Geddes - Stupid Network

Telepocalypse Ltd.
The Stupid Network: A User Guide

Prepared for Cinderella Somewhere, Somecountry
Prepared by: Document version: Date:
Martin Geddes, Director 0.1 10 December 2004
Abstract
Carriers keep control of the wireless value web by controlling pinch points on the flow of value through handsets, networks and retail supply chains. This gives them power over their suppliers. They can also perform fine-grained price discrimination against users for the value that flows over the network. A move to open all-IP networks undermines this business model, and enables massive disintermediation of carrier toll systems. This paper describes the mechanics of this change, what the important value creators will be in an all-IP world, and suggests strategies and tactics for the varying market conditions along the way.
Change History
Date 7 Nov 04 22 Nov 04 3 Dec 04 10 Dec 04 18 Dec 04 Who Martin Geddes Martin Geddes Martin Geddes Martin Geddes Martin Geddes Version 0.1 0.2 0.3 0.4 0.5 Changes Document outline created. First draft. Cinderella v0.2 comments addressed. Added context diagram for the strategies; details on trust, billing, abuse; executive summary. 14 Dec conference call comments addressed
Contacts
For Telepocalypse Ltd.: Martin Geddes, Director Telepocalypse Ltd, 26/5 Annandale St., Edinburgh, EH7 4AN, UK. Skype: mgeddes Yahoo: mgeddes_uk mail@telepocalypse.net For Cinderella:
About the Author

Martin Geddes is thinker, writer, coder, inventor, agitator, irritant and consultant. He writes the popular telecom strategy weblog www.telepocalypse.net, cited by Business Week and Forbes among others. Before becoming an independent consultant he was a technology specialist and product strategy manager at Sprint in Kansas City, USA. During his time at Sprint he filed 17 patents on various mobile handset and edge service technologies. Martin also has extensive hands-on experience in the IT industry building large transactional systems at Oracle Corporation. He holds a bachelor's degree in Mathematics and Computation from Oxford University.
Telepocalyptic Quote
Who will be the biggest losers [from VOIP]? Not the fixed-line telcos, even though their revenues may fall by 25% by 2010 due to VOIP, according to Mr Mewawalla. The mobile operators are likely to be the big losers, with their revenues plunging by 80%. Together, VOIP and wireless broadband could fatally undermine their costly thirdgeneration (3G) networks. - The Economist, 2 December 2004
Executive summary
Cinderella is finding it harder to maintain margins and volumes in the face of consolidating and powerful wireless network operators. At the same time, wireline operators are facing significant voice service revenue loss from VoIP, and are failing to create new billable events from other newer IP applications. Technology improvements such as Wi-Fi and FLASH-OFDM suggest similar dynamics will soon apply to wireless networks. The end goal for Cinderella is to create the greatest possible appeal to consumers buying devices for open all-IP networks, regardless of the interests of the network operator. In the transition, Cinderella needs to make the most attractive handsets for todays network operators to distribute.
How network operators gain and lose control

Network operators maintain command over the value web by controlling many individual value pinch points. These may be embedded in the handset, in the network, or external to both. Examples include the selection and positioning of menu entries, the home page URL, the ability to locate a handset and route inbound connections, and the establishment of carrier-specific retail outlets. The report provides a detailed breakdown of their nature, importance and future. These control points enable carriers to divide the profit pool in their favour compared to Cinderella, and engage in fine-grained price discrimination against users. In return, users expend considerable effort in bypassing these toll systems, and frequently meet with success. Avoidance of international voice toll fees, messaging charges and premium content costs are a way of life for many users. As the industry restructures from vertical integration to horizontal layers (separating data transport from service), the individual components that make up a communications service are exposed and potentially become separate businesses. The report uses SMS as an example of a dozen or so value elements hidden inside.
Come on down, the price is wrong

The prognosis for carrier control and ability to price discriminate is that such powers will steadily weaken over the rest of this decade. Other networked industries, primarily involving physical transport of goods and people, have experienced intensifying price discrimination over time. Yet the technical and economic structure of the Internet, as a transport for information goods, is fundamentally different. These precedents only serve to illuminate those differences.
Keys to the operators power base

Two critical elements are billing and digital identity. Even in a world where data transport is virtually free, there is likely to be an asymmetry in the end-user value of many communications resulting in a desire for creating a billable event. Digital identity traceable to real people, places and things provides vital glue to the system, preventing abuse. The carriers retain a critical advantage in these two areas.
New ideas, not lower prices or arbitrage

Other parts of the value network, however, are ripe for transfer outside of carrier control. By creating smart core networks that attempt to meter and add value to data 10 December 2004 Page 3 of 52 Telepocalypse Ltd. 2004
flows, carriers have locked themselves in to often immediately obsolete technology. (There are cases where vertical integration of features into the network makes sense, and these are noted in the main text.) Their weakness is inability to deploy new services and change at the speed that the network edge demands. The purpose of IP networks is not low price or efficiency: it is absolute flexibility, with the network assuming the absolute minimum about the purpose and value of the connections made over it.
Speak clearly after the tone

This paints a potentially bright future for Cinderella, where constant innovation in applications drives an incessant demand for new handsets. A consequence is that much of the current approach to VoIP, which recreates the PSTNs approach on an IP infrastructure, is fundamentally flawed. IP enables completely new modes of communication, richer in sensuous forms of presence, group forming and collaboration. Voice remains at the heart of this, something frequently lost in the 3G content labyrinth. Wi-Fi networks are a key starting point, because they are the dominant form of fast, open wireless IP networks deployed today. However, Cinderella is compromising its position here by its preference for dual-mode handsets, which have to defer to the interests of incumbent cellular carriers. Cinderella is potentially conceding a key strategic market to non-traditional device competitors because it over-values mobility compared to price and new functionality.
Playing your cards in the game of telecom

To address the market changes Cinderella needs a multi-faceted approach that recognises that different markets enjoy varying levels of incumbent power and availability of IP networks to deliver value to users. The most important change Cinderella can make is to view its handsets as sales outlets for carrier services. Simple changes can make Cinderella handsets more appealing to the core metrics of carriers (ARPU, CPGA, CCPU, churn, free cash flow). The best possible sales message to a carrier is not a sexy new form factor, nor a juicy discount. Its evidence of better core financial performance, for example by On-screen reminders for pre-paid users to top up. Impulse buying of MMS messages with one-click send to the 2-3 most likely recipients (a-la Amazon one click). Highlighting on-net calls to reduce churn Calling Bob at Home (free on-net call!)
Many more examples are given in the text. This is a pretty dramatic shift from the traditional hunt for new features for a consumer electronics company. Additional strategies include: focusing on features that have little or no network dependence; subversive features; creating more compelling applications; helping users dodge the carriers net; and leveraging existing market power. The main text includes a discussion of when these strategies are appropriate. To be successful, Cinderella needs to align everything it does to a move to stupid IP networks, from lobbying to venture financing, customer service to M&A. The report finishes off by recapping some of the landmark ideas that have shaped the communications revolution. In particular, all readers should become familiar with the Rise of the Stupid Network and its associated follow-ons.
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Telepocalypse Ltd. 2004
Contents
Executive summary ........................................................................................................................3 Disclaimer .......................................................................................................................................6 Introduction ....................................................................................................................................6 Part 1: Where we are ......................................................................................................................8 State of the Nation ....................................................................................................................8 Case study: Elvis has left the building ..........................................................................................9 How the carrier controls the value chain ...............................................................................9 Travelling without a ticket ..................................................................................................... 12 Part 2: Where were going .......................................................................................................... 14 Case Study: Dissecting SMS from an IP viewpoint .................................................................... 14 The disintermediation forecast ............................................................................................. 17 The only way is down ............................................................................................................ 19 Should you care about carrier disintermediation? .............................................................. 20 Identity and trust: linking the layers ..................................................................................... 21 Billing and value asymmetry.................................................................................................. 23 Understanding mediation ...................................................................................................... 24 Winners and losers ................................................................................................................. 28 Timeline ................................................................................................................................... 29 Part 3: How to get there ............................................................................................................. 31 Support to the winning side .................................................................................................. 31 Dont play with their network ball ....................................................................................... 33 Be the best footballer ............................................................................................................. 34 Have more players on the pitch ........................................................................................... 35 Bribe the public to support you ........................................................................................... 36 Cheat (but dont get caught) ................................................................................................. 36 Foul the other side.................................................................................................................. 37 Plan for the next match ......................................................................................................... 38 Change the rules ..................................................................................................................... 39 Picking your players ............................................................................................................... 39 Case study: A marriage of inconvenience .................................................................................... 40 Summary and Conclusions ........................................................................................................ 43 Appendix A Recommendations ............................................................................................ 44 Appendix B Carrier points of control of value web ........................................................... 46 Appendix C An economists viewpoint................................................................................ 49 Not everything that counts can be counted ....................................................................... 49 Option value ............................................................................................................................ 50 Lies, damned lies, operator revenue breakdowns .............................................................. 50 Appendix D History & further reading ................................................................................ 51
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Disclaimer
According to psychology research by the Harvard Business School 1, people pay too much attention to outside advice that theyve paid for. They consistently underestimate the freely available insight and knowledge of their colleagues. So once youve done reading this consultants paper, throw it away. Shred it, burn it, or bin it. Then Skype a friend and ask what they think.
Introduction
This paper isnt about the Internet. Or peer-to-peer networks. Or Wi-Fi. Or VoIP. Or even about mobile phones. Its about all of these, and the underlying forces that unite them. There are common economic, sociological and technical drivers to the changes we see today. My goal is to help you look at familiar business problems in a new light, and challenge your assumptions about whats possible. The most important of those problems today is:
How can Cinderella compete as carriers assert increased control over content, handsets, networks and distribution?
My thesis is that the current dominance of network operators over the handset makers is a transient period between two very different worlds. The tide will flow out as well as in. Cinderella wants to dominate this future world (I hope!), thus Objective #1: Be the users vendor of choice for personal communications devices operating on open IP-based wireless networks. This should be Cinderellas long-term goal. Whilst it is fine having a vision of a future that hasnt fully arrived yet, we also need to deal with the current reality of ascendant operators. Some simple and inexpensive changes to current products Cinderella could have a great deal more success in getting handsets distributed by todays powerful operators. Objective #2: Be the network operators supplier of choice for handsets not on open IP-based wireless networks. So thats the nutshell description of there and here. But what about the journey? What you need is a unifying framework. What specific criteria make it easier to sell a handset today? And tomorrow? Product development and project investments must be aligned to these trends. Without this, projects and products are launched based on projected ROIs. To be blunt, the ROI competition is won by the department that can think of the biggest number and has the positional power or political capital to force it through. If youre lucky you have a hit, like interchangeable handset faceplates or ring tones. If your numbers turn out to be a fantasy you have a flop instead (and I wont humiliate anyone by providing examples!).
The Hidden Cost of Buying Information, Harvard Business School Working Knowledge, 8 November 2004, http://hbswk.hbs.edu/item.jhtml?id=4465&t=innovation&nl=y
1
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But like a Vegas casino, wouldnt it be easier playing the market with the house odds on your side? How? You align your bets with the macro trends of the industry. The rest of this paper describes the rules of the Internet game.
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Part 1: Where we are

