Canadian Market Notes - The Good, The Bad and The Ugly

Just some thumbnail notes on news items today that show just how scattered the Canadian communications market is....

The GOOD - the Globe & Mail reported that Miranda Technologies is prepping for its IPO next week. This is being touted as "one of the biggest" in Canada since the dot bomb days, and is only the second tech IPO of note since that time. Incredible, huh? Talk about a market going away. Interestingly, as the article notes, the other IPO was March Networks, whose IPO was in April. Gee, you'd think they would have done theirs in March....

Anyhow, both companies are IP plays, which I think says a lot about what the market will put their money in. Let's hope the investment bankers have more of these lined up - we've got a lot of great companies up here, and it's my job to tell you about 'em...

The BAD - Manitoba Telecom's announced job cuts on their investor conference call yesterday. The positive spin is this is part of their $100 million "Transition Phase II Plan" - a fancy way of saying that the economics of IP are working against them, and they've got to get with the program. Translation - big time cost cutting, including 800 jobs. Manitoba Telecom (MTS) has taken on a lot by acquiring Allstream and trying to create a national carrier out of this mix. Very tough to do, and I really don't think the market here can support 3 telcos trying to be national operators. MTS is quick to point out that a lot of this pain is coming from the loss of long distance traffic they were carrying for Rogers. This is going away now that Rogers has acquired CallNet, whose networks will now inherit this traffic. This is true, but Rogers is just one customer, and the root cause issues are much bigger and deeper. Allstream has some great solutions - don't get me wrong - but I think the plan is too grand...

The UGLY - RIM. This isn't an IP story, but RIM's woes continue to mount - first NTP in the US, and now Inpro in the UK. RIM is probably the successor to Nortel as Canada's high tech pride and joy, but lately it's been looking like they're both on the same elevator going down. Let's hope not, but RIM looks to have its hands full in court for a while.

Skype at 38,000 Feet - This Stuff Works

Uberblogger and IP comrade Andy Abramson is a busy guy, and really knows how to use technology to stay in touch. He's been living the digital life longer and better than anyone I know, so I wasn't blown away Skyping with him the other day, but it sure was neat. Andy was enroute to Europe and Skyped me to catch up on things. Basically, he used the Boeing FlyNet Connexxion Service, which provides the WiFi signal, and voila - sky high Skype.

Good thing Boeing didn't partner with Boingo - that would be a fun name to work out...BoBoing??? BoingBo??? Bo2???? Never mind.....

Andy provides his own account first hand about Skyping from the clouds here.

I should add of course that he's not the first one to do this. Jeff Pulver posted about doing the same several months ago, and in both cases it was great to hear about how seamless the user experience was and how the quality held up so well. Skype may be getting lost in the eBay abyss - the ebyss??? - but you can't deny there's value in something that works so well. Of course there are much bigger issues looming for Skype that are not just about technology - and Andy has some great insights on this.

Canadian Podcast Series - Technology and the Electoral Process

This week's Canadian IP podcast had yet another interesting twist. Our Liberal government has been on shaky ground lately, and on Monday, they did not survive a non-confidence vote. This was not a huge surprise, and much to the public's chagrin, Canada enters the Xmas holiday season with an election on its hands.

All of a sudden we're in election mode, and I had the good fortune to speak with someone yesterday who's very connected to how technology is impacting the electoral process. So, the topic was very timely, and it was a nice way to dovetail another aspect of how technologies like IP are playing a role in daily life - sometimes visibly, and sometimes under the hood.

My guest yesterday was Ed Hetu. He's in independent IT consultant in the Ottawa area, and has been doing electoral work for many years at both the federal and provincial level. Ed provided some great insights on how IP and IP-related technologies are making the process of managing elections easier. He noted that the real problems are more social and psychological than technical, since most of what he's involved with is behind the scenes.

Most people are quite comfortable and familiar with manually-completed ballots, and there is still some suspicion around electronic or online balloting. While the potential for abuse and security leaks is real, Ed notes that there is a silver lining to all these advances. If used effectively, technology can enrich the democratic process by making it easier for the public to vote more often and on a wider variety of issues. Elections, polls, referenda, etc. can be conducted quickly and inexpensively, opening the door for wider participation in our daily political life. This isn't all about IP, but it's certainly a part of it, and I have no doubt that IP will find a good home in the government sector once its potential is better understood and issues such as privacy, integrity and security are properly addressed.

