Vonage Canada Challenges Dual-Tiered Internet

This morning Vonage Canada filed a request with the CRTC to challenge Shaw Cable's $10 "quality of service enhancement fee" for subscribers wishing to sign up for competing VoIP services over their cable lines.

Folks, this is a real-life case showdown about net neutrality, and it's the first direct challenge I've seen. The issue is not as heated here in Canada, but the scenerio is no different. Now, the CRTC is being put on the spot to respond in the absence of any U.S. precedents. The FCC has conducted hearings on this bedrock issue, but decisions have not yet been rendered.

Vonage has been under a lot of scrutiny lately around its IPO plans, and they have fallen out of favor with a lot of people. Well, this time, I think they should get some support. I'm in their camp on this one, and Shaw's surcharge looks pretty anti-competitive to me. And they don't even have any ILEC VoIP competition yet.

Have a look for yourself and be the judge - what does this look like to you?

So for $10/month, Shaw subscribers now have the "opportunity to improve the quality of Internet telephony services offered by third party providers". I didn't know the quality was so bad in the first place, and it's not like they're improving their network just for this. They're just saying that they'll provision Vonage Canada's service just as well as they'd provision their own VoIP service - over the same network - but you have to pay extra for Vonage Canada - or other third party providers.

So, are all those happy people in the photo on this web page smiling because they can finally get good quality Vonage Canada service? Or are they laughing at you for going along with this deal?

As Vonage Canada points out in the press release (which hasn't been posted yet), there are some basic questions the CRTC needs to address:

- What does Shaw's so-called "enhancement" service consist of, from both a technological and service implementation perspective?
- What evidence does Shaw have to prove its "enhancement" service actually delivers on the promise of enhancing a customer's use of a non-Shaw phone service provider and to what extent?
- What is the justification for a recurring charge to the customer for a service that it appears may consist of a one-time configuration of the Shaw-approved cable modem used by Shaw's high-speed Internet customers?
- What is the take-up rate past, present and likely future of Shaw's enhancement service, and what is the likely effect of the service on competition in local VoIP services?

These seem like the right questions to me. Sure, any facilities-based carrier has the right to earn a fair return and operate the network as they see fit -within reason (and that of course, is the rub here). And sure, pureplays like Vonage are handicapped on the QoS side. But there are many gray areas here where behavior is not in the best interests of the consumer, and that's where we turn to the CRTC for guidance. Their track record on IP hasn't been that inspiring, so let's just cross our fingers on this one.

If it's March, it must be VON

March means different things to different people, but in the IP space, Spring VON has got to be top of the list, or pretty darned close. The show is a week away, starting March 14, and runs through Friday in San Jose.

This year VON turns 10, so it's a bigger deal than usual. If you've never been to VON, I'd urge you to go, if not just to be part of a pretty special anniversary. Nobody has been as strong an advocate for IP communications as long as Jeff Pulver, and this would be a great time to show your support.

And if you want to hear about it direct from Jeff himself - he'll tell you via video!


I won't be hard to find, and will be doing my part on a few sessions. I'm moderating two panels - one on Open Source, and one called Hot New Apps (the link isn't ready for this one yet - it's on Thursday at 10:30am).

I'm also participating as a speaker on the Industry Analyst session, which I always enjoy doing.

AT&T/Bell South - Another Perspective

Just had to share this one about the AT&T/BellSouth news. When you read this, you'll no doubt nod your head and smile throughout, especially if you have kids. Sometimes things are best understood when you look at them in simplistic terms.

Great job, Dr. Pulver!

And the Best Actor Award Goes to.....at&t

It's pretty hard to compete with the Academy Awards tonight, and maybe that explains the timing of today's news about AT&T acquiring BellSouth. The analyst concall is at 10am Monday, but with the news out today, it will be interesting to watch how these stocks perform Monday.

OK, so like, who issues press releases of such magnitude on a Sunday? And on Oscar Sunday? Either there's an even bigger story coming on Monday (my guess is not), or they want to slip this in while nobody's paying attention, and America wakes up with a love-in Oscar hangover Monday and just goes "whatever", what's good for corporate America is good for me (probably not, but I really wonder sometimes).