Power Why the carriers have it and you dont
State of the Nation

So there is a war between operators and device manufacturers to capture the value of the users communications. What does the battlefield look like today? Application functionality is increasingly moving from the centre of networks (switches, video servers, session border controllers and home agents) to the edge (PCs, PVRs, PDAs, phones and other connected devices). Peer-to-peer is the ultimate expression of this trend. The computing and communications power available at the edge are increasing at an exponential rate. CPU speeds, storage capacity, wireline and wireless transmission speeds all have doubling periods between 9 months and 2 years2. Wireless spectral capacity increases fastest of all!3 The dissolution of carrier control over wireline networks has been slowly unfolding over a period of 30 years. None of the major new applications enabled by the Internet has resulted in new billable events for telecom carriers: email, IM, chat, web, multi-user gaming or peer-to-peer file sharing. Change for wireless networks will be faster and nastier than for wireline ones. Rights of way spectrum are about to become plentiful4. Network equipment is cheap, and much of the infrastructure is paid for by end users. Furthermore, the cost of wireless network deployment is more closely linked to actual subscribers than potential subscribers passed you can start small. The next generation of wireless networks from Flarion, IP Wireless, Kaon, etc. are low latency, cope with bursty traffic, have built-in QoS if needed, and high throughput and spectral efficiency. Perfect for moving IP packets around. WiMAX if it ever rolls out is just a bonus on top of these. These technologies are as transformational to telecom as the arrival of the machine gun on the military battlefield.
As well see, these in turn also have a common thread: The best network for the users is one that just shuffles bytes from place to place. The network doesnt assume anything about the traffic, or try to add value to those bytes. Thus new applications can arise and old ones can change without asking the carrier for
Uncommon Sense, Peter Cochrane, p200. Measured at the user, coming from: spectrum re-allocation and de-regulation, moves to smaller cells (e.g. WiFi), cognitive radios, meshing and general transmission improvements (e.g. new OFDM variants). Claude Shannon showed there was a theoretical transmission limit to a hypothetical channel, but the real world is not a single channel. 4 MuniWireless.com, 11 October 2004. According to Dailywireless.org, work begins next month on one of the IEEE's most important, and most politically charged, projects, to devise an "intelligent" air interface (cognitive radio), that can tap into unused television frequencies. This will be the standard (802.22) for fixed wireless systems that use cognitive radio techniques to switch automatically to a clear area of the band, and to avoid interfering with other occupying devices.
2 3
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permission. Advances in technology at the edge are readily captured by the end user. The user doesnt need to wait for the carrier to deploy any new features or invent a new pricing plan. The worst network for the operators is one that just shuffles bytes from place to place. Such a network offers fewer, if any, opportunities for value-add, differentiation and price discrimination of network traffic.
Case study: Elvis has left the building

Before we look at the deeper issues brought by end-to-end IP networks, lets set the scene with a recap of what is happening to voice on the Internet. Perhaps the most important aspect of VoIP isnt the rise of alternative service providers like Vonage or AT&T CallVantage. Its the creation of totally new voice products and the complete loss of service revenue for traditional voice providers. By my own measurements5, Skype is currently supplying around 7.5bn minutes of use a year. This is 15% more than the annual outgoing international call volume from the United Kingdom6. Monthly growth rates are in the tens of percent range7. They are adding 100,000 registered user accounts every day8. Anecdotal evidence is that much Skype use is for international calling, and thus does achieve some form of toll displacement. There is no public available data on how much Skype usage is incremental to PSTN calling vs. displacement of PSTN calls. However, taking an average (and conservative) $0.02/minute displacement rate this would suggest Skype is responsible for $150m loss of profit to the global telecom industry. It isnt hard to imagine a figure of ten times that for the global private VoIP applications industry, once Xbox Live and comparable services are added in. Whilst this seems small compared to a $1300bn industry turnover, it all comes from the bottom line. A recent and credible analyst estimate is of a total EUR6.4bn loss just within Western Europe by 20089. Consumer acceptance of VoIP and massive growth once given a broadband connection are now a proven fact. The presence, IM and conferencing features of Skype coupled with excellent usability are all icing on the free calling cake. But the crucial lesson is IP telephony is about innovative features and new modes of use. It is not about interconnect arbitrage, regulatory bypass or cheaper replicas of the past.
How the carrier controls the value chain

At a high level, carriers control the cellular industry in three ways: the messages they allow to flow over the network, the features and configuration of their handsets, and the retail distribution and branding of handsets. A detailed breakdown is shown in Appendix B Carrier points of control of value web. These are the capabilities that enable carriers to price discriminate against users and restrict competition from outside the carrier industry.
Skype.com 12 noon 13 Nov 2004: 2,470,915,990 minutes served; 10.38am 20 Nov 2004: 2,616,605,453 minutes served. 6 http://eurotelcoblog.blogspot.com/2004/10/skype-billions-and-billions-served-few.html 7 http://www.henshall.com/blog/archives/000525.html 8 E-mail from Skype PR representative, 22 November 2004. 9 http://research.analysys.com/default.asp?Mode=article&iLeftArticle=1777&m=&n=
5
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The chart below shows these control factors. Each factor is rated on two axes. The horizontal axis shows the degree of control the operator exerts over the pinch point compared to the handset vendor. The vertical axis determines the amount to which the factor is exploited to support market and pricing power. At one extreme the user (or public) has no choice and the factor is exploited to the greatest possible extent to achieve price discrimination. At the other extreme, the vendor has no power over the user whatsoever. The shape of the factor shows the type of control handset, network, or other. The size of each factor indicates how important the factor is to enabling disintermediation. The shaded areas show the two key extremes, one where the network operator is in charge of everything (operator tyranny), and the other where the user has absolute freedom (user utopia). Since there are many more device makers than network operators, users have a strong bias towards handset vendor control of features.
Absolute user freedom
User Utopia
Regulatory Distribution
Customer data
User in control
Dominates Cinderella
Handset software platform
Cinderella
Dominates Operator
Operator
Provisioning & Roaming
Which vendor is more in control?
Certification Home page URL Proxies & gateways Home deck
Vendor in control
Network packet flow
Branding Contact handset Numbering
Handset UI configuration
Layer 1-3 DRM Application environment integration
Operator Tyranny
No user freedom
Cinderella Tyranny
Figure 1 - Market power map of wireless today
It looks complex, but it isnt: Stuff near the bottom edge is causing the user to bleed money because of a lack of choice, control or competition. Stuff on the left makes the operator richer at the expense of Cinderella. Stuff on the right makes Cinderella richer at the expense of the operator.
Some quick usage notes. The values are my own estimates, and reasonable people could disagree over the size and position of any factor. Cinderella is welcome to perform its own analysis. The chart also aggregates positions of the two industries: Cinderella is taken to represent the whole handset and middleware space, and all carriers are treated as
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one. Obviously the degree of control, say, Vodafone has over its suppliers is likely to diverge greatly from that of the carriers as a whole. Not surprisingly, power is currently concentrated with the operators. The bottom left quadrant is where the user has little power and the carrier is in command operator tyranny. Not shown on the chart, because they offer no control to either party, are functions well inside the user utopia of choice and low prices: applications, accessories, consumer magazines, etc. With a more detailed map of the battlefield theres less excuse for shrugging our shoulders and accepting carriers as the king makers. We can instead start to analyse which carriers are in charge, how powerful they are, and where there weaknesses might be. Lets take a look at the same picture, but overlay it with the dynamics of the industry.
User Utopia
Regulatory Distribution
Customer data
User in control
Dominates Cinderella
Handset software platform
Cinderella
Dominates Operator
Operator
Contact handset Home page URL Proxies & gateways Application environment integration Home deck
Certification
Vendor in control
Network packet flow
Provisioning & Roaming Numbering
Branding
Handset UI configuration
Layer 1-3 DRM
Operator Tyranny
No user freedom
Cinderella Tyranny
Figure 2 -- Dynamics of market control in wireless
With the possible exception of DRM, pretty much everything is headed in the direction of openness. More smartphones, more Wi-Fi networks, more operating systems, more choice of vendors, more carriers and MVNOs competing, tougher regulation, more spectrum, faster network technology. Now lets compare it with the wireline world. Add together the PCs, DVDs, VCRs, PVRs, phones, set-top boxes, gaming devices, Microsoft operating systems, and so on, and declare them to be the edge vendors fighting against the network operator core. The positions and sizes of the market control factors all move substantially. Its quite a contrast:
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Contact Certification device
User Utopia
Home page URL
Layer 1-3
User in control
Device software platform
Distribution
Network packet flow
DRM
Application environment integration Device UI configuration
Dominates Operator
Operator
Dominates Edge
Branding Customer data
Edge

