefully establishing this forum as an ongoing interchange that will be repeated every year that will get bigger and better, and attract the kind of attention that I think it should be doing. And act as a pole of innovation attraction for the industry itself.  Because I do believe we can influence them [telcos]. But it is very important that we get together with like minded people and establish that forum in the first place. So I am going to be there and hopefully helping to do that

My next question to get thing going was "how do you see the telecoms innovation model that we have today, can you comment on that"?

actually I could comment very briefly because I do not see much of an innovation model, in the telco space to be honest, to be absolutely frank. In fact if you look at what is happening in the last ten years or so, all the innovation that has occurred in this space has came outside of the telcos. It has particularly came around the Internet., and in many instances this has forced, this has forced the telcos to change what they are doing, rather than the impulse for that change coming from within.  I felt particularly strongly, where I was [director of research], where there was a real, where beyond simply the access product was, the real inability to engage with the really significant changes that were happening. Particularly around what I saw as an enormous amount of innovation, around the Web, around the Internet, the telcos where really playing catch up I think

I put it to him "but surely telcos should get some praise for upto a hundred billion dollar a year SMS market? Would you regard SMS as innovation?"

most definitely, but just remember that the impulse for SMS did not come from the telcos. No operator ever envisaged that SMS was going to be a business and indeed if you had prepared a business case 10 years ago saying that I've got a wonderful idea for a new business which is this thing called SMS and that you put forward the business case as to how it would work and construed what it cost and everything, you either would have been fired or drummed out of the boardroom...SMS is a great example of exactly what I am talking about, it was exactly the kind of areas we were studying which where, you had the telecom operators going on about WAP, and about 3G and how you where going to surf the web with your mobile phone and you know blah blah blah. And what did the customers do? Particularly younger people. They started texting. Which as I said earlier, was never envisaged as a service. And thank God for the young people and texting became what it did become, as that as far as I am concerned, really saved the operators, because without it, they would not be enjoying the revenues that they are enjoying today...of course they reinvent history so everything is read backwards so that they take the claim  for that innovation . You know the innovation had nothing to do with what it subsequently became. And indeed I think the history of the telco industry is precisely that; that they've got this God given right because they've invested some money in the network, which is great and I've got nothing but praise that they've rolled out these networks, but that does not therefore give them the right for in perpetuity, to charge people because they've laid out this expense. I think they've got to understand that the world has changed and it has changed as a consequence of what they have done. But they really have to get with the programme now and adapt themselves to this new environment not hold it back, which I think in fact they are more often than not, doing.

I had to lead on and ask "do I detect that telecoms innovation is and should be, decentralised and a part two to that question is that you are saying that operators are hindering that decentralisation of telecoms innovation, is decentralisation the issue at the heart of what we are really speaking about here?"

I think it's very interesting, if you look at the Internet space, if you look at the web, the point is that once you establish this backbone, once you establish this IP network and you establish the simple rules like the end-to-end principle, it meant that you no longer could control it, in the way you might have done in the past. Because nobody needed permission to put something onto the web, as long as whatever you built, conformed to those basic principles, you know you could put it on there, to be consumed by anybody; anybody could get access to it. And as a consequence of that, it's almost like despite themselves [telcos], innovation occurred, and this kind of platform was created, that enabled anybody to come along and build some new services, new ideas Etc. which was fantastically fruitful. But I'd say that happened you know, despite the telcos, it was like outside of their control. And indeed what I see today, I see the structural barrier...I think the [mobile operators], they are basically where the PC industry was 10-15 years ago.... I think what is really important here is what has happened within business, is you've got these large telcos, which potentially are more accountable to the financial markets than they are to their end user customers. You have a very kind of institutionalized , structural barrier now to a lot of innovation, and the structural barrier is the following. They are very much based upon short term financial returns, i.e. what are you figures going to look like in the next quarter? And that is basically what every CEO in every telco around the world is doing. They are concentrating on the next quarter.  They are not thinking long term. They are only concerned about, basically, the requirements, the commitment they have made to the financial institutions, to the shareholders Etc. So what you have now is a kind of short-termism that is very much geared towards what can we get out of the door, in the next quarter that is going to generate revenue? And therefore what is happening is that if you look at the investments which are going into R&D, increasingly it is based more and more around development rather than the research side of things. And that I think is a real problem, because all that means is you have a kind of pragmatic culture which is looking for success continuously now. For me innovation is about making mistakes as well as successes. You know you learn a lot more from failed projects than projects that might be successful, because the success can be related to a number of issues, which you have very little understanding. But the more you create a culture that enables you to take rsisks that fail, a failed project is not necessary a failure, because you can learn an enormous amount and it can set you off in a new direction, which might be very very fruitful, in the future. That culture does not exist. They [telcos] pay a lot of lip service to this. But that culture does not exist within the telcos. It is all about success driven endeavour.  And therefore what happens is, you stay safe, i.e. you don't take risks, you stay with what you know, and you stay with what so far has been generating you revenue and basically you try and cling onto that. But of course the contradiction in all of this is that it no longer suffices. So even now we see we see the decline of revenues to voice for example, as we see disruptive technologies become much more mainstream etc etc. So that no longer works, so you have this kind of real, what I call institutional stasis, where you have this kind of tension continuously that immediate short term goal and that which you are going to have to do in the long term. And at the moment I can't see within the cultures of these organisations that they have the management, the vision or the courage or the kind of risk culture that will enable them to break out of this kind of vicious cycle. I think the only thing that will force them to do that will be changes in the market as we see other players come into the space as we've seen very interesting, in the last five years or so. Some very new players who are starting to impinge upon them. And you know they are beginning to recognise the threats and that fact will be possibly will spur them, but it really comes down to the quality of the kind of thinking of the management that they have which, in these organisations, which I don't think have the agility to manage this kind of process, I'm, as you can tell, it was the main reason why I decided to get out of that [telecoms] environment, an environment which was not productive, which was not fruitful of any real innovation. It was just copying; it was just following on from what everybody else was doing.

