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May 12, 2005

As the Phone World Turns Part 10 – We Won’t Need Mobile Carriers Either!

When all voice is VoIP in 2010 (my prediction) we won’t need the services of traditional phone companies.  We will need broadband connections to our homes, offices, airline seats, cars and cafe tables.  We will need directory and presence management services so that we can locate each other for all communication purposes.  And residential users will probably need service providers to host voice mail and other applications which support voice communication.  All except the very smallest enterprises will host their own voice mail and related services just as enterprises host their own email servers and run their own PBXes and voice mail today.

In yesterday’s post I reached this conclusion by extrapolating the past of email communication to the future of voice communication.  As JC Francois points out in a comment on that post, the voice service of the future will inherit features from instant messaging as well as from email.  He is right; Skype resembles instant messaging much more than it resembles either email or traditional phone service.

Presence management – a key feature of both cellular telephony and instant messaging today – will be a key ingredient of voice services in the future.  Presence management instant messaging style will eventually crater the lucrative roaming business of traditional mobile carriers and make these carriers themselves obsolete.

When ever anyone logs on to the Internet, the device they are using to connect gets an IP (Internet Protocol) address.  These are the four sets of numbers separated by periods such as 192.168.000.001 which most of us don’t think about most of the time.  All Internet packets are sent from some IP address to some other IP address.  This routing works the same way whether the packets contain email, pornography, voice, or ads.  Permanent connections to the Internet usually have permanent IP addresses while dialup or mobile wireless connections are often assigned a different IP address at each connection.

It is tempting but very wrong to think of IP addresses as being like phone numbers.  On the traditional phone network, we are reached through our phone numbers.  If anyone ever asks you for your IP address, you should run as fast as you can in the opposite direction (unless, of course, it is you favorite nerd trying to debug a home networking problem).

On the Internet we are reached through names rather than numbers.  This is where presence management comes in.  When you start your instant messaging client, it logs in with your instant messaging provider – AOL, MSN, Skype, whomever.  During this login a password is used to try to assure that you are really you.  Once this authentication is done, a server operated by your instant messaging provider remembers that yourid (whatever you have chosen to call yourself at the instant messaging service) is currently at a certain IP address.  When anyone sends you an instant message, the packets which make up that message go to the IP address assigned to the computer you are currently using.

This simple process means that you can instant message with your friends from any connected computer anywhere in the world at any time without them needing to know where you are.  They certainly don’t need the IP address of the computer you are using.  Contrast this with traditional phone service.  If you want someone to call you in your hotel room in Barcelona on the landline phone,  you have to give them the country code, the city code, the local number and the room number and then they have to use their not-very-good Spanish to try to get through the hotel switchboard.  Then, even after all that, your friends find you’re not in the room anyway (although they have a sneaking suspicion that they were connected to the wrong room).

A second important feature of presence management is letting your friends know whether or not you are available.  Typically available means whether or not you are online but you can usually elect to be online in do-not-disturb or busy mode.  So your friends can know whether you’re available to chat with or not.  This is a feature I use sparingly because whether I’m available or not depends on who wants to know.  However, advanced implementations of presence management allow you to be selective about who knows what.

“OK,” you say, “sure it is hard to reach my hotel room in Barcelona but no one has to do that any more.  Everyone knows they can reach me on my mobile phone which is welded to my hip and has the same number everywhere I go.”  Mobile operators have implemented a very lucrative presence management system of their own. 

Assuming you have a phone with all the right modes built in for worldwide communication, your phone is constantly looking for cell towers to connect with.  If it finds a tower in Barcelona and if the operator of that tower has a “roaming agreement” with the carrier who provides your mobile service, you are assigned a phone number in Spain (which neither you nor your callers need to know anything about).  A temporary record is kept at your home provider linking the permanent number of your mobile service to the temporary roaming number in Spain.  When your friends call your number at home, the call is forwarded (at your great expense) to the Spanish number and your mobile phone rings.  For this privilege you also get to pay an exorbitant roaming charge.  Whether or not voice mail works when you don’t answer depends on the technical connection between your temporary host network in Spain and your home network.

Presence management cellular style is an overpriced kluge.  The good news is that it will be replaced by presence management instant messaging style once true VoIP over IP-enabled mobile phones is implemented.   Moreover, this presence management will make you reachable (assuming you want to be) whether you are on a computer, a PDA, a landline phone, or a mobile handset.  There will be no cost per minute for voice any more than there is for instant messaging.  Distance will be irrelevant as will location.  You will still pay in some form for your IP connection (although it may be in taxes if you are on a municipal network).  And some service provider somewhere will have a business model based on providing you with presence management.

The first post in this series is everything you ever wanted to know about legacy access charges.

The second is about the cost of “free”.

The third explains Metcalfe’s Law of network value.

The fourth is about how Skype built huge network value.

The fifth is about Skype’s first paid service SkypeOut.

The sixth is about SkypeIn which makes Skype users callable from the outside world.

The seventh is a summary of Skype features.

The eighth is about Vonage’s strategy.

The ninth asks whether we need phone companies.

A related post contains a very short abstract of what Skype founder Niklas Zennstrom said at VON (Voice On the Net) Canada and a way to download the slides of my talk there.

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