The VON Radio folks managed to turn this one around in record time, so the post is ready for listening now. Thanks Mikey!

Canadian Blog Awards - Vote for Your Faves Now

Who ever thought there was such a thing? Well, there is, and I'm coming around to this after seeing posts from Alec Saunders and Mark Evans about it. Both have been nominated - deservedly so! - in the Business category, and you can now vote for your favorite blog across several categories in addition to Business.

Following Alec's post today about voting, I see that I too have made the grade, and am also a nominee in the Business category. I'm not in the uberblogger class, but am certainly happy to be in the mix. I should also note another nominee with strong IP content - Rob Hyndman - who has turned up on some of my postings.

Don't worry - you can vote once a day until December 11, so if you can't decide which one you like the best, you can spread the love around. However, to really be heard, Round 1 voting ends tomorrow - Wednesday - so vote now!!!

Canadian Podcast Series - Stefan Dubowski on Enterprise IP

Last week's VON Radio podcast was with Stefan Dubowski, Managing Editor of Telemanagement magazine. The long weekend has delayed getting the link ready, but it's available now - click here to listen.

Stefan has covered the Canadian telecom market for a long time, primarily on the enterprise side, and we talked about the state of IP adoption. He's got a pretty good feel for the pulse of the market and what his readers are looking for with IP.

We both agreed that takeup has been weaker than anticipated, and that our market lags the US considerably. Stefan's outlook is more reserved than mine, but we both agree more needs to be done from all sides to educate and stimulate the market for IP.

About Me

I get comments regularly from people who can't contact me directly from my blog - it's a problem I've been meaning to address for some time. I'm working on this now, and hope to have it fixed this week. Until then, below is a brief overview of what I do and how to reach me:

My company is J Arnold & Associates. I'm an independent analyst/consultant focused on the IP communications sector, and am based in Toronto. I've been covering IP full time since 2001, initially as the VoIP Program Leader for analyst firm Frost & Sullivan. I returned to my indie consulting roots in March 2005, and provide a range of consulting, market research and writing services for clients in this space.

Just wanted to add that my blog is a Nominee in the Business category for the 2005 Canadian Blog Awards. You can review the nominees here!





I would also like to add that Jeff Pulver has included my blog in his list of "Top VoIP Blogs of 2005". Thanks Jeff!


My website is being developed now, and will fully outline my capabilities, background and upcoming initiatives. It will also provide a listing of my recent media citings and articles. Most importantly, the website will explain how my services are being positioned for various communities within the IP market, namely vendors, service providers, VCs/investment banks and PR/marketing agencies. Look for my website in early 2006.

Until then, feel free to contact me directly:
jon@jarnoldassociates.com

Saved by the PhoneGnome

Just a small slice-of-life experience to share about my PhoneGnome. I had some small false starts getting this to work in my home office, and their tech support has been great, but we're fine now.

One of the things I really like about PhoneGnome is how you get the best of both worlds with POTS and VoIP. When you place a call using PhoneGnome, a cute voice informs you if the call is local PSTN, on-net with other PhoneGnome users, or long distance. After that, the call goes through just like normal, and there are no extra digits to dial. Very convenient.

Well, we got our first real taste of winter here in Toronto this week, and the power went out yesterday afternoon. It just so happens that this occurred while I was in the middle of a call with my PhoneGnome line. All around me, the lights went out, the modem went quiet, my PC screen dimmed as I went to battery power, Skype went out, and the screens for my IP phones went dark. I'm sure you've all been through this a few times!

That said, my call continued as if nothing happened. Of course, it was a PSTN call - an on-net call to another PhoneGnome user would have died - I think. When the power went out, I heard a short click sound on the line, which must have been the PhoneGnome cutting out, but the call continued as is. Am not sure if PhoneGnome can do a PSTN failover, and automatically port an IP call over to PSTN if the network goes down - would probably have to have a battery backup for that.

Anyhow, I just thought it was great that my call didn't die, which of course, would have been the case if I was using most broadband phone services. Operators like Bell Canada and EarthLink are offering line-powered VoIP to get around this, but the majority do not.