I next put a rather largely worded question over to Norman - "What I am hearing here is that telecoms has two vertical products, voice and SMS which are couple with the device and the connectivity. Voice makes large returns, so does SMS. It is a trillion or multi-trillion dollar industry depending on how you measure it. And it is an industry that is working its vertical two products which are generating revenue; the mobile industry is the world's largest market. Now you are expecting them to be agile and to move and so on, but surely if you where in their position, which I guess you where, you would just stay protecting those two vertical products as they are doing and paying lip service to innovation. Is it not correct of them to try and protect those two vertical products?"

His reply:

Of course yes, there is certain truth in what you saying, but it is very self-defeating process because it is maybe one they can milk for the next ten years. But unless they innovate in this space, unless they take notice of what is happening outside, they are going to get to a point where this is not sustainable - because their revenues are being eroded....I spent a lot of time going to our R&D labs across the world. We were in China, Japan, Korea; we met with all the key operators there. Everybody showed exactly the same slides. Different language, slightly difference cultural emphasis but the same slide, which essentially was that you have access and the value of access going down. And you have this other graph which is showing usage going up and the problem you have got is this massive gap, growing gap between the revenues you are generating through your access product and your basic, what your calling your two products [voice and SMS] and the usage that is going up and the economics are just unsustainable, and so the gap between them, they all had the same slides saying the way we will overcome that is thru value added services. And so we said, so what's the value added service and of course they said that is the key question. Of course they don't know the answer to that because they [operators] have never been able to anticipate these things because these things have been much more driven by user behaviours than by anything that has came out of the telcos, they [users] have adopted the technology and used it in ways that never where understood or envisaged in the first place. So they [telcos] recognise in the long term that there is a big problem here. Because you have this growing gap and it is going to become unsustainable at a certain point where those revenues [from telephony and SMS] are not going to be enough to generate, to enable them to realise the demand that there is going to be from the end user. There's just a lot more people to be connected on this, you know there is a lot more a lot more speed, bandwidth and everything else that will be needed to drive usages in the future and that is going to require investment, that is going to require an understanding. Now if your approach to this whole thing [disruption] is simply to be defensive and to try and hold onto what you have got [telephony and SMS revenues], you know, as I said these are rich cash cows, there is no doubt about it - you know there're generating billions but those billions, relatively speaking, in the next three to five years are not going to be as big as they are now. And they are going to be representative of a major problem which is where are you going to sustain longer term investment that can prepare you for the next generation of things and that is where I think you are seeing other players coming into the market, who are taking a bit more of a longer term of it and being a little more disruptive. And I think this has long term consequences for the whole ecosystem and I really think this needs to be discussed and debated much more so we can start shaking this up and changing the way people are thinking about this

At this point I jumped in to ask if he could name at least one player who is taking such a longer view? He replied:

