Takeaways from Osney Media Voice over IP Forum

Today I presented at the first day of the Osney Media VoIP Forum at Le Meridien Picadilly. It was an interesting event overall, partly because almost everyone there was from industry (I was a rare exception) and partly because Osney events are based on a roundtable format, encouraging discussion and debate in mini-breakout sessions along the way. I met some interesting people and heard some interesting things. I didn't meet everyone, but carriers I saw being represented included BT Group, Vodafone, mmO2, Telefonica, TeliaSonera, Telenor, Cable & Wireless, Swisscom, Matav, Inmarsat, and Glocalnet. I also saw/met representatives of both OFCOMs (the Swiss and the UK). Rather than go through each of the presentations, I'll just highlight a few things of interest.

John Blake from BT's Hosted IP Services division gave a very detailed and interesting presentation, outlining a lot of BT-specific information, but also more general industry drivers relating to the enterprise space. From this it was clear that awareness of what IP can offer enterprise is spiking, with a general technology refresh wave coming through now, five years on from investments made in more optimistic times and ahead of Y2K. Customer interest is generating a lot of enquiries, if not outright sales leads.

He also discussed in some detail BT's deployment for UK bank Abbey, though the really interesting information came later during the roundtables, when he shared the fact that only 10% of the project value actually related to VoIP itself, though voice was the central, mission-critical element, the pull-through that made it an attractive proposition for the customer. It was also revealed that in the current £15m BASF deployment, only around £32k of the project value relates to VoIP proper. This seemed to highlight an interesting and disturbing facet of the entire VoIP phenomenon for many in the audience: while voice may be the essential driver for both enterprises and consumers in making purchasing decisions (technology refits for the enterprises, broadband adoption for consumers), it may not have as strong a business case as a standalone entity. The overall tone in this regard grew noticeably more bearish as the day wore on.

Someone I chatted with in passing (who preferred to remain anonymous) alluded to an impending VoIP initiative from Macromedia. This is the first news I have had of this development, but it seems credible and potentially somewhat frightening. It also makes me anticipate what sort of shape this might take (readers will remember the coverage I gave to Gush early this year), i.e., it could be very differentiated and interesting. This came as interesting news, considering that paranoia levels regarding the global internet brands seem to be exceedingly high among the carriers. This is an issue I sought to stress in my presentation, and independent consultant Matt Winckless later highlighted in his case study just how much was possible on a DIY basis if enterprises merely enabled the correct features in existing versions of Windows.

John Rego from Vonage made a presentation, straight from an overnight flight from Philadelphia, clutching a UTStarcom Wi-Fi handset with 6-hours talktime and 70-hours standby. John is a charismatic and entertaining presenter, but the much-anticipated revelations about the UK did not materialize, and the presentation was pretty much the standard Vonage story. He did reiterate that the company will launch in the UK before the end of the year (or heads will roll, apparently), and also Switzerland. Following on from this, Vonage will move to establish beachheads in Hong Kong (a market which strikes me as a bloodbath for new entrant triple play operators, let alone voice-only players, no matter how good) and Singapore early next year, before returning to the European market. Vonage expects to be in 12 countries by year-end 2005.

He also gave some other interesting insights on operating stats. Apparently 20% of net adds are coming from retail partners (Best Buy, et al), 25% of customers take a number from an area code other than the one they inhabit, and about 5% of total volumes (3bn minutes since launch) are on-net. This latter stat, if I remember correctly, is pretty much unchanged from this time last year. The other interesting observation John had was that roughly 65% of call center calls are pre-sales enquiries, and half of these are from people who are interested in the service, but who don't have broadband. This echoes statements from cable players like UPC and Cablecom, that VoIP and broadband are mutual accelerators - though this inevitably brings us back to the observation above, that voice may be an essential means to an end, rather than an end in itself.

One last point of note was that a representative of Swiss regulator OFCOM stated to John Rego in the Q&A round that OFCOM would be "very happy" to see Vonage come to Switzerland. During the Q&A the UK OFCOM was also asked to clarify its stance on VoIP, and a representative stated unequivocally that not only is it adopting a "light touch" approach, but more importantly, was actively lobbying other national regulators in Europe to follow suit (obviously this hasn't reached Germany yet!).

I had a chance to catch up with Alan Duric, CTO of Telio. The company is closing in on 30k subscribers in Norway. Apparently 80% of subscribers port their PSTN number over to the service, and the really interesting thing is that a significant proportion of the other subs are younger consumers who never previously had a fixed line connection. (Surely there's a message here for other European regulators as regards naked DSL.) Telio is now in 500 Narvesen convenience stores across Norway, and it appears that the retail presence is generating a significant uptake, if mainly through interested consumers picking up the literature in the stores and going home to sign up on the website. This is an interesting development also in light of the fact that the Narvesen chain's parent, Reitan, also has a range of stores in Sweden. (My own observation is that Reitan's ownership of Norwegian MVNO Sense also offers some interesting cross-marketing opportunities, particularly if we think about the sort of possibilities which open up when we connect SIP to the HLR in the GSM world - though there was no sense that this was happening currently.)

It is difficult to draw too much in the way of conclusions from the event, though some interesting issues/concerns were highlighted in the roundtable breakouts:

• VoIP may be booming, but the impacts are entirely unclear, at least in the consumer space, where market fragmentation looks set to increase;
  
• Seamless, ubiquitous IP communication may not necessarily be a productivity enhancement in the enterprise, as employees then have to combat constant interruption;
• Numbering/identity issues are a mess;
• It is exceedingly difficult to identify what portion of the VoIP adoption/usage pattern is outright substitution, and what is new usage, or usage which would have found a different outlet (or no outlet) if not for the availability of IP;
• If voice is the essential glue which holds a lot of other business models together, yet voice may be a strategic weapon for those with an entirely different objective than making money from voice itself, then how is anyone going to make money from a pure voice offering in future?

All of these are interesting observations and hard questions, and as an outsider, I was struck by the apparent lack of any real answers among the very bright and hugely experienced audience assembled. That's not a criticism by any means, but it is a pretty good measure of where the industry stands - balanced circus-elephant-like atop a ball of confusion.