Proxies & gateways Numbering
Regulatory
Operator Tyranny
No user freedom
Figure 3 -- Market control map of wireline world
Probably the only thing thats worse on wireline from the users perspective is regulation. Wireline carriers have had longer to perfect the art of regulatory capture.
Travelling without a ticket

The economic goal of a carrier is to extract value from communications over its network through the generation of billable events. Nothing else counts. To do this, you have to price discriminate between the messages that flow over the network. But the customers are increasing finding ways around those toll barriers. The trend has been running for decades, but is now accelerating. The table below illustrates just some of the ways in which telecom customers bypass carrier tolls. This list is by no means exhaustive. The methods highlighted in bold rely on an IP network for by-pass. Those in italics use circuit-switched telephony as the transport. Service Circuit voice Circuit voice Toll gate International call interconnect Premium rates for cross-network calls (e.g. mobile to mobile) Means of bypass Calling cards Prefix dialling of landline numbers to preserve bucket for xnet calls Examples IDT www.80550.co.uk
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Vendor in control
Circuit voice Circuit voice Telex and telegram Fax Fax MMS for photos
Roaming charges + handset lock-down PSTN switch Gateway/separate network PSTN switch PSTN switch MMS gateway
Unlocked handsets and thirdparty prepaid SIM VoIP + Wi-Fi Fax machine
Expansys (handsets); www.oneroam.co.uk (SIM cards) Skype for Pocket PC N/A eFax Mediatrix
Fax-email gateway
Fax-IP gateway
Email + IP network; File N/A transfer in IM applications (e.g. MSN, Skype) + IP network; SMS for notification (check your email); Bluetooth file transfer; face-to-face viewing; sneakernet via flash memory cards Java/Symbian application + IP Network User-created ring tones; flash memory cards or Bluetooth Java application + IP Network SMSSend [defunct], Agilemobile Xingtone
SMS Ringtones
Mobile originated message charges Download vending machine Gateway/proxy
Push-totalk
FastMobile
Disintermediation of carrier tolls is clearly more than a few isolated examples: it is a pattern that practically forms a way of life for users. To complement these toll-bypass methods, customers can also engage in lock-in bypass by getting their handsets unlocked. There are many website that can be used to procure unlock codes for just a few euros.
Q: How might the product and sales approach differ for a closed vs. open carrier? Q: How does the role of third party retailers (e.g. Carphone Warehouse) and alternative distribution channels change with the openness of the carrier? Q: How do Cinderellas handset designs help or inhibit users to bypass carrier tolls?
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Part 2: Where were going

Wealth Where it comes from, where it goes to
Case Study: Dissecting SMS from an IP viewpoint

How do IP networks enable disintermediation of carrier services and tolls? To find out, lets take apart the familiar SMS service. The goal is to understand what value the carrier might be adding. We can then start to discuss how and when the carrier might be bypassed. Many articles on price discrimination of IP data transport include a table along the following lines10:
Service SMS ringtone/logo SMS message Complex ringtone/logo Java download (game) 1 min voice call kB consumption 0.2 kB 0.1 kB 2.0 kB 15 kB 144 kB Example Pricing $2 (UK) $0.15 (UK) $3 (UK) $3 (Japan) $0.10 (US) Revenue per MB $13,981 $1,573 $1,536 $204 $0.71
These are very misleading because they attribute the value that comes from these services to the transport element alone. I could post you a box of gold and a box of manure, but the relative transport costs tell me nothing about the postal system or the goods! You only learn about the value of the gold by being told about wedding social customs, mining costs, secure storage costs, central banking institutions, currency issuance and inflationary effects of competing stores of value. You dont learn anything about those by looking at the value of the stamp on the box. All that tells you is gold is heavy, not why the user paid $10,000 for it. IP networks help move us from a vertically integrated to a horizontally layered industry. Most of those horizontal functions have been hidden inside telcos, but are emerging as separate industries in their own right. You can assign the value of a service to the component parts of that service. (You need both an architect and a plumber to build a house, but you expect to pay more to the architect.) Before assigning value to functional elements of SMS, we need to know what those elements are. In the diagram below, Aino is sending an SMS to Bo. The key components of the transaction are shown: handsets, radio networks, SMS messaging centres, longhaul interconnect, home agents/HLRs, customer database, billing and policing. Remember, the customer sees no value any of these things per se.
10
Forget Bandwidth-Hungry Applications: Focus On Non-Voice Mobile Services That Generate Higher Profit Margins than Voice Telephony, http://www.soundpartners.ltd.uk/article_serv_prof_article.htm. This is a truly terrible piece of analysis, and I take great pleasure in picking it apart! Until you run out of spectrum or network capacity there is zero marginal cost of transmission, and capacity is a sunk cost that should be ignored. $/Mb is the worst possible metric to run a network by.
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SMSC
SMSC
Home Agent
Customer Database
Invoice
Alice
Bob
Figure 4 Functional decomposition of SMS transmission
Now lets take the same picture, but look at it through our polarized value glasses:
Transmission
SMSC Universality SMSC Storage
Mobility Agent
Home
Availability Accountability Database

Invoice
Delivery
Customer
Usability
Ubiquity
Urgency
Relevance
Alice
Governance
Figure 5 Value decomposition of SMS transmission
Bob
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So what does your 10 to send an SMS buy you? Where does the value come from? Is it the basic postage and packing charge? The ability to enter the information into the handset, tuned for usability? To have it transmitted and delivered? (Think of the difference between these as being between having the package delivered to your home address and having to collect it from the depot.) How much is attributable to the availability of coverage: the service comes to you, rather than you to it? The universality of the service via interconnect agreements? The ubiquity of the receiving apparatus? The storage of the data sent to sometimes disconnected recipients? The resolution of mobility, delivering to the user wherever they may roam? (Think of this as the difference between a package delivered to your home address and one delivered personally to you.) What value is attached to the ability to cause the recipients handset to ring and vibrate, indicating urgency to the message? (Do Blackberry users have their devices vibrate with every email? Rarely. Why not?) Every message is billed (or subtracts from a bucket), and thus has cost which would only be incurred if the message has relevance. Without this, how do you know the recipient will bother reading messages? What if the system is abused? Somehow there has to be governance, which in turn relies on some means of tracing malicious users and accountability.
You can almost imagine getting an itemised bill for each SMS, with sub-totals from 3GPP, Verisign, NeuStar, Level 3, the FCC, Cinderella and so on. Decoupling the connectivity from the service as IP networks do makes it easier for these elements to exist as separate businesses. For some, the carrier retains a natural advantage. For example, every customer has a network identity, and this naturally leads to the carrier as the supplier of digital identities. Every customer gets a bill, which makes the carrier the natural conduit for 3rd party charges. But others are under attack: witness the gradual increase in dynamic DNS services11, open ENUM registries and even competing name/address resolution systems like DUNDi. A better understanding of the sources of value helps Cinderella build products that compete or collaborate with carriers on the right parts of the value network.
Cheap, open IP networks make disintermediation of carrier services possible, but not inevitable.
People will continue to use SMS even when offered a free e-mail alternative. This is because e-mail does not have all the value attributes of SMS the customer desires (e.g. governance, ubiquity). It also lacks the economic structure that content and service providers need, such as premium charges to vote in TV reality shows like Big Brother or Pop Idol.
A long list of providers is found at http://dmoz.org/Computers/Software/Internet/Servers/Address_Management/Dynamic_DNS_Service s/. Unlike traditional DNS, the cross-reference from domain name to IP address is not cached for significant periods. If I move around I can change my IP address immediately, without waiting two days for DNS servers all over the world to propagate my record. This comes at a cost of performance and resilience. Its less functional than mobile IP, but more than adequate for 80% of user needs.
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The disintermediation forecast

So in this fight to extract the value from the network, who will win? Can carriers set up effective toll booths on the wireless Internet?
The carrier doesnt know the value of the traffic