Well I think if you look at some of the web based players, if you look at the Amazons of this world, if you look at Google, if you look at some of the strategies that they are beginning to evolve where you know, they have a much more deeper understanding where things are going and what they need to do to take advantage of this IP world. I think they, you see them, you see the kinds of moves that they are beginning to make which I think are very very interesting. I think they are going to pose some very big questions. Can I just get back to you on just one other point though? The problem with this defensiveness is they are missing a huge opportunity. That to me is the frustration. As I said earlier I understand why you would have this culture [defensiveness within telcos] and most certainly that was the frustration I had a lot of the time when I was in, working in that space. That you know, if you were responsible for this revenue [telephony and SMS] and this revenue was coming in, you know you would be sitting there feeling quite good and you would be very jealously guarding that and ensuring that nothing disrupted that. But for me the real tragedy if I could use that term, is that there is such a huge opportunity now such a huge space for innovation that could generate new value that if we were able to take advantage of the innovations and the technologies that we now have at our disposal. You take something like voice and now for me one of the most interesting and challenging questions is what the future of voice is going to be? I think voice has been static for the past hundred years. I think for the first time now, that you have IP I think it is quite possible that voice becomes something quite different to what it has been up until now. Voice just becomes another application that can be delivered across this network that means you can integrate voice into things that you could not have done in the past. So the whole experience of voice and how we use it, if you combine voice with presence and things like that, it just means the experience for the end user is going to become that much greater. And that represents a huge space for changing the way we think about communications and the way we will communicate in the future. That to me is an enormous opportunity. In fact I am doing some work on this question on trying to quantity what the new opportunities might represent and my instinct, although I don't have the research to back this up yet is that I think there is a huge pot there that no one is even envisaging as an area of value creation. In fact in time I suggest it will be bigger than existing voice revenues

I had to chirp in a verbose fashion then cut myself off having remembered I was meant to be the interviewer not the interviewee, to which Norman then replied:

I really couldn't agree with you more. I think when you look at something like voice and you think about what you could do, it's really remarkable to me, actually I've been doing some work with Martin Geddes on this very question and it's remarkable to me that looking at all this research, I might be wrong, but from the research so far there is very little qualitative study on a very basic question which is why do people make phone calls? There is a lot of quantitative  stuff which say when they do it [make calls], how they do it, etc. etc. but there is not qualitative studies that really break down what is behind a phone call, what's the motivations, what's the emotional content, of phone calls. Because very very often phone calls are just signals of something else and not just practical things about you know I am doing such as such or I will meet you at such and such. There are so many subtleties to why people make phone calls and what they are doing in a phone call, that I think if you understood that better, and if you could embrace some of those motivations, I think you could create an entirely new communications experience. Which I think people will value very very highly. And there for me is the future of value expansion

Again I had to chirp in and add my own views in agreement, so Norman continued:

This is the frustrating thing you see because, it's almost like this [telecoms] industry despite itself has made, as you said, billions of dollars, and it's a trillion dollar industry and everything but what is remarkable about it is that they do this despite themselves, I find that remarkable. Obviously something has to be written about this at some point, historically, about the relationship between intended outcomes and conscious application of technology because there is such a huge gap between the two things here, but for the telco industry, they've, they are obviously meeting such a basic human need. That despite the fact that they themselves still don't understand what that is, they are still able to generate billions.

Thomas Howe on Voice Mashups

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One of the most chatty, interesting and passionate people about voice that I met at the former ETel was Thomas Howe. So I figured the other week it would be good to interview him to get his perspective. Due to distance we used Skype for the interview. Tom is the CEO of the Thomas Howe Company and was formerly a CTO for a business unit at Comverse.

The interview can be downloaded here in 64kbps-cbr mp3 format (it's 15 meg in size and 34 minutes in length). Although I can not hear a difference, if you believe you can, a 96kbps-cbr version is here in mp3 format (it's 23 meg in size).

Below is some text to give you an idea without listening to the audio interview but it is by no means anywhere near a transcript nor full account of the interview (so please listen to it). Rather it is taken from notes I made in real-time. I've also added hyperlinks where I believe they could be beneficial to understanding.

I started by asking him if in the sphere of person-to-person communications whether voice has ceased to be the jewel - that voice is now somewhat passé' to which he responded:

yeah, yeah I think so, the message I am trying to give is that, what has happened for voice, is that we tend to think of the applications as being voice applications, so if your talking about voice applications, your taking about PBXs and conferencing, and pre-paid, PBX sort of functionalities, when, I think in reality, voice is much more powerful when it is used to enhance another application which has nothing to do with voice at all.