So, for those of you thinking about replacing your POTS with VoIP outright, I'd say think again - unless you have reliable alternatives, namely a cell phone with some battery life on it.

There's another side to this story that vindicates the tech luddite in me. I have never trusted machines of any kind (there's a classic Woody Allen routine about this from his standup days - don't get me started - "So, I gather all of my possessions for a meeting in my living room..."). We have way too many phones in the house, but I always keep an old one around - the kind that doesn't run off electric power - for emergencies or blackouts. Well, I just bought a reconditioned Nortel Vista 100 for this purpose, and that's what's connected to the PhoneGnome. So, while the PhoneGnome did its job, the real reason the call stayed alive was the Vista phone. Score a point for the old guard!

So, the moral of the story for having a bulletproof contingency plan that optimizes the use of POTS and VoIP is to have a line-powered phone with your PhoneGnome.

Google/U. of Waterloo Redux

Earlier this week, I posted about a private donation of $25 million of Google stock to the University of Waterloo.

Fellow IP blogger and Iotum CEO Alec Saunders has had a running dialog with me on this posting - first on-blog, then off-line. Alec raises many valid points about Microsoft's long history of generosity with Waterloo, and of course their much larger philanthropic efforts in several areas.

My intent was not to make MS look spendthrift - not at all. I was really just trying to draw attention to how easily and quickly Google has managed to get itself permanently attached to Waterloo, long a major feeder of top talent to MS. I think it says a lot about the momentum Google is bringing to so many facets of our digital world, and in such little time. Waterloo didn't have to accept this offering, so to me, it's a tacit message of endorsement for Google and the school's desire to associate its name with them so prominently.

I actually had no intention to revisit this topic on my blog - until I read today's Globe & Mail. They run WSJ pieces, and today's was about Google's recent hiring trends. Unfortunately, I don't have a link to the article, but if you're interested in what I'm talking about, it's a great read. The title is "Google's growth helps ignite hiring frenzy", written by Pui-Wing Tam and Kevin Delaney.

Basically, the story focuses on the lengths Google is going in the pursuit of the top talent - wherever it exists. Kind of a perverse application of their own search engine, come to think of it. For example, one of their recruiters was assigned the task of "tracking down all women from the top 50 universities world-wide who had graduated after 1980 with PhDs or Masters degrees in physics, math or computer science". Wow.

The story goes on to talk about how this impacts the Microsofts and Yahoos of the world, and the pressures they face to keep up - not just to recruit new talent, but to retain their own top people from going - to Google. Dog-eat-dog at its most primal - very Pac Man, huh?

And of course, the parallels with the 1999 tech bubble are scary, especially with the MLB-type salaries and stock options been waved about. But that's another topic....

If you ask me, this article is highly relevant (another clever pun, right Alec?) to my earlier posting on Waterloo, and that's why I'm writing about it now. Google is clearly on a mission, and I stand by my earlier conclusion - I think Google is out-doing MS in the hunt for global dominance!

There's really a lot at stake here, and my blogging is only scratching the surface. Alec - let's do a podcast about this - I think we need to examine the ethics of recruiting and philanthropy in the digital age. You up for it?

Telus Consolidates Wireless and Wireline

Well, in the wake of all of Bell's recent news and moves, Telus has made a public statement of how they're going to cope without George Cope (pardon the bad pun).

Simply put - they're not going to replace him. Instead, they're going to merge their wireline and wireless operations - I guess that's their own version of FMC. The press release talks about how this move is consistent with their national "growth strategy to provide integrated solutions". Fair enough - it's all part of being a one-stop shop for communications, as per the path Rogers and Bell are following.

I sense they would prefer to have kept George Cope and continue building Telus Mobility into a strong, growth machine. Today's news is Plan B, so to speak, and the market has no doubt been waiting to see how Telus plans to move forward.

In principle, putting wireless and wireline together makes sense, but the realities are somewhat different. Telus Mobility is certainly a strong national service. However, the same cannot really be said on the wireline side, especially residential, where they are essentially a regional carrier operating primarily in 2 provinces. Of course, they have wireline presence elsewhere, but not nearly to the extent of Telus Mobility.