Telecom isnt the first network-based industry involved in the transport or transmission of goods and services. The physical distribution networks such as canals, railroads, turnpikes, airlines or lighthouses have served the routing needs of commerce for centuries. These have formed exquisitely complex price discrimination regimes and counter-regulatory structures. Wont telecom go the same way? No. The Internet is genuinely unique, and its structure suggests these parallels will not result in the same price discrimination architecture12. The complexity is at the edge, and is changing rapidly. That makes it hard to build pricing mechanisms into the network when the network has little knowledge of the application and its worth. Information goods lack the predictable uniformity of physical goods: a canal boat has a very narrow range of practical uses compared to a fast Internet connection.
The carrier cant see the traffic even when it knows the value
Companies like pCube pride themselves on being able to identify and traffic shape Skype packets etc. In principle, the carriers can try to identify toll-avoiding traffic on their packet network, and block or charge for it. But users are not passively going to pay the tolls. Applications will use non-standard ports, change the IP address of servers, encrypt or split their messages, tunnel via other protocols, and mix messages with useless salt data. Encryption via VPNs and Opportunistic IPsec (a feature of IPv6 replicable in IPv4) make the carrier even less able to enforce their pricing regimes. Do operators want to get into an arms race with their customers? Bearing in mind the lack of success of the copyright cartels13 in trimming illegal peer-to-peer networks, how likely is it that carriers can prevent the transmission of entirely legal user-generated (and user-copyrighted) content? Multi-region DVD players and unlocked handsets are hardly a rarity, so hardware control has a poor precedent at preventing revenue leakage.
The carrier doesnt have anything left to charge for

Technology is rapidly increasing available bandwidth. Lack of scarcity means lack of economic rent. The biggest priority for carriers should be increasing usage, not capping it via high charges. Scarcity can only be artificially imposed via oligopolistic market structures or lobbying to exclude competition14.
12
Pricing and Architecture of the Internet: Historical Perspectives from Telecommunications and Transportation, August 2004. Much of this section paraphrases that report. http://www.dtc.umn.edu/~odlyzko/doc/pricing.architecture.pdf with commentary at http://slashdot.org/articles/04/01/03/1839206.shtml?tid=126&tid=95&tid=98&tid=99 13 Cartel A combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members. Examples: RIAA, MPAA, Business Software Alliance. 14 Philly, Verizon strike WiFi agreement , MSNBC, 30 November 2004, The city of Philadelphia and Verizon Communications Inc. struck an agreement Tuesday that would allow the city to provide wireless Internet access as a municipal service even if Gov. Ed Rendell signs legislation to give Verizon the power to scuttle the project., http://www.msnbc.msn.com/id/6622765/ 10 December 2004 Page 17 of 52 Telepocalypse Ltd. 2004
One hole in the operators spectrum cartel is Wi-Fi; it would be no surprise to see the 2.4Ghz band expand, and cognitive radios make inroads into TV UHF bands. Its just a question of time.
Users wont play the game

The users pay directly for Internet connectivity. However, most physical transport charges are for cargo or business use that is subsequently incorporated into other goods. The user doesnt see the price discrimination that charges extra for a truck to cross a toll bridge compared to a car. Behavioural economics tells us that people react extremely negatively to price discrimination, and are willing to pay extra for simple prices, especially flat-rate ones. Most of the costs of physical transport systems were associated with the core of the network. The Internet reverses this. Since the edges are paying most of the infrastructure costs (e.g. PCs, game consoles, phone handsets), they control the system. Efforts to price discriminate via handset and network control can backfire, as this review15 (and many similar ones) pans Verizons lock-down efforts: Verizon customers have been waiting for a phone with a feature list like that on the Motorola V710. Unfortunately, the phone doesn't live up to expectations. To transfer photos out to your PC, you'll have to purchase a memory card or pay to e-mail them to yourself. We think it's unfair of Verizon to limit the phone in that way.
Other carriers undermine efforts to charge

Consider a market like Denmarks with many incumbents and MVNOs. Whats the quickest and cheapest way to differentiate yourself from your competition? Make your network and handsets more open. Hence theres an openness ratchet effect that accompanies increasing competition.
It hasnt worked yet

Efforts at price discrimination and rationing scarcity within the data transport network have so far met with limited success. Think of ATM, QoS, RSVP, MPLS, multicasting, congestion pricing and active networks. Not one has achieved its economic goals. The big growth continues to be in best-effort IP networks. The money spent on network price discrimination and rationing is better allocated to simply increasing capacity.
15
PC Magazine, undated, http://www.pcmag.com/article2/0,1759,1639784,00.asp
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The only way is down

The Vodafone Live! 3G launch explicitly says they are trying to move towards value pricing on their network16:
Figure 6 - Vodafone steers customers away from open Internet
The free browsing only refers to that within the walled garden: all other packet data is charged at premium GPRS rates. Effectively this slide states that none of the profit pool will be shared with the edge (i.e. customer or Cinderella). But it also exhibits a weakness of the carriers. The services they offer themselves are constrained by their own general packet data pricing. They cant charge more for a service than the equivalent packet data rate plus a mark-up for the value attributes discussed in the earlier dissection of SMS. If they try, and the handset and network arent locked down, then someone will bypass them. This will drive carriers towards metered services that are low value/high data need, like mobile video. Unfortunately for the carriers, the limited nature of the handset form factor makes these among the less compelling applications. You can only consume so many bits per second through a two inch screen. However, they could encourage massive use of bandwidth for video and file sharing, squeezing the capacity for general packet data and creating an artificial scarcity into which they can sell quality-of-service guarantees for a hefty price. Cellular voice is coming close to being disintermediated17: a Vodafone UK 3G card offers 75Mb for 23.50, which at 5Kb/s is the equivalent of 250 minutes of talk time. A 200 minute talk plan is 30/month. To make up the difference you would have to use a VoIP service provider, which at a blended mobile and landline rate of 5p/minute adds about an extra 10 to the 3G cost. Clearly, their pricing structure is no accident.
Taken from http://www.russellbeattie.com/notebook/1008160.html This is not to dismiss issues of quality of service and congestion; but given the marginal reputation of wireless for signal quality customers are likely to accept richer audio codecs at the expense of momentary glitches from packet loss.
16 17
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Should you care about carrier disintermediation?

Yes. In monopolistic markets price discrimination reduces consumer welfare. It decreases usage, lowers perceived service value, and diverts the customer communications budgets away from the network edge. However, in competitive markets price discrimination works to achieve a more efficient allocation of resources 18. Furthermore, it extends the market downwards: people who could not previously have afforded the service now can, cross-subsidised by others who are paying more for the same service. This points us to a critical lesson:
Go downmarket where the carriers are in control. Go upmarket where the edge is in command.
What does this mean? If the carrier has great market power and uses it to lock-down their devices and network, they will exercise strong price discrimination. High-end handsets will not realise their full potential to the user: the price discrimination will erode perceived value. Cinderella will not achieve the anticipated premium prices. What is the point of Cinderella investing billions in new service-enabling features of smartphones (e.g. Symbian OS) if Vodafone, DoCoMo and friends control the profit pool? However, low-end users may be sucked into the market by price discrimination. These might be underserved by a more traditional Cinderella handset strategy. Dont try to offer a shrunk-down laptop computer. Instead build a vertical VoIP application into a simple handset, add smart presence features and a wideband audio codec, and make it easy for the carrier to charge for it. Indeed, it may pay off to reinforce carrier control at the lower end of the market, particularly when trying to extend service into otherwise underserved or unreachable markets. At the low end of the handset market the carriers offer lower subsidies (theres only so much you can knock off a $50 wholesale price.) Many phones are even sold at a profit. The lack of a subsidy lever weakens the carriers ability to exert control over handset features. That means whatever threatening features you do want to sneak in against the carriers wishes are more easily done at the lower end of the market. Summary: Carrier in control? Forget the smartphones, keep it simple. The converse is where the carrier is weak and creates an open network environment. Here you do want miniaturised open computing platforms that make the most of IP. At the high end youll get higher margins, because the users get the full value of the product without artificial limitations. (People pay extra to buy unlocked phones today.) The end result might see carriers stratifying into ones centred on lower-end handsets with fierce price discrimination, and ones supporting faster IP networks with higher-end premium handsets.
Price Discrimination, http://www.tutor2u.net/economics/revision_focus_2004/A2_Price_Discrimination.pdf

18
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Identity and trust: linking the layers

Identity in a nutshell
Lets try to understand how critical identity is in the future of telecom. The communications industry is slowly and painfully transforming from vertical integration to horizontal layers. Those horizontal players then gain economies of scale within their layer and niche. The glue between these layers is identity. Cinderella must have a digital identity business strategy to be successful in managing this change. Every interaction between the layers involves some explicit or implicit exchange of identity data about the thing being exchanged. Without it, no value can flow between the layers. This is not a technology problem.
Economic value in identities