Tom then went on to give an example using Morisky Surveys:

if you're a patient and your going to get a prescription for drugs, there is a 4 question survey that you could take that would predict if your going to finish your course of care, finish your drugs,  and if your able to use a voice form to ask the patient as they give the drugs, if they are going to take that drugs, you can give them a much better experience of care,  and that has nothing to do with voice at all,  it has to do with making people more healthy. But by using voice you can reach these people who you could not reach before in a very controlled and inexpensive way. So I think the next wave of voice is nothing to do with voice applications but using voice to enhance other applications

Asked if voice then takes a secondary seat?

...voice could be applied to a hundred thousand applications, just none of them happen to have nothing to do with voice

Once I had a grasp where Tom was coming from a fired a more extended question at him "Do you see these applications that voice could be added to, as being new applications as in completely new or do you see this as just voice enhancing existing applications - is this new space or enhancing existing space?", to which he replied:

...I'm not taking about voice being used to solve new problems. I'm talking about voice being used to solve older problems, better.

Asked for another example Tom replied:

One good example is in the area of logistics, where you have an organisation that is responsible for managing computers , it could be vending machines, it could be computers, could be fleet management, anything to do with taking care of inventory outside of a corporate wall. One problem is tracking data and what happens to those assets. One way of extending your business process outside the firewall is by using voice to any black phone, so imagine that your doing asset repair out in the field, you could use your phone to call into the corporation , give what happened to the asset and hang up. This has some real great advantages. First of all none of the corporate data goes across the firewall. Secondly it works with every single phone. Smart phone or not. Thirdly it is very inexpensive to implement for the enterprise manager. The fourth thing is it is very easy business case to make. The fifth thing is there is really no other technology today that could give you that sort of bang for the buck. Not even web browsers because if your running them in the truck, you have the whole issue of wireless Internet access and smart phones, it's a real pain. So by using voice in the asset tracking applications, you make that problem much easier to solve, but it has nothing to do with voice.

When asked for example clients which the Thomas Howe Company works with, he replied:

I'll give you a couple of them. The first client that we are working with , actually it is a pretty neat project is for a company called Pero Systems down in Texas and with Pero we're doing a password reset for their corporate facility. So what we are doing at Pero is taking a job function  which is a guy sitting at a desk  who resets passwords when people forget them and we're replacing it with a voice script. So instead of calling a human being to get your password reset, you call this voice script. Now this not only reduces their headcount on the desk but, which is really important to them but also ensures that they have a controlled , repeatable  and consistent process of applying security to passwords...

We're also doing an application for a charity called Poverty Action, they are funded by the Bill and Linda Gates Foundation and they do research into finding ways of alleviating poverty in the third world using communications, so we did one application for them that allows, agents in the field to give micro-loan offers, in a controlled and auditable way to merchants and using any phone. It doesn't net require any smart phones, these are poor countries, but they have fraud issues and by using voice to carry that application to the field they are able to enable a much wider reach of their field workers. I can give you more examples we working with the large financials in New York City; it's a big market for us, we sort of focusing in on disease management and pharmaceuticals, and this financial stuff.

In relation to his talk he said he would bring along more examples and "hard data" from out of Forrester and other analyst groups, which say exactly how much money Enterprises save by deploying voice mashups and that the "numbers are very very impressive"

Asked if he was working with many companies APIs, he responded that he was. Asked specifically if he was working yet with Ribbit (conference sponsor) he said that he was currently learning it.

I said that Microsoft seemed to be pushing into the voice mashup direction with, Tom replied:

...I must admit I spend more time on than the Microsoft site...Microsoft has obviously recognized the importance of mashup technology, I hope they keep an ethos and keep it has 200-300 that are listed there, ProgrammableWeb has almost 3000.

Following on from this I put it to him that one of the innovation paths that BT are looking down is providing an API to their new network, known as BT 21CN, and so I asked whether or not he'd had a chance to look at the BT 21CN's API

I surely have, and I had a real great opportunity to speak with the general manager of future voice at the Sylantro global user summit last fall and he shared with me some of their work and their efforts and I'm really thrilled by what they are doing. I mean if I was to predict the future of carriers, in a world where most voice is, or at least most voice applications have mashup infrastructures, I really think British Telecom is the shining light and is doing a fantastic job. The API is very interesting, I think the fact that it is running on BTs network , you can guarantee that it will always work, it is not going to change capriciously, is a very valuable is amazing a company that size is being that entrepreneurial. 

