XConnect launches Video Interconnection Exchange

Well, that title is a mouthful, but it's good news for anyone who likes using video for calling or conferencing - and especially those who want to do this but cannot.

Let's start with XConnect. They're a U.K. based pioneer in the IP peering space, a market I've been following for several years. It's been slow to develop critical mass, and I'm one of several analysts who have commented about the reasons, but most of us know that the underlying concept has value.

Until now, most IP peering initiatives have been voice-centric, but there's simply not enough money in it - or arbitrage opportunity - to make this a household name. The value proposition for video, however, is more attractive, and that brings us to VIE. Aside from the fact that video endpoints aren't ubiquitous, there are two basic barriers to growth. First is cost - video-enabling technology is expensive, and video is bandwidth-intensive, requiring operators and enterprises to invest heavily in upgrading their networks. The second major holdback is technology-based - specifically around interoperability. There's a mishmash of standards and protocols that make video difficult/impractical/impossible to do when trying to connect between or among networks.

This is XConnect's world, and to address these problems, they launched VIE - Video Interconnection Exchange - earlier this week. I had a briefing this morning with their CEO and Founder, Eli Katz, so I'll share some thoughts that go beyond the news.

The basic idea here is for XConnect to serve as the hub for a federation that addresses the above-stated technical issues, hence enabling video between IP networks. It sounds simple, but it's not - XConnect has been at this a long time, and they feel the market is now ready. Their news included comments from one VIE member, Telio. Long time followers of my blog will be familiar with this Norway-based operator, and they've been doing video calling for years. Telio is definitely an early adopter-type, and represents the type of operator that sees the value here.

I suspect U.S.-based operators will take a bit longer to catch on, but video calling is not new in E.U. or Asian markets. For consumers, of course, smartphones and tablets are simply kicking video into overdrive, and that's really going to accelerate the adoption of all things video. This means that consumers will actually drive demand here, and that's where I think things will get interesting for VIE. Think of it as video roaming. It won't take long for consumers to get beyond their My 5 circles of friends and family to wanting to do video calling anywhere/any time, with anyone.

The enterprise market is a different story - same for SMBs - the other two markets VIE is after. Now we're talking about conferencing and collaboration, which takes us into the worlds of telepresence and UC. There's more complexity here, especially around security, and I think carriers will have to be more proactive in pitching the VIE story to their business customers. As such, I think the business market for VIE will be driven more from the supply side, but that's ok. At least in this case, carriers are addressing a known problem, and there is pent-up demand for businesses to make greater use of video.

Being vendor-neutral, VIE sits in the middle of all this, and with their cloud infrastructure, offers a safe middle world where federation can take place. The key here is getting carriers to add their IP addresses to XConnect's ENUM registry, and as with anything cloud-based, there is a basic matter of trust to consider. However, carriers need to weigh that against current alternatives, and if they factor in what VIE offers in terms of enabling IP interconnectivity, scalability, security and cost effectiveness, the business case should become a lot stronger.

On that note, the business models aren't entirely clear to me, but once carriers decide they need to offer this capability to meet customer demands, they'll figure out pricing schemes pretty quickly. This will probably take the form of monthly subscription fees, much like the tiered options we have for broadband service. Whatever form that takes, I think the odds of success are pretty good, since market demand is real. As mentioned, the business market will probably take longer to kick in, but once carriers find success with consumers, they'll find ways to make it work for enterprises and SMBs.

Disclosure - I'm an Advisor to XConnect, but not actively involved in their everyday operations. I'm sharing this to be fully transparent, but that aside, I can objectively say that the trend around video peering is becoming more real now, and VIE is a tangible proof point. As other developments emerge in this space, I will comment accordingly. I am in fact, working on another one currently, but it's not ready for public consumption. Stay tuned!

Loose Ends - Skype and the Great Firewall of China, VON/Virgo Deal, Oz/Nokia Deal

I don't get paid to blog, so when I'm busy with consulting work, I fall behind on the news. There is always interesting stuff going on, and before the week is out, I wanted to quickly draw attention to three stories of note. These are all of interest to me, but it's way too late to post about them. So, for the laggards out there, here are three items you might want to explore further.

1. Skype - China/censorship/privacy - you get the idea. Wow, this is an interesting - but not altogether unsurprising story. Barely a month after the Beijing Olympics, here we go again, with the dark side of state-run media rearing its ugly head.