We can create many types of identities: phone numbers, IP addresses, handset IMEI, email address, personal domain name, account number, etc. Two key things differentiate these identities. The first is the existence of links from the digital identity to real people, places and things. The second is the extent to which they are either explicitly revealed to the target of the communication, or can be traced back via a third party. Does it point to something real? Can I find out what it points to? When an identity is offered in transaction in a way that can be traced back to someone who would suffer a loss as a result then this identity possesses identity collateral. Landline connections are associated with a place. Post-paid cellular is associated with a person through a credit check. And pre-paid cellular is associated with a device. Abuse could respectively result in arrest, exclusion or device deprovisioning. The value of identity collateral comes from preventing abuse rather enabling services. Telecom isnt alone in finding theres a significant profit to be made from mitigating the undesirable effects from some underlying technology. For example compare the abundance of food of modern agriculture and the diet and pharmaceutical industries that manage the resulting obesity. Or motor vehicles and the insurance industry19. The money isnt in making VoIP calls. Its in stopping unwanted ones from making your phone ring! Again this is not a technology problem. Identity creates value in specific situations. Understanding how they are related is key to making money from the disaggregated components of a voice call.
Good identities cost money to make

Whilst a carrier might spend $25bn building a network, it can also cost $5-10bn to acquire the customers and their identity data. Just because the balance sheet only depreciates the network doesnt mean the identity data isnt core to the operation of that provider. Consider the difference in fortunes of retail telecom operators (who have identity collateral for sale) and their wholesale dumb pipe competitors who dont. Identity is big business, just a hidden one. What about directory businesses with 50% (or more) margins surely theyre just sorted lists of identities?
Largest US automobile insurer 2003 profit: $3.1bn (State Farm). Largest US automobile manufacturer: $3.8bn (General Motors).
19
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To illustrate the critical importance of identity collateral, note that Japan has recently flirted with an outright ban on pre-paid cellular phones20 to curb fraud and abuse. Instead they are settling for more rigorous identity checks. This administrative work will cost the carriers a lot of money. What advantage can they and the handset vendors make out of the enhanced identity collateral? The carriers have a natural advantage in providing digital identity. Everyone who buys a connection must reveal something about themselves, even if only the identity of the device to be provisioned to the network. Their natural advantage must be kept in mind when formulating competitive strategy in deploying new applications. Repeat this is not a technology problem. Choosing the right identifiers is a business issue, because they are business assets with tangible value.
Trust the other side of identity

Telcos are trusted by their customers in a big way: your calls arent wiretapped without due authority, your call details are kept private, calls are routed correctly, caller ID works21, your voicemails are secure, you rely on the system for emergency service, and so on. With a smart network, much of that exchange of value occurs within the telcos castle walls. This reduces the amount of trust required in the system, because no boundaries are crossed. It also reduces the cost. For example, the phone doesnt need to authenticate to the voicemail system as well as the network. But when you distribute these functions to the edge of the network, they start crossing trust boundaries. If the telco just supplies connectivity, someone or something else is doing all the above functions. Its much harder to build a trusted distributed system. For instance, the more recent peer-to-peer file-sharing networks have become poisoned with deliberately mislabelled and incomplete files spread by irate rights holders. Napsters centralized directory architecture made it less resilient to legal attack but easier to build trust. Skype maintains a centralised authentication architecture22, despite every other aspect of the system being distributed to the network edges. Some bad news: nobody I know of has really cracked the measurement and classification of trust for public networks, or related it to the economics of communications and placed a value on it23. Yet without trust the system collapses: it is worth hundreds of billions of dollars. A possible research area for Cinderella? One last time this is not a technology problem. Trust is tied to branding. Brand is a business issue. Whose logo lights up and says trust me?
Japan rejects ban on prepaid mobiles, Telecom Asia, 16 November 2004, http://www.telecomasia.net/telecomasia/article/articleDetail.jsp?id=133526 21 A misplaced confidence: see the tale of star38.com and the history of phone phreaking. 22 An Analysis of the Skype Peer-to-Peer Internet Telephony Protocol, Salman A. Baset and Henning Schulzrinne, Columbia University, September 15, 2004, http://www.cs.columbia.edu/~library/TR-repository/reports/reports-2004/cucs-039-04.pdf 23 Although a good starting point is at http://www.strategy-business.com/press/article/20964?pg=0
20
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Billing and value asymmetry

If VoIP calls are free, why do we need billing? And without billing, what does a telco have to offer? Here lies an unexpected source of operator power. The costs of network technology are decreasing, while the costs of complex billing systems remain somewhere between amazing and extraordinary. At some point the billing part of telecom may become a major or dominant cost compared to the network. A common misconception is that this is somehow ridiculous and unsustainable, and will cause a collapse of the telcos. This is a superficially a very attractive argument. Surely the transaction costs of an efficiently run service should always be low? Definitely. However, a communications service is often partly a brokerage fee. That means some of your money is being passed on to a third party. Even with zero transaction costs, youll still have to pay. One case is where there are termination fees of some sort. This is the exception rather than the rule on the Internet, so until VoIP calls to Mars become a common reality, well not discuss it further. The other case where charges persist is when the caller is drawing on the resources or attention of the callee. There is some exchange of value going on, and the direction and magnitude of the exchange are clear. Such charges are made via explicit or hidden premium rate tolls. Standard premium rate numbers are well known and merit no further discussion. The hidden ones are of greater interest, however, since they may act as a precedent for a wide range of services in future. The United Kingdom has a fascinating system whereby calls to the 0870 area code24 are tied to an obsolete BT national calling rate. This rate is vastly more expensive than the cheap rates national calling rates available in the competitive market often by an order of magnitude or more. Revenue sharing is allowed with the callee, typically at a rate of around 3-4p (US$0.07) per minute. In other words, this is a premium rate calling system, but with a lower price than on standard premium rate services (typically 20p100p/minute). The low unit price is made up for with massive volume. This numbering scheme exists despite the 09xxx number range in theory having been assigned as the sole means of offering premium services, and 08xxx being for nongeographic numbers (like 0800 freephone). Thousands of companies, large and small, have flocked to using these 0870 numbers for inbound calls. An airline or utility company might run up hundreds of millions of minutes of use, and the revenue starts to become a lot of money. Indeed, according to the UK regulator between a quarter and a third of BTs metered call revenues come from 0870 (and similar) numbers 25. Most companies block outgoing calls to 09xxx numbers, but not 08xxx numbers, so there have been few barriers to adoption. What companies are doing is using their temporary market power over customers to extract revenue. Want to change your airline ticket? Ask some questions of the shop staff? Complain about the goods you bought? Get ready to pay. Oh, and since there is no limit on the use of queuing systems on 0870 numbers (unlike 09xxx premium rate numbers), the longer you wait the more you pay. Devious.
Other codes, such as 0871 and 0845 are also used. For simplicitys sake, we shall only refer to 0870. NTS (Number Translation Services) focus group meeting notes and action, 3 June 2004, http://www.ofcom.org.uk/ind_groups/ind_groups/telecommunications/nts_focus/notes/nts20040603
24 25 OFCOM,
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You can expect this to spread from being an isolated example to being the norm. For consumer-to-consumer and business-to-business the exchange of value is not clear, and indeed minute-metered telephony is likely to disappear on both wired and wireless networks. (Small businesses also look and act more like consumers than business accounts.) But for business-to-consumer or consumer-to-business communications this need not be the case. Who cares if the telemarketer calls at dinner time on your premium 5/minute public number? The lesson?
The existence of free transport and carrier service disintermediation via IP doesnt mean the end of billable events.
Other variants are also possible on the charge for value exchange equation. For example, carriers who get user to call freephone numbers might get a finders fee on any sale the 21st century replacement for the yellow pages, mixed in with Googles business model. Clearly the billing capability of carriers will continue to be a source of power, and against much of the punditry that just sees the Skype phenomenon and free calling for everyone.
Understanding mediation
Smart vs. dumb pipes
The opposite of a dumb pipe is a smart pipe. Any smartness built into the network beyond simple connectivity is mediating the flow of messages, ideas and innovation between users and service providers and device makers. When and how do smart pipes make sense? How is value added by mediation of data flows? There is no shortage of Cinderella networking products that are smart pipe elements. Think of messaging gateways, web proxies, SIP proxies, and session controllers. These arent merely services on a dump pipe network that handsets can choose to draw on; rather they are the only way of connecting points of the network. Their use is compulsory. These indeed perform essential functions such as recording billable events, authorisation, non-repudiation of transactions, firewalling, media translations, and so on. Yet these functions can be performed by an autonomous edge using alternative technologies such as token-based micropayments, trusted computing, and P2P voice using newer codecs. The smart network model only makes sense in four cases, which may overlap. Getting the old and the new to work together. When there is a gap in technology generations, its sometimes easier to address the tyranny of the installed base with a smart network. For example, an analogue telephone adapter does this for a tone-dial phone and an IP network. Old handsets know nothing of new protocols, even if they have the CPU power and memory to speak them. Bleeding edge. The second scenario where smart networks win out is where there is technological deficiency, and the efficiency of a dumb pipe is not enough to sustain the application. These requirements are often non-functional in nature (e.g. availability, performance, manageability, security). In this case vertical integration of the application with the network is justified.
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Stable applications. Where no further change is expected the application can be vertically integrated with the network to optimise cost or performance. A wireless home automation system (heating, lighting, ventilation, thermostat, controls) might arguably fit this category26. The system requirements are very predictable and stable. No need for IPv6, just a low price. This scenario is not typical of mobile handsets, where the user interface is soft (a screen and alphanumeric keypad). Where the edge is blurred. Finally, you might have a smart network where the intercept and smarts occurs on the users home turf. If the user has complete control over the installation and removal of the smart networking feature, there is no economic incentive to bypass it and no restriction on innovation at the network edge. For example, consider a system that transparently intercepts email and checks for viruses, or one that scans downloads for overbearing enduser licenses27. An interesting dilemma with this case is in the corporate environment where the demand for innovation by employees (e.g. using IM systems, Skype, etc.) may exceed the appetite for change of the infrastructure owner.
An example of bad design and inappropriate tying of application functionality to the network is Bluetooth. When the technology was conceived vertical integration might have been necessary. But by the time it came to market, it was an obsolete28 technology cul-de-sac29. Now its an inflexible and restricted set of capabilities where all innovation and change needs the blessing of the carriers. This is the exact opposite of the Internet philosophy of making the connectivity as dumb as a bag of rocks. Recent attempts to put smart networking features into the network edge have flopped. Technologies like OPES [Open Pluggable Edge Servers] have largely disappeared from the map. Qualcomms EV-DV network technology is under a cloud: why include special channels for circuit voice alongside a packet network, when you can run everything over IP? The trend is clear: stupid networks are pushing out smart ones.
Stages of application evolution