I follow up by asking if the cost still prohibitive:

It's funny, I never think about that. I tell you why. The cost BT has for their offering is only prohibitive if you are thinking about horizontal services. If your thinking about vertical services and I go back to the Morisky Survey, the cost to the country, to the health care providers, to the people, in real money, that can be saved simply by identifying those people who will not finish their does of penicillin, makes the cost of an API infitesmal, who cares, it does not matter. Really when I am looking at these applications, the returns, the ROIs for my customers are so high and the money and the money they are saving so big and their relative volume is so small that it really doesn't matter what the costs are , given that they are somewhat reasonable

Asked if he had looked at Vodafone's Betavine and how it contrasts to the 21CN API

the great thing about the Vodafone API is that they are focusing in on location based services, which I think is a wonderful addition to what we're doing and I know there is a company here in Massachusetts called Where which is working with other carriers but really in my mind Vodafone is the leading company in enabling applications know we've heard about location based services quite a bit and unfortunately for me, most of the times I hear about location based services, I hear about advertising possibilities or ...actually I am more interested in how they can help the enterprise business process and I think the fact that Vodafone has made their API so widely available, allows these mid to large companies to do their experiments to understand what sort of LBS applications make sense. One that I happen to like is workforce automation that will figures out when the Comcast technical goes into your house, how long does he stay there and when does he leave? If you can get that information, you can figure out how much to bill that customer or you could do efficiency studies, you could relate that sort of repair took that long and just by figuring out how long someone was at a certain place, is enough to understand all that data.

Asked if there is an API service out there that lets you take speech in and send out the transcript via SMS Tom said you could gang it together with a speech to email API of which there are a few and then you just pipe that into SMS.

Tom finished off by stating:

By using voice in their application they can enforce consistency that is hard to do in other ways. So they can do a consistent collection of data by using voice forms that they would not have to do otherwise.

I had to fire in just one more and asked about the discrepancy between the global reach of Internet player's APIs such as the Google Talk compared to a pretty national focused company like British Telecom, in particular questioning interactivity between someone in the States and someone on the UK. Tom replied:

depends on important localization is going to be

One of my most favourite thinkers in the telecoms space is Martin Geddes who is a chief analyst at STL Partners. Martin also has a very well read blog humorously called Telepocalypse.

Because I see very strong value in Martin's opinions I asked him to keynote and to be on the advisory board for eComm 2008. And yesterday since I was in Edinburgh (Scotland) I decided to go round and do a pre-conference interview in person. We decided to aim for fifteen minutes but soon after hitting record we found that an hour and fifteen had passed. Now the word on the street is not to post interviews longer than the talk otherwise people will opt not to come to the conference! But I find it hard to believe that people could be so short-sighted, so I've decided to upload the whole thing. I've split it into two logical parts and will post the other half as a separate post.

Part 1 of the interview can be downloaded here in 128kbps-cbr mp3 format (it's 48 meg in size and 54 minutes in length). If you prefer a smaller file size and accept a little loss of voice quality, a 96kbps-cbr version is here in mp3 format (it's 39 meg in size).

Below is some text to give you an idea without listening to the audio interview but it is by no means anywhere near a transcript nor full account of the interview (so please listen to it). Rather it is taken from notes I made in relation to points that interested me personally. I've also added hyperlinks where I believe they could be beneficial to understanding.

I started by asking him to tell me about the Telco 2.0 initiative to which he responded:

Telco 2.0 is about moving to a world where vertical integration of the telecoms industry is coming to an end and your seeing new industry structures emerge and it is how to remain profitable and alive in that environment

He made it clear that it is not only the applications themselves (voice and SMS) which are being horizontalized but the industry itself in a macro sense.

Martin also spoke at length about varying degrees of both vertical technical and commercial integration which results in different patterns of systems for distributing data to users. One of the examples he gave was:

...downloading a movie to watch on a iPod has a low level of technical vertical integration - the ISP does not know about the movie. But Apple may be paying CDNs to cache it, so there is some degree of commercial vertical integration. When looking to deliver voice, video and data, you can adjust the two axis of commercial and technical vertical integration

He went on to say that separating the application from the delivery mechanism which one would normally assume is a good thing, is not always good:

There is an utter total fixation on the broadband ISP product which is one where the applications have no access to the means of transferring money based on who is going to pay for delivering this movie, there is no API for hey Mr ISP...I will pay for it's delivery, don't count these bytes towards the users monthly usage cap, which is what the application provider would like....there are benefits from separating the applications from their delivery but also looses a lot in that process of the commercial richness of telephony and SMS and that is a problem

He then made a pertinent statement about the future of the Internet:

The future of the Internet and the future of broadband is largely about putting back into it some of the rich commercial models from other distribution and delivery systems like the fixed telephony PSTN system but without all the technical limitations of those old legacy systems

When I homed in on the net neutrality issue with the question:

you decide how many gigs you want, what speed you want, you purchase connectivity as a product, surely that should not be bound to the application, the applications you may or you may not pay for but these are separate things?

