Testing membership based VoIP business model
Everything seems obvious in hindsight as, for example, in the case of the business model pioneered by Vonage in 2001. I can report navigating toward the business model during 2000 it was not at all obvious what would work. The previous successful VoIP businesses were all straight per minute plays and primarily in the International LD world. No one was sure exactly what business model might work to break into the domestic telecom business. The basic architecture of the network or end user offer were unknown. FWD's effort to test a paid membership model gets into similarly uncharted territory. The $30 price point was set at 10% of the basic Vonage offer, although FWD and Vonage offer very different value propositions for users. FWD will put as much communication value into the $30 bucket as possible, but the approach holds as sacred elimination of usage based charges and retaining global flat rate connectivity. We are looking to enable new forms and context for communication rather than simply cheaper forms of the same old thing. The fact the process starts with a thin story does not mean it fails. It is not obvious today why anyone ever purchased a 286 based computer in 1988. No Internet connectivity. No RAM or storage. The thing was little more than an oversized paper weight. However, it had characteristics that allowed continuous improvement and 3rd party application development. The membership based FWD seeks to enable the same dynamics.
Beyond minutes based busines models
There exist maybe 50 companies with Skype and Vonage at the head of the pack that grew into significant enterprises based on VoIP technology. All the 50 companies ended up with a business model based on connecting people to the telephone network, hence none of the companies really offered an Internet like communication experience independent of geography and usage fees. Skype to Skype calls take advantage of the Internet, but Skype's dependence on the SkypeOUT telephone revenues keep the company tied to the telephone network. This means the world of VoIP entirely lacks the two things that drove the growth of the world wide web in zero incremental cost global termination and navigation via hyperlinks. Touching the telephone network means usage based charges and telephone numbers. The revenue and growth problems suffered by Skype and Vonage seem like symptoms of the deadend telco myopia shared by the entire VoIP industry.
Telephone calls address only a narrow slice of communication demand
Very few people seem to appreciate the idea that telephone calls do not address all potential communication demand. This represents an example of the "moth phenomena" where the moth can't resist the flying around the brightest light even if they end up starving to death in the process. The average entrepreneur interested in a communication application can't help but attempt a play for a cut of the trillion or so telecom revenues floating around. This leaves the world stuck in horseless carriage mode, ends badly for a lot of entrepreneurs, and fails to improve the available communication options.
Framing the challenge as one of creating the Communication ISP equivalent to the existing Information ISP's represents an attempt to break the telecom myopia. SIP provides for VoIP the same utility as TCP provides for the file transfers associated with the world wide web. The number of elements that make all the functionality associated with the www have expanded rapidly over the years. A similar development process needs to take place regarding the real-time sessions enabled by SIP. The success of VoIP requires a specialist ISP focused on enabling communication functionality.
The limitations of traditional telephone service in terms of audio quality, user interface, and cost shape the types of useful applications. VoIP solutions offering enhanced audio quality, a different user interface, and global flat rate termination will lead to different applications. These new applications can get driven by the virtuous circle of content attracting audience and audience attracting content. These points all admittedly fall into the category of theory and the task of proving the theory still has a ways to go before anyone claims victory.
Communication ISP Manifesto
Restricting VoIP to the task of traditional telephone calls is like viewing television as a platform for delivering AM radio. The promise of VoIP in connecting communication devices via the Internet represents a much better fit with the ISP model - a Communication ISP. The Communication ISP preserves global flat rate termination and click-to-connect functionality required to take full advantage of Internet connectivity. The Communication ISP asserts no constraints on the type of connected devices, applications, or content. Communication ISP connected devices offer a blank sheet of paper for end users to express their communication creativity in a manner directly analogous to traditional Information ISP's in enabling navigation of the world wide web.
Interconnection with the telephone network shuts out the possibility of creativity. Everyone already knows the essential features of a telephone. The telephone network determines the nature of the application. Content is limited to those uses justified in the context of the per minute cost of telephone service. The essential offer of a Communication ISP as with existing Information ISP's is making a device addressable via the Internet. A communication device connected to the Internet need not have a telephone number or key pad at all. Addressing can be accomplished via a domain name in the same manner as any other device directly connected to the Internet.
Texas Instruments reports having shipped 450 million VoIP ports in recent years, but almost all the resulting devices connect to the telephone network rather than each other via the Internet. Communication ISP's recognize the compelling value of connecting any two VoIP devices anywhere in the world via the Internet without a per minute usage fee. Rather than depend on telephone network as the means to achieve critical mass, the Communication ISP leverages the virtuous cycle of content attracting audience and audience attracting content that drove the rapid expansion of the world web web.
The telephone did not merely represent a more efficient telegraph and VoIP does not merely enable more efficient telephone service. The measure of success for VoIP and the Communication ISP is the extent of incremental new communication enabled. Companies and individuals can leverage connected communication devices as the means to invent entirely new categories of communication. Session Initiation Protocol (SIP) offers for real-time communication the same frictionless mechanism that Transport Control Protocol (TCP) offered for the file transfers associated with the sharing of information. The open platform for development associated with the Internet promises a steady stream of new applications and explosive growth in available content.