Most computer applications have a rich heritage stretching back into a pre-computerised world: despite what Silicon Valley would have you believe, social networking didnt begin in 2003. The base capability normally goes through six stages of evolution. The applications core function stays constant, although the form mutates and the reach, speed and convenience increase over time. For example, the act of sending a body of text for later delivery has been achieved through hand-delivered scrolls, the postal service, telegram, telex, fax, email, and SMS. The diagram below illustrates a simplified view of the stages of evolution of every class of communications application. Voice calling is used to illustrate the stages. In reality there is overlap of the stages, jumping of stages, grey areas between stages, concurrent transition of several stages, and even occasional regression (e.g. Napsters closure).
Proponents of ZigBee and related wireless networking standards might disagree with this example. http://www.freedom-to-tinker.com/archives/000478.html 28 http://www.hyperorg.com/blogger/archive/2002_07_01_archive.html#85215080 29 http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2913885,00.html
26 27
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1876
AT&T Ma Bell era, Cellular voice
Nobody can build it yet
2 Needs a dedicated network
Se r
1996
vic
Net2Phone, Yahoo! IM voice chat
3 Works on IP, some loss of functionality
2000
Vonage, Cisco SIP phone
Pr
od uc t Fe atu r e
2003
Skype, Peerio
Works on IP, meets user needs
5 P2P IP application
2005 ? 6 Integrated platform
Figure 7 Evolution of communications applications
The descent down the chain is a result of economics, not technology. A smart verticallyintegrated network lets you meter value and discourages innovation, and thus encourages users by-pass it using IP. The operator of centralised IP infrastructure will seek economic rent, again driving traffic towards peer-to-peer. A sole supplier of an applications user interface gains market power, and the user interface gets stripped off leaving the bare underlying platform. Finally that becomes an open source platform, and nobody makes any money from the basic application service any more. The last stage hasnt happened yet on voice calling. In this sixth stage, instead of a common application (e.g. POTS, Yahoo! Messenger, Skype) and user interface, an application platform with many services built on top comes to dominate. It has happened with stored media distribution already: more than 50% of P2P traffic is from BitTorrent, eclipsing the previous generation of vertically integrated IP applications, KaZaA and eDonkey. The recently released APIs from Skype are a first step30. The first ever Motorola cellular call in 1973 was a transition from stage 1 to stage 2. Internet Protocol wasnt standardised until 1981, so that was as far as it was going to go. Current 2G and 3G handsets rely on a portal and/or web proxy infrastructure to gate access to premium content centralised stage 4 technology. Future DRM technology would move that functionality into the handset, at a cost of extra memory and
For the observant, note that SIP is a protocol, not a platform. Skype APIs provide you access to a specific operational infrastructure. SIP might be used as plumbing between the components of the platform, which perform specific functions for particular owners. But SIP isnt a platform, and the future platform(s) for VoIP are still in play.
30
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management. Super-distribution of encrypted content is then possible via multiple systems including P2P. Peerios technology allows peer-based storage of files including fragmented and encrypted voicemails. Your desk phone, and all your colleagues desk phones, together store multiple copies of your voicemail. You no longer need a central voicemail server. This is also an example of a transition from stage 4 to stage 5. Their APIs are a contender for being the stage 6 platform.
Services, products and features

Voice calling is turning from a service into a product, and then from a product into a feature of a larger communication and collaboration system: You pay for a service on a recurring basis. This is either metered (depending on how much you used) or flat-fee (usually with a slight price premium against average usage to reflect the user value of predictable charges). A product is a one-off buy, like a SIP adapter box and a telephone. If it works as advertised, you buy two Peerio phones, plug them in, and get voicemail and calling without any service provider needed. The feature of speak to someone not physically present is being subsumed into larger systems like Xbox Live, Skype, or Yahoo! Messenger in conjunction with presence, collaboration, workflow, group forming and vertical application features. These have very diverse business models.
This is both a threat and an opportunity to Cinderella. Handsets are products, and diverting service revenues into handsets is clearly desirable. Being just a feature of a bigger picture is a mixed blessing good if youre successful at doing alliances, bad if someone else takes control of the profit pool (the bogeyman usually being Microsoft). At the same time, as we saw in the SMS example, components of the voice calling applications may become spun out. These in turn can become services, products or features. Digital identity will remain as a service. Ubiquity might be associated with the product (e.g. leveraging Cinderellas x% market share to create a faceplate market). Storage of messages becomes a feature of a device, not a network service.
No magic in Internet Protocol

A quick but vitally important lesson. When someone says theyve got a strategy to move to an all-IP architecture, keep probing. What you want to know is whether their architecture still has application processing embedded in the network itself, and if so what their justification is. Its still possible to build a smart network using dumb pipes, thus recreating all the inflexibility of the circuit-switched world.
Just because its on Internet Protocol doesnt mean its done right.
Do you really need a SIP proxy? A session border controller? A media gateway? A traffic shaper? Whats the price in terms of flexibility of the solution? Is the solution full of mediation, but just shifted to an IP platform? Skype has equivalents to all these functions, but not implemented as $500,000 boxes sold to telcos. Given Skype works and scales, how much value are these products adding?
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Winners and losers

The billion-dollar question: who gets the prizes from the transition to open IP networks with open devices? The following table assumes such a transition occurs, and makes some educated guesses as to who the winners and losers might be31. Note that winner and loser are the relative changes as a result of such a shift. Some of these sectors may be excellent or poor business prospects regardless of the direction of change. Who
Handset OEMs & ODMs Component manufacturers MNVOs
Examples
Flextronics, Compal SkyCross, Texas Instruments Virgin Mobile
Winner or Loser
Winner
Why?
More change and innovation at the edge shortens replacement period. Dont carry marketing costs, inventory risk, etc. in times of rapid change. Fortunes tied to that of handset OEMs. Innovation in sales and distribution likely to be more critical than product innovation for retail of access services. Massive amount of unrealised innovation potential; sticky applications with increasing returns to scale from community use and group forming Dominance of platform over pipe; localisation and application testing/certification. No news that peer-to-peer is a problem. Possibility of big wins later with service-oriented business models (e.g. selection of music of likely interest) Increased choice requires middleman to help filter and perform QA. Unable to retain consumer surplus, facilities competition, regulation. Open IP access networks will spur additional demand. Low margin, high volume, predictable profit; exclusive rights-of-way (road, railway, pipeline, pylons) form barriers to entry. Continued destruction of traditional switch and PBX business, but increased layer 1 and 2 sales Likely to offer better deals than retailers tied to one network
Winner Winner
Application developers Software vendors Media content creators Aggregators and publishers Access network operators Long-haul data network operators Network equipment vendors Independent Retailers
Jamdat
Winner
Microsoft Disney
Winner Losers?
Handango DoCoMo, Vodafone Level 3, Global Crossing
Winners Losers Winner
Lucent, Nortel
Mixed
Carphone warehouse
Winner
31
Cinderella is deliberately not in this list; whilst it is part OEM/ODM, it also performs value chain orchestration that cant be summarised so simplistically. Overall, Cinderellas a winner.
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Timeline
As you can see from the evolution of voice calling, change is rapid through the last few stages. How soon can Cinderella expect to wait before the floodgates of wireless IP connectivity are opened? Lets take a look at the key ingredients: Technology. Fast low-latency symmetric IP networks are coming on stream32. Flarion, IP Wireless, and Wi-Fi are here now. WiMAX, as long as I stays the course, will arrive in 2005 for large-scale deployment in 2006/7. Its close cousin, 802.20, is on a similar timescale. The 802.22 standard will allow re-use of TV spectrum for IP networks. The team has just started work and might deliver useable hardware in 2-3 years. Scaling of mobile mesh networks is still a basic research problem. Regulation. The FCCs Spectrum Policy Task Force issued its initial report on reform in 2002, and continues to modernise US spectrum policy. The UKs OFCOM has expanded unlicensed wireless spectrum by 50% in its Q4 2004 review. The Norwegians have just auctioned off 3.5GHz for IP wireless. Operators. Nextel are flirting with a Flarion roll-out in the US, and even the second-rate alternatives (EV-DO, HDSPA, EDGE) are good enough for VoIP, even if the scaling characteristics and latency are lousy. Some are waking up to the reality that they really are just going to be a bit pipe33. Customers. VoIP is transitioning from early adopters to early majority. The chasm is being crossed. Theyre used to IP applications on the wired Internet. Theyre ready.
UMTS may be a dead-end: its stuck in a world of distributing stale packaged media content over asymmetiric links that dont cope well with bursty two-way IP traffic. In a bid to maximize bits per hertz and peak throughput its lost sight of the users needs: low latency, low jitter, low channel access times, predictable throughput, symmetric. More bandwidth comes last after all of those. Metro Wi-Fi is a big deal, with a real addressable market by 2006-7. Wi-Fi in the home and enterprise is a reality already. The time to act is now. However, to do a rigorous analysis of the changes in operator control and IP network deployment would require a data collection effort beyond the scope of this paper.
Q: As new applications are embedded in handsets, which of the value components from the SMS example might be overlooked? How can Cinderella gain advantage by fixing these? Q: How easily can users track their data use on Cinderella devices? Does this matter? Q: What are the circumstances where people could use their mobile phone but choose to use an alternative service (e.g. landline phone, e-mail)? What features might be added to a handset to enable greater price discrimination in such situations in favour of the handset? Q: What would the effect on Cinderella be if SPIT (Spam over Internet Telephony) becomes common? How could Cinderella phones be made more attractive to users, or less likely to be
The Qualcomm EV-DO roadmap fails to make the grade: too much latency, poor reverse link scaling, highly asymmetric. 33 http://eurotelcoblog.blogspot.com/2004/12/japan-gets-it-one-of-my-japanese.html
32
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associated with outgoing nuisance messaging? positioning?
How might that affect Cinderellas brand
Q: Open Wi-Fi access points are common in the USA and Europe. What are the implications for identity collateral? What is the likely future of this situation? Q: What current Cinderella features are being used in a B2C or C2B context where there might be a mismatch between the value received and the payment made? What opportunities exist to create such services? Q: Which Cinderella products (network as well as handset) are associated with which stages of application development? What technologies might threaten them? How might Cinderellas product portfolio look in 5 years from now measured on this scale? Q: What happens to operator handset subsidies on all-IP networks? Do operators subsidize handsets more in order to retain control over them? Or do they find it impossible as margins are squeezed, and users buy open/unlocked handsets to avoid carrier tolls? Who stands to gain from an open environment and might become an alternative source of subsidy? Q: If the current circuit-switched cellular voice network didnt exist, and we suddenly invented fast IP-based networks, what would the services look like when freed from past design constraints? Would British callers always send you their current weather along with the caller ID? Would we start or end calls, or just fade in and out multiple audio streams, some of which would be like a baby monitor or TV in the background?
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Part 3: How to get there