Martin responded:

there are a number of subtleties to that question...when we say connectivity what do we really mean? And there is two parts to that. One of which is getting the pure access do I get from my mobile device to the cell tower...separately from that there is the question of getting the data across the world to wherever it needs to go. What we are seeing is the access component is relatively steady over time...the users do not like having to think about how many megabytes and megabits they need. So if you want to access the new BBC iPlayer online and your on Tesco value broadband, you've only got a 1 gigbyte usage limit in the month, the average user is not wanting to have to start thinking about the bit rate of the streaming video. All they want to know is either I am buying some product and it comes with postage and packing included or it is an add funded thing from something like YouTube and Google are paying for the whole delivery...and also they don't want to think about having to provision a new access everywhere they go, so when you go to your parents for really don't want all your usage at your parents house to be counted against your parents ISP plan because they might be on Tesco's value ISP broadband plan and not on the super business class version that you prefer. So we have to go work out how to package up the access, the data service itself and the application of devices in new  and different ways to sell the user exactly the thing they value and no more and no less. The best example around at the moment is Amazon's Kindle...this device will deliver you ebooks, you don't have to think about megabytes and megabits or whether it is provisioned, or just does has been packaged up perfectly.

In relation to another application which is bound to the device and connectivity Martin states the SMS market last year was $100 billion dollars which is bigger than movies, music and computer gaming all put together.

for the few gigabytes worth of traffic that all of SMS adds up to, some small amount the users are paying some very very large amount of money but only if you view that purely from a very technical viewpoint. What that is telling us is a couple of things. One of which is that  when you brake apart a product into small pieces and sell it by the sachet rather than by the big bulk bottle,  you get much higher margins....another thing is that SMS is a distribution system for messages and data. And each of these distribution systems has a large number of attributes. One or two of which are what kind of technical data can it carry and how can you make payments thru it but it has a whole load of other attributes as well so for example the difference between SMS and the Internet is that SMS is based on phone numbers, phone numbers are attached to countries so for example if you are running the Eurovision song contest and you want people to be able to vote for songs, but they can not vote for songs from their own country well with SMS it is easy to filter out those votes....with the Internet you can not know with high certainly which country or jurisdiction  and ISP address is attached to and it is easy to go and fake it as is only by understanding the full suite of attributes of these different distribution systems  and their cultural context and their expectations like telex has particularly laws, it has legal force in a way that other forms of communication maybe don't; fax only became a legal form of communication 10 or 15 years ago even though it existed for longer. So you need to look at the whole context of each of these different systems. The clever thing you can do with a telco or an application provider is blend together these different systems to create in effect new communications media. The impressive example at the moment is something like the Sky Anytime manages together broadcast and broadband...there are multiple ways of delivering the bits to the user...Sky have blended together the best of different distribution systems into a new one.

Ingeniously Martin has been thinking of the Internet as a means of signalling and coordination rather than always also the best means of delivery. Martin also steps into heretic waters by knocking the fixation with VoIP as a means for moving voice:

Netflix is using the Internet as a signalling system and the postal service as a bearer. And the postal service is a very efficient way of transferring tens or hundreds of gigabytes worth of data....the important lesson is that when you take this to where the cash is - the money is in voice - is that there has been this fixation with voice over IP for a number of years and actually, maybe and this is heresy but maybe the good old telephone system is really good at transferring voice. Hey time division multiplexing, does constant bit rate voice, real well! So you have to throw an awful lot of [VoIP] technology at a problem [voice quality/delivery] that does not exist to try and persuade anyone to move over to voice over IP. So it is only by understanding the full context and capabilities of each of these systems that you start to think hey actually the Internet is good at allowing new forms of signalling to evolve faster than what SS7 or whatever may have why don't we focus on allowing the IP part to do what it does well which is how do we enable the rendezvous' in front of this phone call, how do we return signals and presence data and the little picture of where I am at, location information to help people make phone calls at the right time...stop worrying about trying to do voice over IP until the technology is super duper mature until we can not possibly afford to maintain two networks which is quite a long way away still and let the phone network do what it does well which is phone calls.