You don't have to look far for coverage of this story, or think too hard about how insidious all this is, but it's another reminder of how the Internet is impacting our lives. Ultimately, it may be a borderless technology, but as they say, the "great firewall of China" isn't quite onside yet.

I'd start first with Phil Wolff's posting on Skype Journal, then Om Malik, and I'm sure you'll find many others from there. I should also add this is not a new problem, and Skype is not alone in this morass - other IM platforms have had similar issues. RIM too, by the way.

Aside from the coverage you've already seen on this, I wanted to add some local coverage that I thought was really great. It ran in today's Globe & Mail, and talks about how a lab researcher here at the University of Toronto - Nart Villeneuve - uncovered some online trails that led him to all kinds of censorship and monitoring in China with Skype traffic. It's a great read, and am pretty sure will add valuable first-hand insight for anyone following this story. I should add that local colleague Jim Courtney - a regular Skype Journal contributor - picked up on this today, as have others like Om Malik.

I'll end on that triumphant note, as it's great to see some homegrown investigative work getting to the bottom of a truly international issue.

2. Virgo acquires VON. This is a much smaller scale story, but still of interest to many of us in the space. Several of us got wind of this news at the IT Expo a few weeks back, but it's just becoming official now. Andy Abramson had a good wrap on this the other day, and there's not a whole lot more to say about it right now.

Well, there is, but it's end of the week, and I'm kind of done now. That said, I wanted to at least acknowledge the story because it's evident from my recent conversations that most people don't know this has happened. Now you do.

3. Nokia acquires Oz Communications. Yet an even smaller story, but also of interest to me. Everyone knows Nokia and how they're doing lots of cool things with Ovi and just launched their iPhone killer. But most of you don't know Oz - a bit like saying you don't know Jack.

I've followed them for a while, and it's another great Canadian success story. So, add a notch for our win column, which is a nice way to end the week as the weather gets colder and my Red Sox look to keep winning.

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Service Provider Views - Is VoIP Dead?

Well, that's what Skype's Jonathan Christensen thinks. My latest Service Provider Views article ran yesterday on TMCnet, and the focus was on his keynote at the ITExpo earlier this month. I thought it was the most interesting presentation given, and is very much in line with what my Service Provider Views column is about.

Of course, it's a provocative question, so you'll just have to read the article yourself to find the answer. And whether you agree or not, I'd love to hear your thoughts.

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Post-Vacation News Roundup - XConnect, Jajah, Mobivox, Fonolo, magicJack

Things always happen when you're on vacation, so I'm just catching up on industry news now. Didn't seem to miss a whole lot while I was gone, but I wanted to note four items that have just hit the market in the past couple of days.

They're all different and probably warrant separate posts, but I have too much new stuff to move on to, and wanted to at least give them some attention. So, in no particular order, here are some items that you should be aware of, if not already through other sources.

Item 1 - XConnect

On Wednesday, XConnect announced some breakthrough news on the peering front. XConnect has developed a peering solution for cable operators in the Netherlands, and as far as I know, this is the first of its kind in the industry. This stems from XConnect's big win back in 2006 to handle all the peering among Dutch cable operators. By routing all this traffic across a common platform, the cable operators in effect create an alternative to the PSTN that could largely bypass the local telcos altogether. This was a great proof point for VoIP and the ability for a commercial peering solution to work on a reasonably large scale.

The big news now is that XConnect (along with partner Kayote Networks) has achieved interoperability with the Nokia Siemens hiQ VoIP platform. This builds nicely on XConnect's 2006 peering win, which led to the development of SIPX, the Dutch SIP Exchange project for cablecos. With Nokia Siemens being so strong in the EU, and cable penetration being 97% in the Netherlands, this news means that cable operators have a pretty complete solution for VoIP. Not only is this great validation for XConnect's vision, but it allows cable operators to offer true end-to-end SIP-based VoIP. This should translate into a superior offering, not just in terms of more affordable service for subscribers, but a better quality experience, especially with high fidelity voice codecs and video telephony.