On top of that, Telus has only brought VoIP to the enterprise market, where they really do have a strong portfolio, namely IP One and CallCentreAnywhere. But nothing yet for consumers. This is also largely true for television/video as well.

No doubt, the financial community was happy to hear that the integration will be on the business side only. Telus Mobility will continue to report their performance separately - this is the growth driver, and Telus wouldn't be doing itself any favors by blending this in with their wireline performance, which is on the decline, as it would be for any major ILEC.

Of course, now that the strike is over, they can focus 100% on becoming a truly integrated service provider, and I for one, can't wait until they can offer the full package to compete against Bell, and of course, Shaw in their back yard. Today's news is a step in that direction, but it's a long road ahead.

Canadian Tech Podcasts Expanding

I was pleased to learn today that the Canadian podcast landscape is about to expand in an exciting way, at least for those following the tech sector.

Canadian institutions - especially public ones - are big on using acronyms, and tech is no exception. Today's acronym, folks, is OCRI - Ottawa Center for Research and Innovation.

OCRI is exactly what the name describes - a gathering point for those wanting to support the Ottawa tech community. Over 600 entities support OCRI, including the academic community, government, R&D labs, and the private sector.

Today, OCRI launched OCRIRadio.com, dubbed as a "new, social media channel". Am not so sure how new this really is, but they're definitely jumping on the Web 2.0 bandwagon, utilizing web-based tools like podcasts and blogs to help build their community. I think this is a great initiative, and it's a cool example of the true spirit of IP - building communities - using tech to help the tech community. Works for me.

I see some nice parallels and complements to my Canadian IP Thought Leaders podcast series for VON Radio, and will be exploring common ground with OCRI tomorrow. Stay tuned, and perhaps I could soon be sharing links and feeds with them to bring you a broader picture of the Canadian market.

Google Gets Another Leg Up On Microsoft at Waterloo

The University of Waterloo (about 1.5 hours west of Toronto) has long been one of the best recruiting grounds for Microsoft. Bill Gates paid some nice lip service to this during his recent visit to speak at their campus. From what I can tell, speaking was about all he did, however.

Well, Google sure has gone one better, and it didn't even come from a Google executive!!! This story really says a lot about how things are changing in the hunt for the best and brightest. I read about this in the weekend National Post, but don't have an online subscription, and didn't expect to have access to the story for posting. However, the author, Mark Evans cited the story on his blog, and was nice enough to provide a link there. Thanks Mark!

As the story goes, David Cheriton has donated $25 million in Google stock to his alma mater as an endowment to fund things like research chairs and grad scholarships. In return, the computer science faculty will now bear his name. Turns out this is the largest private funding the school has ever received outside of the $50 million put in by the founder of RIM, Mike Lazaridis.

Incredibly, David doesn't even work for Google - but he is Canadian. He made an early fortune with Cisco, and then a much larger one via an early investment in Google. This was his way of giving back to his alma mater, and I think it speaks volumes about which currency is carrying weight. I'm sure there are loads of Waterloo grads who have done very well working for Microsoft - have they been giving back like this? What about Bill Gates himself? - he was just here, and left nothing behind. Either he missed a great opportunity to really endear himself to Waterloo, or maybe he thinks his best recruits are coming from elsewhere now, and that's where he'll put his money. I think it's the former, and that David Cheriton comes out looking great. Advantage, Google.

Canadian Podcast Series - Upgrading from PBX to IP PBX

This week's Canadian IP Thought Leaders podcast for VON Radio was a bit different, but one you'll find most interesting if you want to know how IP looks to someone doing the buying and deploying. The podcast is available for listening now.

My guest this week was Peter Lamb, the Director of Information Services for Torys LLP . Torys is one of Canada's largest law firms, with offices in both Toronto and New York. Peter runs their IT group, and is going through the process of replacing their antiquated PBX with IP.

This is a very interesting perspective as to how IP is viewed from the user community, and what VoIP means to a law firm. Peter discusses the issues around the need for IP and what is most important to a mulitnational law firm for voice communications. In many ways, this is a classic forklift upgrade scenario, but the subtleties around what's really important are quite interesting.