 When Martin said that I could not help but ask what he felt about 21CN: 

...if we just focus in on the voice part of the network itself...what I'd be tempted to do is look at how long from inception to delivery [of 21CN]...that is an awfully long time to be planning a technology project over, in this environment, and you could have built a wrapper around the existing voice network...and started to enabled lots of the "advanced services" that the 21CN would offer, years earlier, if you wanted can see the allure of moving to an all IP network but you also have to understand the high risk of having any project that has 5-10 implementation time scales, where the protocol and architecture you are choosing may be obsolete by the time that you get to the end

SIP has been facing growing criticism and Martin picks up on that to prove his point (as SIP is a core protocol in BT's 21CN):

 if you look at something like SIP which was the obvious clear winner out of the IP signalling protocols, even that has got it's problems, it's got it's architectural mistakes, it's incompatibilities. It has been an absolute nightmare to get everyone to have an understanding of what a particular SIP message a result the chances of  SIP itself being exposed to the application developer and being the interoperability layer, probably is not going to happen. SIP and IMS is good at provisioning the signalling to say hey Tom over here has paid a certain amount of money to have certain kinds of traffic being hauled over this is good at saying hey lets manage some virtual circuit. What it isn't necessarily good at is trying to have a common understanding of what some presence message might mean in the future because it's all contextual to the user

Martin redefines what telcos are which is neither a dumb pipe nor an application provider:

let the signalling protocols do what they are good at which is help the telco be the logistics provider for data...personalized logistics providers for data, that is what telcos are. They haul data around from point A to point B but they do it using a number of means, so could be broadband, could be content delivery networks, edge caching. The telco provider is just like a logistics provider for atoms, blends together rail, sea, land and air transport...for voice you have prioritized networks vs best effort vs full circuit switched, packages it up with the applications and the device but does not get involved in the application itself. All they are doing is helping these people get data A to B, which isn't just being a dump pipe, it is a lot more complicated that just being a dump pipe because your having to slice and dice up that pipe and enable competing, contending uses of the pipe to be prioritized against each other to have much finer grained provisioning of the pipe...

When asked in relation to the electricity analogy - "is this not like saying that if you buy a kettle, someone else should be paying for the electricity that goes into the kettle" he responded:

When you post something there are all kinds of ways of deciding on who pays for the thing being posted, could be the person at either end....electricity distribution is like broadband and doesn't offer these different payment mechanisms and there are good reason for this. It could be good that each appliance has to account for its own usage. There are good reasons why the power network does not have this capability....power distribution is vertically integrated for a very good reason.

 Since it was clearly apparent that at least on the surface those positions seemed to differ extensively from what network neutrality folks appear to be advocating I steered the conversation closer and closer to the heart of that debate, to which Martin responded:

the whole network neutrality debate should your ISP ...price discriminate and reclaim all the value for themselves...there is a duopoly in the US and there are some pros and cons of that model. There are some lucky people in that model where Verizon FIOS has been deployed because the Verizon model says this is a zip code with higher income people who pay their works to some [network neutrality] will also greatly inhibit the growth of the necessary economic models that will be needed in the future, particularly the growth of rich wholesale markets in access and connectivity.

 Martin goes on to say what would be termed anti-network neutrality is in fact a good thing:

The vertical industry structure you see in the USA, where AT&T and Verizon and a few other companies dominate the market and you have limited retail choice, where you have the choice of one or two broadband ISPs. In the UK market there is a thriving, vibrant wholesale market. In France a thriving wholesale market, a foundation in which to grow new wholesale products which would enable new kinds of connected appliance, so you go out and buy the Apple TV box and plug it in and you don't have to think what broadband plan your on...the iTunes service has to worry about getting the content onto the box and paid for it. So as long as you do not have a bottleneck in that little access loop stopping retail competition then the network neutrality debate, this whole bogey man, is a shadow on the floor. The shadow is something you want, which is the rich wholesale market. The idea that Google will be charged extra for delivering YouTube videos, it's, here is the secret, a good thing! It is a good thing that Google could offer you YouTube videos and you can watch them all day, in standard def., in high def., and Google is footing the whole bill for you, which today isn't the case.

Due to fear of loosing that which I value (access to Internet sites without my telco/ISP trying to rob me on the way) I asked "excuse my instant pessimism, you will get the same Google video quality but the telco will charge you 5p or 10c everytime you watch a video?" Martin replied

the worst fear of network neutrality is that your ISP will be charging you to go to something that you value highly. That is'nt going to happen. It is'nt going to happen.