Item 2 - Jajah and Mobivox

On Wednesday, Jajah actually had two really cool announcements. First is Jajah Babel - wow, this is neat. Released just in time for the Beijing Olympics, this service provides real time translation from English to Mandarin (and vice versa) on the phone. Of course you need to use Jajah's platform, but it's not hard to imagine how popular this is going to be over the next few weeks! Let's not forget that Jajah is now running Yahoo's voice platform, so they've got a pretty large global market at their disposal, and like the Tower of Babel, this will no doubt be the first step towards adding other languages and getting everybody talking to everybody. Just when you thought voice was getting boring.

Jajah also had a second announcement, this one being a partnership with Mobivox, a Canadian company I have followed for ages. This one is a bit smaller scale, but still pretty interesting. Not to confuse you, but there are two stories here. First is Mobivox's move to partner with Jajah to be the platform for their own offerings. Second is Jajah's launch of their Concierge service, which uses Mobivox's voice recognition technology to enable voice-activated telephony. This will be a handy value-added feature for operators using Jajah's platform, especially when targeting mobile users. As the press release notes, states like California now require hands-free calling in the car, so it's easy to see where Concierge will be of value. Sounds like a good partnership to me.

Item 3 - Fonolo

Yesterday, Toronto-based Fonolo announced the release of its API at the ClueCon developer conference in Chicago. The developer community is really the beta audience for Fonolo, but the early reactions - there and just prior to ClueCon have been just great.

Check out this post from The Consumerist for a starting point. Andy Abramson's Fonolo post provides more detail along with links to other industry responses.

If the term "Deep Dialing" is news to you, it won't be after reading this, and I guarantee that you'll get the idea right away. I'm not going to spoil this and tell you here - just read it and see for yourself. Then, go ahead and sign up for the beta yourself. I've been using it a bit, and it's pretty cool. This is a definitely an application everyone has a use for, and I'm pretty sure it will be finding its way into a telco near you, hopefully by early 2009.

Item 4 - magicJack

If you follow my blog, you may recall my post about magicJack back in early June. I provided my candid thoughts after learning about it following a magicJack story I was interviewed for. It has turned out to be one of my most enduring posts, as I'm still getting comments about it - both pro and con.

Anyhow, I smiled broadly when I saw that colleague Thomas Howe put up an even more candid post about magicJack while we were away on vacation. Looks like magicJack is in the midst of a big TV campaign, and Thomas just couldn't believe what he was seeing in their ad the other day. So, if you liked my post, you'll really like his! The Analyst in me can't help but try to be balanced, whereas the Engineer in Thomas sees things more black and white - that is, all problem and no solution. Read 'em both, and tell me what yout think - I'd love to keep this dialog going.

This sure has turned into a long post, but now you're up on all the news that's keeping me up at night.

Disclosure - I am an Advisor to both XConnect and Fonolo, but in all fairness, I'm not the only one out there blogging about these news items.

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Skype-O Killer... que'st que c'est...

I can't seem to face up to the facts,

I'm tense and nervous and I can't relax...

Recognize the lyrics? Of course you do. But if you don't, it's from Psycho Killer, an early tune from one of my fave bands, the Talking Heads.

Like the title of my post? Clever, huh? Starts making even more sense when you start with the lyrics (did you pick up that other subtle Heads innuendo?). Those first two lines say it all for me when it comes to this Skype-killer storyline that started early last week with Om Malik's post.

Big telcos are a bit on edge these days, to say the least, and even though they still have the subscribers, their hold on reality is becoming increasingly tenuous. Fa fa fa fa fa, fa fa fa fahh...

I generally stay away from these big news items as I'm usually way too slow off the mark to comment on a timely enough basis. This time around was no exception, and there sure has been a lot of posting about it over the week. Some of it has been on the positive side, such as Erik Lagerway or Gary Kim, and some of it has dismissed what the telcos are thinking as ridiculous, as with Rich Tehrani.

A review of these posts tells the story, but here's the basic idea. Big telcos like AT&T, British Telecom and Deutsche Telecom are supposedly working together to come up with a common platform of their own to support wireless VoIP. It's a dream for the peering community, because they need the volumes of the incumbents make their exchange platforms economically viable.

Anyhow, this story is more about the intended losers than the winners. The real target is Skype, and if there's any substance to this grand plan, it's pretty strong validation that Skype still matters and is seen as a real threat to the incumbents. They may see Skype as siphoning profitable minutes of their networks, but I see it more about making the pie bigger for everyone. Long term, we all know that voice is going to zero, and the name of the game is connectivity and applications.