The best takeaway message for me was the importance of having applications that cater to the specific needs of a law firm. Peter explains how it's great to use VoIP to replicate what they had before - law firms are not early adopters, and are not looking for the multimedia richness of IP - at least now. However, what he's looking forward to are third party apps that can help him address specific problems, such as billing - something lawyers are quite fond of. In the TDM world, this simply wasn't possible or practical, but with IP it's easy, and Peter looks forward to being able to pick and choose apps from various developers that suit him just right.

Peter certainly echoes the importance of apps being the real drivers of value, and the same story will hold for countless other vertical markets. So, for all the developers out there, this podcast should be a good listen.

Telus - Cool Contact Center Solution

By heritage, Telus may have deep PSTN roots, but they have been a real leader - as ILECs go - for bringing innovative IP solutions to market. They were one of the first - if not the first - major North American ILECs to build out a VoIP network, upon which their IP offerings are being run. They were definitely the first to market with a national hosted IP solution for the enterprise market (IP One).

Today, I attended their forum here in Toronto for CallCentreAnywhere. This is their hosted IP contact center solution, and it looks to be the first of its kind from a major carrier up here.

I certainly liked what I saw, and they've done a good job of applying the versatility of IP to the real problems facing contact centers today. To get the point across, they featured presentations by Henry Dortmans of Angus Dortmans Associates, and David Chalk of Chalk Media. Both have a deep understanding of call centers and where IP can really play a role in their futures.

One of the real issues that is easy to overlook is the fact that many businesses, especially retailers, are having a hard time getting to know their customers these days. There are simply too many alternatives for shoppers if they don't like what they see, and loyalty is just so hard to build up. This has become very problematic in Canada, as big box stores from the U.S. have pretty much killed off all of our our homegrown retailers. It's pretty sad, actually, and in a lot of ways, Toronto's retail landscape doesn't look much different than Toledo's. I digress.

The main idea here is that call centers become critical for retailers as they may be the best - and only - way they can build real relationships with customers. IP brings a lot to the table for making this real, and Telus has come to market with a very practical solution. The hosted model is flexible, which is great on many levels. It means that businesses of all sizes - big or small - can take advantage of this and make contact centers a really strategic resource - instead of a simple cost center. This model is also great since it's so easy to scale up or down, so you can flow with your natural business cycles, such as seasonal volumes or special promotions.

Another key message I liked was the importance of emphasizing applications instead of infrastructure. To gain broad market traction, a hosted solution needs to be marketed on the merits of what it does, and not how it does it. Most businesses don't understand or care that much about the technology - they need to see how it will address problems and give them an edge they didn't have before.

For me, the only thing missing in the presentations was a better sense as to the range of businesses that could benefit from CallCentreAnywhere. I think the Telus folks were largely preaching to the converted - businesses that already have call centers. That's a given, but with all the cool capabilities and ease of use, I'd just as much like to see them broaden the landscape. Tell us more about how this would be a great solution for businesses that don't have call centers. Just like VoIP is a great reason to start using broadband, CallCentreAnywhere is a great reason to start using call centers.

Yak For Free, eh!

For all my rants about the Canadian market not being very exciting for VoIP, we sure generate a lot of good technologies and companies. However, the good stuff is primarily exported elsewhere, at least until the Canadian operators get behind VoIP in a big way.

Well, Yak Communications is another example of this. They were actually an early entry to the VoIP market up here, but haven't really gained much traction, at least the kind that gets noticed. Today, they launched a very interesting offering that raises the bar for IP. YakforFree is not only free PC telephony - among other Yak callers - but free video as well. Really. That's pretty neat. Talk about a great hook for international calling where you've got broadband and a videocamera. The voice part is not new, but adding video takes things up a notch. I'm still not convinced video is a driver for IP - either in the home or the office, despite the efforts of Nortel's MCS platform and all the angles Packet8 has been trying to make a go of it.

For all the coolness of this service, it's not something I'd run to sign up for - even if I had a videocamera. No doubt, they're showing the market the multimedia potential of IP, which is great, but this is a familiar scenario.

First we had Skype, which has had fabulous success getting 10's of millions of free "users". But transitioning them to paid, PSTN service has been another story. Voiceglo was actually doing this one better, and had PSTN connectivity way before Skype. They're up to 5+ million users, but only a fraction are spending any money. Free World Dialup is another example, but it's less crucial for them to develop revenues.