As a rule of thumb, I hardly ever post on weekends, as I'm usually preoccupied with other things. I did see this story earlier in the day, though, and figured just wait til Monday to see if I had an angle worth posting about.

Well I'm posting now because CBS Radio in New York interviewed me about an hour ago about the story. So, if you happen to be bored with the Oscars, and happen to be a nighthawk reading this post, and happen to listen to your local CBS Radio affiliate tonight or on Monday, there's a good chance you'll hear me on the radio.

Hey, if you do, please let me know - I'd love some validation on this!

I'm not going to say much here about the news, and there's certainly no scoop. Russell Shaw has a very good posting from earlier today that should answer many questions, and many other insightful posts are sure to follow Monday morning. Hat tip to Andy Abramson on Russell's post, as he cited it on his blog - and I'm sure Andy will have his own cogent take on the news soon. Om Malik's post today is also a good read, as is Mark Evans's post from first thing this morning. When do you ever sleep Mark?

For my two cents, I'd just like to add a few quick thoughts, most of which is what I shared with CBS Radio tonight....

- In a bizarre way, at&t does deserve the Best Actor award. They go from what looked like terminal decline and being acquired by SBC for "only" $16 billion - half of what the Sprint/NexTel deal went for. How can this be? Was AT&T really so badly managed? Then their new corporate logo was recently unveiled - same logo, but the name has gone from AT&T to at&t. So, is this the meek, happy-to-be-still-alive, smaller and friendlier AT&T? Or is it a wolf in a sheep's clothing that really hasn't - and by nature cannot - change its stripes - and is simply waiting for the right situation to reassert itself? I dunno. Looks like the latter to me with today's news. I have always felt that AT&T is one of the most valuable brands ever created, and it seemed ridiculous for it to be worth the $16 billion SBC bought it for. Well, here they come, reversing the acquisition at over 4 times the price to take out BellSouth.

- As with so many other carrier deals happening these days, it's all about wireless. With 100% of Cingular, this really creates a telecom megabrand. They've got the huge subscriber base, the brand and the network - all primed for the inevitable onslaught of cool wireless apps that we've been waiting for. The rich will certainly get richer. We all know they've got a strong franchise in the enterprise market, and now, CallVantage finally has an addressable market with BellSouth's footprint. I think they'll now get to become the VoIP provider everyone thought they'd be in 2004, when CallVantage was launched with great fanfare at Spring VON. Has there ever been a marketing campaign with greater irony? Dubbed "The Year of the Giant", their launch was anything but. I remember - I've got the t-shirt and the photo with Kareem Abdul Jabbar to prove it! With massive global advertising during the 2004 Olympics, they sure looked to be world beaters. However, Vonage totally spooked them, and baited them into a price war and killed any chance of making money with VoIP. With barely 70,000 subscribers to show for all this, "the giant" was acquired for a song (I think)within a year's time. Wow.

- Of course, this news will have a domino effect of questions and winners/losers analysis that impact the whole communications sector. First and foremost, how will Washington and consumer groups react to what sure looks like a devolution back to 1984 when the AT&T monopoly was broken up? In broad strokes, this merger would basically reduce the US to a two horse market - AT&T and Verizon, and that raises all kinds of questions about consolidation and competition - for everybody. The other RBOCs -well, Qwest, really. The independent carriers. The wireless operators. The cable guys. The broadband operators. Consumers. Startups. Vendors. Etc. This merger is probably bad news for Packet 8, as their deal with BellSouth will look tenuous now. It's bad news for Vonage as well, especially if they can really get CallVantage on track. And that does not bode well for Vonage's IPO aspirations - which in turn, hurts the overall IP sector in terms of its attractiveness to the VCs and bankers. All of which is good news for at&t, and if so, I suspect it may only be a matter of time until they become AT&T again. Now that would be Oscar-worthy!

I'm 1 Year Old!