Sex Survival of the fittest
Now for the meat: what Cinderella needs to do to appeal to todays operators and tomorrows users. How does Cinderella avoid losing at football when playing against the bigger kids?
Support to the winning side

The natural reaction to a threat from the Vodafones of the world is either to fight (e.g. by trying to appeal directly to the end user) or flee (do Vodafones bidding). But are there other options worth considering? Yes, definitely. There are some compelling, if unglamorous, opportunities to differentiate Cinderella from other handset manufacturers and increase appeal to the carrier distribution channel. Network service customer acquisition & retention Core to Billing operators Customer care business Logistics Personalised settings selected by user Third party accessories Management of userPeripheral to generated content (e.g. operators photos) business Media content (e.g. news clips) Partnerships & alliances Default applications and settings Branding Look & feel Retail distribution
Non-billable services (e.g. built-in games, address book sync) Operating system Handset form factor Development platform Developer program UI framework
Handset customer acquisition and retention Peripheral to Cinderellas business Core to Cinderellas business
Cinderellas product handset innovation is currently focused on quadrant C. In combating the threat from carriers attention normally gets focused on quadrant B. But this fight over control is a win/lose proposition, and Cinderella might be the loser. A better approach in the short term is quadrant A, the win/win space. Cinderella can make the carrier happier in ways that dont hurt Cinderella. Lets look at how by examining how carriers make and lose money.
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Customer acquisition & retention
Service revenues
Customer care Hardware: Network, spectrum, handsets

Figure 8 -- Abstract financial view of a carrier
Theres not a lot Cinderella can do about the hardware platform costs of carriers, bar giving its own products away for free. But there is a lot that can be done elsewhere. To stimulate your thinking here are some examples of innovations Cinderella could engage in. To increase service revenues: Increase impulse buying of MMS messages by adding one-click send of photos to most common/likely recipients. Increase SMS to voice call up-sell by adding message at bottom of SMS display Press TALK to call Jukka Tolonen. Likewise from voice to video call, or voice call to 800 number to an m-commerce transaction. Birthday marked in the calendar? An anniversary? Remind them to call! Dont make users remember top-up call numbers, directory enquiries, etc. Etch them on the back of the phone. Add features that actively enable carriers to perform price discrimination. This could be as simple as handsets flagging discounts at certain periods to particular individuals for named services (e.g. MMS). (Discounting a high standard price is economically the same as raising a low standard price at other times, but the framing makes a world of difference in customer acceptance.) Create handset environments and content vending services that serve to obfuscate real prices through mechanisms such as loyalty points. Increase pre-paid top-up frequency and amount. Remind the user to top-up. Pitch offers. Increase carrier free cash flow.
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To decrease customer acquisition & retention costs: Enable viral customer acquisition (e.g. SIM cards that can support multiple carriers and encourage on-the-spot switching, customers can message coupons to each other). Make handsets that encourage on-net calls by highlighting callers with on-net call rates. Make customer fear cost of off-net call rates if switching. Build RFID tags into handsets for stock tracking. Turn the home screen into a trouble ticket tracking facility; avoid customers calling in for status updates. Make the phone and network elements more aware of network congestion, decrease support calls about service quality. Distribute a how to DVD with each new phone introducing the key features.
To decrease customer care costs:
Im sure the collective intellect of Cinderella can come up with much better examples than the few I have thought up. The key thread is that these all treat the carrier as the real customer, with (on average) no loss of welfare to the end user in their implementation. This has the additional benefit of sweetening some bitter pills that Cinderella might try to feed to operators.
Dont play with their network ball

So weve rejected a head-on assault on carriers, and looked at ways of putting some lipstick on the operator-controlled pig. What other alternatives are there in dealing with overbearing carriers and a lack of open IP networks? Well, you cant lose at football if you play tennis instead just play a different game to the carriers. Theres a world of communications over short distances that is unappealing to carriers because it doesnt fit their business model of building networks and creating billable events. This would include gaming over IR or RF links, Toothing, picture exchange, contact swapping and comparison, m-payments, proximity adverts, and security ID systems. What are the untapped social and commercial opportunities of RFID, and other near-field RF34? How much priority do these receive in Cinderella today compared to more traditional network-centric investments? Cinderella is already experimenting with adding non-network features such as haptic (touch) interfaces to devices to help differentiate them35. Weve seen hand-waving LED message boards36. The ultimate in new features is to import the whole functionality of other devices into converged handsets. Weve already seen MP3 players, satellite37 and FM radio, and games consoles take this route. They only avoid the carrier bottleneck to the extent that the content is delivered by means other than the carrier network.
For more examples see http://www.cioupdate.com/trends/article.php/3442591 http://www.thefeature.com/article?articleid=101249&ref=11558418e2a754cab1315d2193ddc3b9::3427 36 http://www.smartmobs.com/archive/2004/05/31/wave_messaging.html 37 http://www.engadget.com/entry/1234000660022392/

34 35
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Be the best footballer