So, what's really new here? Will addding video be the kicker that drives free Yakkers to take on Yak's various paid services? Hard to tell, and Yak is not a brand to be reckoned with - at least yet. They'll be doing some heavy duty marketing to spread the word, so we'll just have to see if they have a twist that nobody has thought of. Until then, it's great offering if you're into free video telephony on your PC.

Hat tip to Andy Abramson who had an insightful posting on this earlier today.

Canadian Podcast Series - Anuj Sethi on Being a Reseller

Last week's VON Radio podcast is now posted.

This is my continuing weekly series on Canadian IP thought leaders. My guest was Anuj Sethi, Director of Carrier Services for Phonetime International. I recently visited Anuj and his executive team here in Toronto, and Phonetime has quietly built up a nice business.

We spoke about the realities of being a reseller of voice services. The retail business has been a good place to be, especially in Canada with such a diverse ethnic population, which is tailor-made for prepaid calling. But now as rates keep falling, and competition coming from all over, it's tough to make a go, especially with so little customer loyalty.

Phonetime has gotten around this by becoming a wholesaler as well, and as Anuj explains, this has been a good move. Phonetime is not well known outside of Canada , but they've invested in their own network buildout, and that's enabled them to branch out into into wholesale. This is a public company, by the way, and being one of Canada's leading IP resellers, seem like a good one to watch.

Coming attractions - this week's podcast is with the Director of Info Services for one of Canada's largest law firms. We'll be talking about what their firm is going through as he takes them down the IP garden path, and away from their antiquated PBX. This is what VoIP looks like from the front lines where time is money.

NexTone Revisited

In my posting earlier this week, I noted that NexTone may become a consolidator now that they have a fresh round of funding. Well, that seems to be the message VON Magazine got talking with Dan Dearing, so my instincts on this appear to be right.

The good buzz around NexTone continues. Today I spoke with Private Equity Analyst magazine about their funding - looks like NexTone will be their "deal of the month" in the December issue. Not sure if there's a centerfold - I can't afford the $1,570 subscription fee, and it's not available on the newsstands! :-)

PhoneGnome - Phone Home....

I've posted a couple of times about the PhoneGnome from Televolution.

I'm not much of a gadget guy, but I got my PhoneGnome today, and am looking forward to using it. The concept is great - only problem is I need to find other PhoneGnomers out there to take advantage of free on-net calling. Andy and Alec - I think I'll be calling you soon!

Of course, you can also take advantage of very low LD rates for PSTN calls if you buy minutes from one of the plans offered by PhoneGnome. This is really neat, since you just dial LD numbers like you normally would, and the minutes go against your plan. If you're making a local call or calling another PhoneGnome user, PhoneGnome knows the difference, so you only use LD minutes when making off-net LD calls. Since there's no monthly commitment, you essentially get the main benefit of a VoIP subscriber service for a lot less money, plus you're still on PSTN - so you get the best of both worlds.

Of course, things get more interesting once you add SoftGnome into the mix, since that gives you portability. Now you can take the benefit of cheap off-net LD with you on the road - and have call display still show your POTS number at the other end.

So, two calls to action out there in blogosphere...

1. If you're a PhoneGnome user, I'd be happy to connect with you to test out the quality and help spread the word.

2. If you're not a PhoneGnome user, check it out - and tell 'em I sent ya.

Mr. Pulver goes to Washington

Jeff Pulver and his regulatory guru, Jonathan Askin are closely monitoring the hearings going on in Washington DC right now to develop an effective policy framework for VoIP.

Jeff has been taking good notes via his blog, and I urge you to follow his postings if you want to keep on top of the situation.

I'm not a regulatory expert, but Jeff raises some troubling issues about how fragile Net Freedoms really are, and the seemingly arbitrary approach the FCC is taking to regulating the Internet, especially over the E911 issue - but not doing the same for other communications technologies like wireless or satellite.

As usual, Jeff's timing is right on. Tomorrow is his Peripheral Visionaries Summit, which has a heavy focus on the regulatory issues. He's right in the thick of it during these days before the event, and I expect his next few blog postings will give us a pretty good window on how the FCC is looking at VoIP now, as well as the positions being taken by all the key stakeholders - RBOCs, MSOs, software companies and IM players.

