Monday, 16 July 2007

Interconnecting for minnows

News today from Truphone : Truphone wins court injunction against T-Mobile blocking tactics. In short, T-Mobile UK were blocking calls to Truphone phone numbers, Truphone have successfully proven that they have a sufficient case to argue in court, the judge has required that T-Mobile UK started connecting calls from next Monday.

Great news for the developing internet telephony providers? Well it's certainly a start.

This reminded me about Mark Hay of HSL's campaign to try and compel T-Mobile to interconnect with them over SS7, see Dispute between Hay Systems Limited and T-Mobile UK Limited about SMS termination via Signalling System 7.

Now this case was different in that in centered on a dispute on the technology of interconnect but yet again it was T-Mobile UK blocking the way (incidentally I understand HSL have successfully interconnected with other UK operators). All consistent I hear you say, big company protecting the status quo what's to talk about?

You'd be right if it wasn't for the investment T-Ventures (investment arm of Deutsche Telekom) made in Jajah an internet telephony provider : T-Online Venture Fund Makes Strategic Investment in JAJAH. Left hand not talking to right hand or a more strategic vision of blocking or owning.

What with Orange and Vodafone disabling the VoIP functionality on their Nokia N95's it all seems to me that the operators plugging the mobile VoIP dyke but are rapidly running out of fingers.

Fixed rate data plans and an acceptance among users that if it's free, poor quality voice is fine (I use Skype but boy is it hard work at times) is opening the door up for more and more VoIP providers. These providers are lightweight, nimble and completely without a PSTN legacy. Couple that with Mobile Broadband being rolled out and the mobile operators have put out a Welcome mat.

For me this raises the question of what these 'minnows' of the telecoms world will do when it comes to interconnecting with each other.

Will they perpetuate the closed shop, 'interconnect where I have to' approach or, create an open system where each provider interconnects with each other provider.

Traditional marketing and competitive strategies would drive people to keep their communities to themselves and only interconnect where the have to, ie to the incumbents. But I think this time has passed.

The opportunity exists for multiple niche players to exist, each serving very specific markets providing just the hooks and add-ons to a traditional telecoms service that their target market needs.

Chris Anderson demonstrates in The Long Tail: How Endless Choice Is Creating Unlimited Demand that companies like Amazon, Rhapsody and iTunes are already serving these niches in their respective markets. I believe VoIP technology can remove the supply constraints on the telecoms markets to allow the same to happen.

The danger for the new players is that a large player comes in and does it before they've had a chance to get to critical mass, eg T-Mobile with Jahjah.

The answer, in my view, is for all these players to interconnect with each other. Enable your customers to talk to as many of their friends and colleagues as possible and they'll love you for it. Couple that with a range of services that are made for their market and they'll have no reason to move and eulogise about your service to their colleagues and friends.

It's also a defensive option, as the VoIP community grows, the collective strength grows, critical mass arrives more quickly and the incumbents won't be able to ignore you. Rather like a shoal of smaller, nimbler fish staying out of the way of the lumbering predators, it's easier and more effective in a group.

I'll be watching the space with interest and welcome any comment from the existing players, this could get interesting.

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