When asked why he was so sure the response was:

the charges are going to be to those upstream parties like Google, to people like Microsoft... it [network neutrality] is trying to treat the symptoms of a lack of competition caused by the access bottleneck. You can not cure cancer by giving people more morphine. It doesn't work that way. It seems to take the pain away but they still die. In the US market they need to understand that the infrastructure is not part of the telecoms industry, basically. The infrastructure is part of a more multi-utility access business and their job is synchronize up the replacement of the gas pipe with the laying of a new fibre...

Martin laid a further attack on network neutrality advocates stating:

if you want network neutrality, neutrality has to be a difference layer. It is not the IP layer, it is not layer 3. Neutrality has to happen at layers zero and one....They picked the wrong place to go and fight the battle. The good news is that if you started to initiating anti-network neutrality legislation, I don't think anyone could actually write anything down which would be meaningful and enforceable. So it is largely hot air and time not well spent.

 Knowing that STL have been working on a future of broadband report, I asked to know a little about it:

we've just finished a 6 month study on the future of broadband, future business models of broadband and to do that, we did an online survey which I know 800 respond, we've talked to dozens and dozens of people...we've been comparing broadband to the other industries like container shipping  and the power distribution industry  and we've been trying to learn the lessons we can from these other industries, what does it mean for broadband and our conclusions are very much along the lines of what I have been describing. Broadband is part of a multi-network data logistics business, it does not exist in isolation

Martin made the point that in the future we should expect to see a closer relationships between the applications and the networks in question:

the biggest credit checking company in the UK, is BT, yet if your running an application on a BT DSL line you have no means to interact with that personal private data. Location and presence are other examples...the telco or the broadband service provider is a provider to these people building these applications on top of the network and doing things which are natural by products of running a network, the logistics business

 When asked directly "is your position on network neutrality, that it is a moot point", the response was:

pretty much yes, because I've never managed to see a really meaningful definition of net neutrality. I've saw lots of high level superficial definitions but when it comes to applying those ideas in practice, there far too wholly and vague. So it's just a name for a fear rather than a viable policy that anyone in regulation can adopt. You can think about has any network been neutral?

 Back on the topic of ISPs he stated:

the current ISP model tries to charge everyone the same amount for a very broad spread of actual usage, you can not remedy that though by going back to metered usage as people hate having the clock put on, they don't understand the megabytes and megabits stuff and you cannot packet shape your way around the problem because the users don't really understand advanced network policy enforcement...the way to solve it is to take the voice and video traffic, take it out of the ISP product and do it in a way that is beneficial to the user...

 Making his point that network neutrality is just a name for a fear and little else:

the network neutrality fear is that his bogey man is going to come along and rob you. The bogey man really just is a shadow of something we actually want which is a rich wholesale market.

 When challenged with "but you said right at the start that there is not such a rich market in the United States, so the network neutrality fear is therefore very real then, surely?" Martin passed comment on the future of the US broadband industry:

It's real in that there is a gap between what people are being sold at retail by an ISP and what they are actually getting. Comcast can suddenly come along and decide they do not want to have this peer-to-peer traffic even though they sold you Internet access but the solution to that is to restructure the industry, so users have retail competition and have lots and lots of people trying to compete for their business and whoever turns out to be a two faced liar, you just don't renew with them and go with somebody else. Now that is not going to happen within the current US industry structure and the consequences are that probably the US will fall behind as an industry leader 

Finally I could not help but bring into the interview a topic which has been very much on my mind by asking "have you given any consideration to open wireless? As in the 700Mhz type stuff?" to which Martin replied:

there are certain benefits to vertical integration in that it helps to pull more money into the infrastructure layer, you cross subsidize from your over priced application services because you can control what runs over the network. The problem then is that you end up with a very stagnant sort of services network because everything is gate-keepered by a telco and the telcos idea of progress is not the same as everyone else's. Superficially open access is very attractive but it is really unclear how the contention between the commons of the network and the need for innovation and the need to ration out a fixed amount of space is going to work out. So I am really keen to see the experiment and I think the experiment should be well run. There should be enough spectrum given out over to open access rules. There is a number of different models, potentially, so something like WiFi which is a bit of free for all so long as your power level is not too high. Some where it is open access, where it is all wholesale and business to business type transactions. So lets see the experiment run. I don't think anyone is sufficiently clever to understand all the variables involved, so let's see the experiment run in many different places as I don't think anyone knows what the outcome is going to be.

eComm 2009 Conference

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