Also of note - uber blogger Andy Abramson will be attending the summit, so look to his postings for a more detached perspective on how things turn out.

Canadian Thought Leaders Podcast - Bob Mimeault, Versatel Networks

Last week's podcast in my Canadian IP Thought Leaders series for VON Radio is now available.

I spoke with Bob Mimeault, CEO of Versatel Networks. Versatel is another innovative IP company from the Ottawa region - Gatineau, Quebec to be more precise. Bob has really taken this company forward, and they are strong advocates of putting network intelligence out to the edge, especially in their gateway, which has been designed around this principle. Versatel is finding their niche, and a recent round of funding provides further validation of this.

Bob articulates his thinking on this during the podcast, especially in terms of the kinds of problems he's seeing from carriers. Aside from some friendly Toronto/Ottawa hockey talk, Bob also talked a bit about what makes Ottawa such a vibrant community for IP companies. Check it out!

Is NexTone the Next One?

I came across this play on words by chance - the copywriter in me couldn't resist using it for this posting. I think it fits pretty well.

NexTone announced its D series round of funding today. They got $35 million, just about doubling their funding to date. So, they've attracted almost $70 million, which is pretty good for a company very few people were following a year ago. Of course, other IP vendors continue to get funding, and it's a sign of health, as many vendors who've been in the game a few years have now got a mature, well defined offering, a sizable customer base, and a core management team with a plan.

NexTone has come a long way, and with over 300 customers, they see a lot of upside for themselves as a standalone vendor in the session border controller space. I've followed this space for some time, and there is room still for vendors with varying approaches to session management, and NexTone has found a strong niche, largely among Tier 2/3 service providers. The Tier 1s get all the headlines, but there's a big world out there for other carriers, and vendors like NexTone are doing a great job catering to their needs.

I don't see NexTone being the Next One in terms of the next Cisco, but I think they are a model for where startup vendors go from here, as they mature from being gawky teenagers into responsible adults - so to speak. The nextgen infrastructure space is full of vendors like this, and they will all face similar decision points in the next year or so.

To me, there are 3 paths to follow - go public, become acquired, or become a consolidator. We've already seen examples for all of these. Within NexTone's space - session border control - Newport Networks had a successful IPO, and both Kagoor and Jasomi were recent exits, being acquired by Juniper and Ditech respectively. Others like Tekelec and Excel Switching have been acting like consolidators given their acquisitions over the past year. It's too early too tell, but if I had to pick, I'd say NexTone is most likely to become a consolidator. Time will tell.

Internet Voice Campaign Kicks Off

I'm a day late with this, but wanted to post about it since I've not seen much coverage about it anywhere.

Yesterday the Internet Voice Campaign was launched, which I think is a step in the right direction to help broaden the awareness and undertanding of VoIP in the general public.

The founders of this initiative are Sonus, Google, EarthLink, Skype, Pulver.com, the VON Coalition and USA Datanet.

Pretty interesting mix, and conspicuous by their absence, of course, are the RBOCs. If Ed Whitacre gets his way, I don't see that changing any time soon!

Certainly no surprise seeing Sonus and EarthLink there - they've been in the game from the beginning, and are great examples of companies that are built around IP, and continue to show market leadership and innovative thinking.

Google and Skype are the ones that really catch my eye. Skype is the 800 pound gorilla of VoIP, certainly in terms of their share of VoIP minutes. Monetizing this, of course, is another story. And it's also interesting to see just how quiet it's become on the Skype hype front since the eBay deal. Lots is going on, no doubt, and Jeff Pulver made a great observation the other day about their job posting for an enterprise product manager - a sure sign about where they're looking now. Regardless, if anyone has brand clout in this space, it's Skype. Which raises the burning question - where is Vonage in this mix? If anyone knows about building a VoIP brand it's them. Am sure there's a good reason why they're not in.

And then there's Google. I think it speaks volumes to see them here. A year ago, who was talking about Google in this space? And now they look almost unstoppable in their quest to be the Microsoft of the Internet. They're the one I'd be watching.

Pulling all this together is the VON Coalition, and the press release (see link above) provides contact info if anyone wants to get in touch or become involved.

