Tuesday, March 30, 2004

Daiwa Eurotelcoblog No. 10 TGIFriday 19th September, 2003: Wi-Fi backbone/Skypewatch/SIPQuest (original email blast 3:37 PM Friday, 19th September, 2003)

Wi-Fi backbone in Berlin

We've given a lot of attention to free networking projects over the past few months, and continue to monitor developments in this space closely. One of the mailing lists we monitor contains a very enthusiastic account of a the Freifunk event in Berlin (http://informal.org.uk/wiki/index.php/FreifunkReview). Very high geek content in this link, but you get the idea. This is more or less representative of the DIY events common to this movement, but the site also contains a map of the Berlin Wi-Fi backbone under construction, part of which is up and running (http://www.freifunk.net/wiki/BerlinBackBone).

Skype finally received some mainstream coverage in today's Wall Street Journal, and Bloomberg now seemed to have picked up the story. The Skype website now shows 525,000 downloads, i.e., 150,000 higher than this time yesterday, suggesting that the number of new downloads has more than doubled again - in a day. On the related issue of file sharing Wired has published an article discussing a rather unorthodox use for data on file sharers - to develop marketing strategies for record labels (http://www.wired.com/wired/archive/11.10/fileshare.html).

We've made a lot of sweeping statements recently about SIP and its implications for the incumbents in the residential market, but what does this technology actually look like as applied in an enterprise environment? Ahead of next week's VON event, we were treated yesterday to a briefing from Canadian start-up SIPQuest (www.sipquest.com), formed in December 2002 by a group of former Nortel executives, with the co-author of the SIP standard, Dr. Henning Schulzrinne, as its chief scientist. Via this channel, the company has exclusive rights to the commercialization of innovations developed at Columbia University under Dr. Schulzrinne. SIPQuest is in the process of developing and marketing a real-time collaboration and communication software suite for use in the enterprise. Release 1.0 of the software, scheduled for the end of the month, will include IP-PBX or PBX extension, audio conferencing, hosted PBX, SIP to H.323 interoperability and basic mobility. The SIP/H.323 interoperability issue is not a small one - many of the desktop SIP phones we have seen for the enterprise market do not offer this, and interoperability is often cited as a reason why enterprises are reluctant to adopt SIP. They don't want to strand the capital they have already sunk into H.323 in a complete cut over to SIP. SIPQuest expects a migration period of 8 - 10 years, and believes that to be successful vendors have to offer products which can co-exist.

Things should get very interesting early next year with the release of version 2.X, featuring enhanced mobility with multidevice capability, video-conferencing, instant messaging, presence, application sharing, and presence & availability management. What this means in plain English is that SIPQuest plans to introduce a range of tools which will help enterprise employees (whether in offices around the globe or on different floors of the same building) to communicate with each other (via voice, IM, and conferencing) and collaborate on projects, including simultaneous file sharing. The mobility angle comes through the harnessing of an innovation from Columbia University, allowing soft handoff from one 802.11a/b/g access node to another within a campus/office setting, and will function on a number of devices including laptops, tablet PCs, palm tops, and presumably on whatever other hybrid devices we may be seeing by then. The function of presence allows employees collaborating on a project to "click and drag" another participant into a conference session, for example to ask a quick question or seek an opinion on a particular issue.

How this works in practice may be illustrated by the following scenario: In a hospital equipped with the SIPQuest solution, a doctor doing rounds visits a patient and has some questions about the diagnosis of another doctor. The doctor at the patient's bedside uses a palmtop device to connect via Wi-Fi to the local access node and pull up the patient's file. He then sends an instant message to his colleague, requesting a chat. The two then initiate a conference call in which they jointly view the patient's records and test results. They decide to consult a specialist, determine through presence that she is available, and "drag" her into the conference to ask her opinion. New notes are added to the file, a surgery theater reserved, and a request made to transfer the patient at the required time, all without any of the participants meeting face to face.

The hospital environment is only one vertical market segment which SIPQuest is targeting, along with universities, financial institutions, and the warehousing space. On the pure voice over Wi-Fi side of things, we have been impressed by the response to products from Vocera (www.vocera.com which offers a unique VoIP over Wi-Fi solution for hospitals), and we believe SIPQuest may at some point look to partner such companies with penetration of an attractive vertical in the voice market. We also expect that SIPQuest may be an interesting partner for some of the larger software players looking to penetrate the enterprise space.

What are the implications for the incumbents? First of all, as a totally software-based product the cost of deployment for the first phase of SIPQuest's pure SIP solution (i.e., without the SIP/H.323 gateway) is $100 per line (seat), versus $400 - 600 for hardware-based deployments. Besides the cost differential, we think developments such as this are significant in that they further blur the lines between telco/systems integrator/software vendor. Whether SIPQuest partners with smaller niche players or major software vendors/integrators, we think that products such as this may over time limit the involvement of the incumbents in the process of telecom investment by enterprises. We think that on balance, the incumbents are just as likely to become resellers or channel partners for such products, than competitors in this space. At a very fundamental level, linking all the employees of a global enterprise through a structure allowing real-time collaboration and communication without use of the PSTN has obvious implications for POTS revenues. We think we are already seeing some early signs of this effect in the UK business market call volumes, particularly in the national and international call segments.

SIPQuest is just one of many companies we're looking forward to meeting next week at VON Fall 2003. We are arranging a demonstration of the technology and will report back in more detail after the event.

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