Whether this consortium comes together or not, the story raises an underlying issue about the dual-edged nature of Skype. Its early runaway success was about ease of use, which was due in large part to Skype's secret sauce, so to speak. Their technology was - and is - proprietary, making it difficult to copy, but likewise for integrating with other solutions.

Skype has managed to sustain its incredible growth with a proprietary solution while most of the telecom world has moved to adopt SIP, a standards-based protocol that allows for seamless interoperability. As SIP increasingly becomes the de facto protocol for VoIP, once big telcos cross that line and agree to peer their traffic, they will potentially have an answer for Skype.

I'm not saying that's going to happen any time soon, and if you side with Rich's post, you'll be of this mind. Still, even just recognizing this potential should be a wakeup call for the telcos to see that with SIP, they have incredible opportunities to do things that Skype can't do. Don't get me wrong - I'm a big Skype fan, and I'm not trying to create a recipe for their demise - far from it.

Instead, I'm trying to tie two ideas together that I think add something to this storyline. Most of the blog and media coverage about the "Skype killer" has been focused on the big guys ganging up on the newcomer and settling things once and for all. I get that - we all do, for better or for worse.

That's where the Psycho Killer idea kicked in for me. This ganging-up tactic strikes me as being very defensive and destructive - it's what you do when you're tense and nervous and can't relax, right?

To me, facing up to the facts should be more about building on your strengths rather than exploiting the weaknesses of your competitors. In other words, don't worry about trying to squash Skype. Their revenues in the big scheme of things are insignificant, and they really don't own the customer the way telcos do. It's a bit like all the effort some telcos are putting into their efforts to take down Vonage - it's negative energy that won't make you any friends down the line.

Wouldn't it be better to not worry about Skype, and just focus on building on the inherent advantages of what you have today, such as SIP? Skype doesn't have this, and if you can turn it to your advantage, it doesn't matter what Skype does.

Why am I saying all this? Well, because I want to steer you to a nice article written for me by the CEO of SightSpeed for the IP Convergence TV portal, which I'm the Editor of. CEO Peter Csathy prepared a thought leadership piece for our portal about the virtues of SIP and interoperability for applications such as video.

Following an email exchange with Peter the other day, we both realized that since this article was just published about 2 weeks ago, it was very timely for this Skype item. To me, it really embodies what I'm getting at here as a perfect example of how service providers can embrace SIP-based applications to add value for subscribers - regardless of what Skype is doing.

While it's true that Skype can easily match most of what any individual telco can bring to market, what they can't do is federate their offerings with other operators. That's the next big step for carriers to take, and potentially, it could be a Skype-killer. I don't really want to go there, but I will say, they can't even consider taking a step like that without first having a common basis for providing services - and that's what protocols like SIP are all about. In that regard, Peter's article is a tangible example of how carriers should be thinking. They have the solution within their grasp - and they don't have to take Skype out of the picture along the way.

On the other hand, I agree with Ken Camp's view that big telcos have not been very good innovators since the rise of the Internet, so if left to their own devices, it's going to take a huge leap of will and vision to go down the road Peter is advocating. On the other hand, the competitive environment is far more challenging now and the pace of change is simply too fast for telcos to try and catch up on their own and try to out-innovate new players like Skype. SIP is here now, and it seems to me that the sooner the telcos start using these tools to their advantage, the better.

So, thanks for connecting the dots, Peter, and I hope all of you out there give his article a read. And remember where you saw it - exclusively at IP Convergence TV - and we've got lots more thought leadership like this, so come back and spend some time there if this is your cup of tea.

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Posted by jonarnold at May 12, 2008 08:52 AM


To repeat from a Skype Journal post I just completed prior to seeing this (and updated upon seeing this):

Sorry, Jon. ... As for SIP as the common denominator for the telcos to make a play, just keep in mind that Skype is one of the world's largest users of SIP -- for its SkypeIn and SkypeOut services. They understand the technology, the protocol and where it can play a role; they can turn up the "volume" when it's appropriate in a "real time conversation" market context. Just because the technology and protocols are there does not a business make. (Skype's GM for Audio and Video was involved in the early evolution of SIP during five years spent at Microsoft. He recalls what the dream was and what today's reality is for SIP.)


Posted by: Jim Courtney at May 14, 2008 10:01 AM