Time sure flies, and I just realized it's March. Aside from Spring conferences getting into gear now, it dawned on me today that I've been on my own a year now. I left Frost & Sullivan at the end of February 2005, and I have to say it was the right thing for me to do. Frost continues to cover this market very well, but I have to follow my own road, and so far, so good.

Calysto is one of the leading PR firms focused on IP, and they were nice enough to mention my transition in their newsleter - Media Vibes - which is just about a year ago to the day. I can tell you these things work! I still remember how surprised I was to hear people come up to me at the beginning of Spring VON last year telling me they had heard the news - before I had a chance to tell them. They read about it in Media Vibes, where news of my move was briefly noted - here it is. Calysto got the scoop, that's for sure - nice work, Laura!

For those of you who don't know me, I'm an independent analyst/consultant focused on IP communications. You can read more about me and my practice, J Arnold & Associates in the sidebars on this blog. My website will be launched this month, and I'll post the link when it's ready - that will tell you much more about my practice.

Being an independent consultant isn't easy, and I'm thankful for all the support I've received from across the spectrum of vendors, carriers, bankers, the media, PR firms, entrepreneurs, consultants and my friends. I want to say a very special thank you to Jeff Pulver and his team at Pulvermedia and Pulver.com. Jeff's support and openness to working with me on a number of levels is a big reason why I'm here, and why I've been able to participate so broadly in the global IP community. One of Jeff's virtues is building community and giving back, and I know that I'm one of many people in this industry who has done well by being part of Jeff's world.

There are many ways to gauge success, and I'm happy to say that I've found a good niche to grow from in my first year. I've got a growing client base, a strong pipeline of new projects, and I'm developing a good network of ad hoc associates to work with me. I've maintained my industry profile as an independent, having participated in 15 conferences, been cited in the media and press releases over 100 times, become an advisor to several companies, and have posted over 200 blog entries (here's entry #1!). I'm not a volume blogger, and some people post this ofen every month, but that's not me. But I certainly hope to maintain a regimen of daily postings, and try to focus on providing original content and/or commentary. Same goes for my weekly podcasts on the Canadian IP market for the Pulvermedia Podcasting Network (that's an updated and fancy way of saying PulverRadio!).

That's all I have to say. A year sure goes by fast - I'm very excited about Year 2, and appreciate all the business and support that has brought me to this point so far.

Iotum - The Demo Effect

I realize you've been hearing a lot from me lately about Iotum, but you have to like what's happening here. It's a bit like following up on American Idol winners - they don't have their record deal yet, but they sure are getting terrific buzz in places that didn't know them from anybody before Demo.

Andy Abramson has a nice post summarizing some of this buzz, namely Business 2.0, which is running its Next Net 25 in the current issue, for which Iotum made the cut.

In addition, Iotum got some coverage in the current issue of Fortune, and the Financial Times last week.

That's what I call moving up the food chain quickly. Hopefully, Iotum will remain on this upward trajectory for raising money and then coming to market with a successful launch. If this comes to pass - and I'm laying odds it will - then you'd have to agree with me that Iotum would be a great case study and a blueprint for up and coming nextgen/Web 2.0 startups to follow. That would be the stuff MBAs at Harvard and Stanford will be studying 5 years from now. It's the American Dream, Canadian style!

Canadian IP Thought Leaders Podcast - Stefan Dubowski, Telemanagement Magazine

This week's podcast was with Stefan Dubowski, Editor of Telemanagement, one of Canada's leading publications serving the enterprise communications market. This was Stefan's second appearance on the Pulvermedia Podcasting Network, and this time we talked about the market opportunity for cablecos offering IP services to enterprises. It's certainly an untapped market, and Stefan shared his thoughts on the pros and cons facing MSOs. To date, it has taken a back seat to residential telephony, but it's just a matter of time until this becomes a priority. I'd say give it a year, or as much time as they need to get a lock on residential VoIP, and then they can turn their sights to enterprise. I suspect they'll need to some key partners to do this, but time will tell. You can pick up the podcast link here, as well as learn more about Stefan.

We'll both be at VON Canada here in Toronto next month, and if you're there, he'll be moderating the session on the use of IP in contact centers.