Unfortunately, there's nothing about this initiative yet on the VON Coalition website, so the press release is the best way to get the story. I hope they get that fixed soon!

Bell's Q3 Numbers - Landline Losses Starting to Show

I don't normally follow earnings calls, but some estimates from RBC Dominion about Bell's landline losses caught my eye.

They estimate 2006 residential access line losses will be 490,000, which is a decline of 6%. That's significant, and is in line with what the RBOCs are experiencing. Our VoIP market is a good year behind the U.S., and I guess this estimate shows that we're just catching up.

Residential line losses have been a painful fact of life for RBOCs for some 2 years, but it's very new in Canada. Wireless substitution isn't as a big a deal here because wireless penetration is lower, prices are higher, and we don't have wireless LNP. Also, broadband penetration is higher, so there's less of a shift happening among dial up customers migrating to high speed.

I wasn't able to take part on the call, and don't see anything in the press release to substantiate this erosion. The closest I could find was a "3.5% decline in the residential NAS (Network Access Service) customer base". It's not clear if this decline is compared to the previous quarter or if it's year-over-year. I'd be very worried if it was the former, but I'll give 'em the benefit of the doubt.

Either way, losses are no doubt occurring, but up until very recently, it's been a minor issue. With Videotron leading the assault on Bell's home subscribers, the environment is changing fast, and it's not a minor issue any more. This is reflected in the financials, and the investment community is now looking at the impact of VoIP in language they understand. Profit forecasts have been slightly lowered, and this is partially due to the landline losses, as well as the lower margins Bell will get from VoIP as opposed to POTS.

SoftGnome - Coming to Your Desktop Soon

PhoneGnome is not yet a household word, and neither is SoftGnome, but they both come from someone who knows something about making something pretty close to a household name, at least in the IP world.

Today I got a chance to speak with David Beckemeyer, the CEO of TelEvolution, the company he has founded to bring these cool things to market. I posted about PhoneGnome a while back, and commented a bit on the company. David has surrounded himself with first rate advisors, and was the co-founder of EarthLink, which is probably the most recognizable ISP in the US after AOL.

The SoftGnome was officially launched today, and this sure is an interesting application. Here's the press release:

SoftGnome

This is their version of a soft phone, but like PhoneGnome, is designed to work with your existing POTS line. It's cheaper than a soft phone client from the likes of a Vonage (only $4.95/mo.), so if you want the benefits of VoIP in your home, and on the go, you really don't need to sign on with a VoIP provider. PhoneGnome gives you VoIP functionality over POTS, and using their LD partners, you'll still come out ahead compared to getting a VoIP plan and keeping bare minimum POTS for lifeline support. Plus, you get the reliabililty of POTS, 911, 411, etc., and of course, you keep your phone number. That in itself is pretty neat.

Now, add the SoftGnome, and you have the full package. The really cool thing is you keep your regular phone number, and with SoftGnome you can make or receive calls on your PC. So, imagine call forwarding your POTS calls to your computer. Or, when you make outbound SoftGnome calls, your POTS number shows up at the other end on their caller ID - regardless of where you're calling from.

So, it's VoIP with a twist - a true hybrid approach that combines the best of both worlds - POTS and VoIP. How about PoIP - POTS over IP? You get the idea. This is one of those things that's fairly intuitive, but the wow factor doesn't sink in until you use it.

In terms the business model, my question to David was this - are you friend or foe to the RBOC? The answer isn't totally clear, as it's really a bit of both. They could embrace it for defensive reasons and mitigate some erosion of revenues, but could also use it on the offensive for pursuing growth out of region.

TelEvolution is also targeting ITSPs and ISPs, where the appeal is pretty easy to see. PhoneGnome and SoftGnome really eliminate the need for these operators to build out a VoIP infrastructure, and they can basically have plug-and-play VoIP out of the box.

Given David's track record, I have no doubt he's on to something good here, and the market will start paying attention when he can establish some major channels and distribution partners. At the heart of this is his philosophy of making Internet applications open to all, and getting away from the walled gardens that so many operators have and continue to build.

Thanks to Andy Abramson for getting me connected to his client, and helping get the word out about some innovative products. These are exactly the kinds of products the market needs for VoIP to reach mass adoption, and give the operators an avenue to make some money.