I could flatter myself by suggesting Cinderellas already got a better team physiotherapist by hiring me. But then how to play superior football against a strong opposition? Assume theres a growing world of open networks on which to deploy innovative IP applications. What are the likely criteria for success? No doubt Cinderella has received endless excellent external and internal advice on this matter, and it is with some reservation I submit my own thoughts. Based on my reading, winners are more likely to emerge if they align with the following interlinked trends. But that doesnt exclude success coming from other directions. Trend #1: Communication over content. If you havent read the seminal paper Content is Not King38 then I suggest you make it your first task after finishing this one. Extending the arguments in that paper, I suggest there are four layers to the communications cake, and the higher the layer the more compelling the revenue opportunity. Tools like SMS and voice calls need not be shoe-horned into any one of these, and indeed multi-purpose services appear to dominate today. Layer Type 3 2 1 0 Social services Transactional services Interactive Informational Description Share your holiday photos with friends and family. Book a holiday to a warm place. See the weather and a map you can zoom in on and animate, change from Celsius to Fahrenheit and back. See the weather forecast, view a news clip.
Trend #2: Presence and Pre-sense. An extraordinary (and rather long) paper39 from Douglas Galbi, an economist at the Federal Communications Commission, suggests that there are three fundamental modes of communication: information-passing, narrative and presence. However, he draws a much wider scope around presence. Think of it as the sense of being there, or that which enables us to make sense of what we see and hear (literally pre-sense what you contextually feel before you make sense of the message). Presence is a form of sensuousness, and Galbi reaches for examples such as medieval illuminated manuscripts to help us understand the colder modern methods of communication. He suggests services which communicate sensuous presence make the most money. By this argument, applications like Skype with high-quality audio codecs that help you hear the breathing and subtle intonation are extremely compelling. Why doesnt your phone let you feel or hear your lovers heartbeat? Why isnt 3G used to deploy better audio codecs where you can hear each others breathing? Trend #3: Immersive. There are likewise three forms of narrative40, of increasing value. They are: Story-Telling: unidirectional, passive audience, linear (film, TV, radio, print, etc.)
Content is not King, Andrew Odlyzko, First Monday, January 2001, http://www.firstmonday.dk/issues/issue6_2/odlyzko/ 39 Sense in Communication, Douglas Galbi, October 2003, http://www.galbithink.org/sense1.pdf 40 The Age of Story-Dwelling, http://evelynrodriguez.typepad.com/crossroads_dispatches/2004/11/the_pace_of_the_2.html
38
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Story-Forming: bi-directional, interactive (board games, conversation, computer games, some live theatre, etc.) Story-Dwelling: multi-dimensional, immersed participants, networked (live sports, MMORPGs, simulation, real life, most good networked media, i.e. internet)
What is a Blackberry device other than a way of immersive dwelling in the corporate soap opera? Trend #4: Group forming. Networked communications services come in three flavours, also of increasing value: Sarnoffs Law states that broadcast-type networks increase in value with the number of nodes. Ten times the viewers, ten times the value. Streaming media works this way. Metcalfs Law suggests that networks which enable peer-to-peer communications increase in value with the square of the number of nodes. Ten times the participants gives a hundred times the number of possible connections. The phone network is like this, if we discount conference calling. Reeds Law takes this further. Communications systems that enable arbitrary group forming increase in value exponentially (~2n) with the number of nodes. Ten times the users, a thousand times the number of possible groups. Chat rooms work more like this.
To put it crudely, its more fun doing it in a group than in pairs, and only losers do it on their own. Unsurprisingly there are caveats, limitations and shades of grey. (If you discuss a TV programme around the office coffee machine, was it a broadcast application or a group-forming one?) But collaborative applications that enable rapid assembly and dissolution of groups have the theory on their side. Trend #5: People really like to talk. You dont say! But you wouldnt guess it from the 3G hype and crash. Talk is compelling for some of the reasons above interactive, sensuous, collaborative, etc. But theres more to it than that. Voice calling is ripe for reinvention. Why isnt voicemail ever stored on the phone? Why do I have to end every call cant I just listen in? I do on Skype! Why can I only hear one call at once maybe I can have a chat with someone in the foreground while waiting for the conference call to start in the background. How to integrate picture taking with calling? Why cant I see what youre seeing? Why is sending a picture a separate experience from the call, and something I have to interrupt the call for?
Have more players on the pitch

Every time someone buys a Cinderella phone, they arent buying their #2 choice. One of the opposition players gets sent off the field. Despite some recent hiccups, Cinderella retains around a 30% global market share of the handset market, and is #1 in the market by all measures. This means that Cinderella should be searching for increasing returns to scale capabilities. For example, with P2P VoIP there is no need to make the codec carrier-specific. Cinderella phones could automatically negotiate a higher-quality audio connection. If every Cinderella phone has a P2P client, the market is seeded with a critical mass of users. 10 December 2004 Page 35 of 52 Telepocalypse Ltd. 2004
This phenomenon of increasing returns works at two levels. At one extreme it works across whole user populations within a carrier, country or globally. In some ways Cinderella has devolved this increasing returns to scale issue to the Symbian effort. But how much of Symbians resources are devoted to me too type features versus things that have positive network effects? At the other end of the spectrum comes a single household. If Dad buys a Cinderella phone, what features would make Mum and the kids buy them too? Just like Microsoft vertically ties the browser and Office into Windows, how can Cinderella horizontally tie purchases together?
Bribe the public to support you

The supporters are the end users, and Cinderella might have to create handsets that are irresistible to the user despite the carriers objections. The users choice of handset is, ultimately, final. The carriers goalkeeper might also be open to a bit of additional persuasion by generous gifts. After all, were only trying to pursue our original two objectives: get the carriers to love Cinderella despite our taste for open IP networks, and the users to love Cinderella because we free them from the carrier cage. One crude way of doing this is simply to lowball the price of artificially open-architecture devices. Make the second or third 3G operator in each market a distribution offer they cant refuse. Or bypass them and stuff the independent retail channel with open devices. Users could be encouraged by features that enable them to manage their minute buckets. Simply enter the size of the bucket and the billing day of the month, and the handset tracks the rest. A more advanced system could even periodically screen-scrape the web account management page for the information. In markets where various carrier pre-select access codes exist, the handset could actively manage least-cost routing on behalf of the user. International calls would be automatically prefixed with a calling card access number and PIN; mobile out-ofnetwork calls would come from the main minute bucket; geographic landline calls would use an access code. No user would ever have to manage this on their own. These techniques are clearly in opposition to our first tactic of selectively playing for the carrier opposition. Were appealing to the users over the heads of the carrier, or simply paying the carrier off. The trick is to know when to be nice and when to be nasty. The approach would have to vary with the power of the carrier, their degree of openness, and the distribution channel for the handsets. Theres a difference between a bribe and a sales incentive. You just have to know what it is!
Cheat (but dont get caught)

This probably ought to be a tear-off and throw-away section to the report. You didnt read this, and I deny all knowledge of writing it. Its all a bit too Machiavellian for a standard management consultancy report. Are these facts possibly related? Cheap Chinese-made DVD players from Wal*Mart are very popular with the public. Page 36 of 52 Telepocalypse Ltd. 2004
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The Chinese have a massive trade deficit in intellectual property goods and a reputation for piracy of software, music and movies. Chinese DVD players often have an easily accessible, ahem, service menu that enables region switching.
It isnt unheard of for devices to be riddled with hidden functionality that goes against the interests of the distributors or content providers but is attractive to end customers. Phone unlock codes, mod chips for Playstations, hacked PVRs, overclocked CPUs. People have always been tinkering with the artificial limits on their hardware. It would be unethical to actively pursue a program of hidden trapdoors. However, Cinderella doesnt need to be over officious in preventing exploration and full exploitation of the handsets hardware. Its the equivalent of tugging at the other players shirt when tackling them. Ungentlemanly, impolite, but not a red card offence. Ill leave the rest to your imagination.
Foul the other side

Telecom is sometimes a dirty business. Sorry if you were hoping for better. The bribe the supporters approach was an explicit financial appeal to users and carriers: pay them to be open. This one is a bit more subtle. Cinderella might not itself deploy features that make toll avoidance and cost management easier for users. But Cinderella could deploy features that make it really easy for third parties to do this. For example, what if the address book had a prefix capability before each phone number? Could this mysteriously be populated with carrier pre-select codes by users? What if there was space inside to store a second SIM card, even if the phone doesnt actually support multiple SIMs? Or how about an SD card slot that can be turned into a second SIM making it easy to swap networks? What about making it really easy for third parties to create intelligent clip-on charging holsters to devices? These could access the phones full functionality, except maybe the air interface. So when you put your phone in the charging cradle at home it becomes a corded land-line phone, complete with address book. No need to wait for complex dualmode Wi-Fi chipsets and solve the handoff problem. This would spoil the carriers fixed/wireless displacement program, but the users would love it. Cinderella should encourage the encryption of absolutely everything. That makes carrier metering of value much tougher. Encouragement of encryption could be simple psychological plays, like reminding users this session is not secure. Or like the PC browser, why not nag the user to ask if they want encryption as the default? The general characteristics of such Trojan features are: They enable the customer to avoid price discrimination or obfuscation via alternative channels of communication, or They prevent carriers from seeing the value of the traffic, or They help users avoid lock-down (e.g. application signing) by smuggling that functionality into other places.
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Plan for the next match

Sometimes you just have to build up the strength of your team and hope for better outcomes the next time. You never know, some better players might come on the market, and the opposition team might not be so good next year. The lack of an open IP network can come from one of two sources: Carrier policy. The carrier is using their market power to block access at the handset or in the network. Technology. The network is incapable of supporting any of the throughput, latency, jitter or security requirements.
Neither of these is fixed in stone, and both can improve over time. Cinderella can give itself an advantage by anticipating changes in policy and improvements in technology. The installed base should provide the least possible drag in moving to open IP networks. Changes in policy are the easiest to deal with. Every lock-down feature of a phone should be reversible over-the-air (using IOTA or whatever standard Cinderella chooses). Nothing should be burned in permanently: if a carrier changes their mind, the existing handsets should not be a barrier to change. Cinderella should try to support features that associate the lock-down policy with the network the phone provisions to, not the handset itself. So if you roam to a different network with a more liberal outlook, the phone would automatically adopt the new profile. New types of IP-friendly air interface technology generally require a new handset. But there are plenty of lesser changes that occur: new protocols, new types of service, new networked resources. If it isnt doing so already, Cinderella probably ought to be seeding the market with the following features where economic and technical constraints allow: The only certainty is uncertainty. Make upgrades to the firmware quick and painless and preferably under user control. TCP/IP stack even in phones that are officially voice and SMS only. IPv6 support where possible SIP and encryption protocols in the API profile of every handset Support for dynamic DNS services. Create a Cinderella DDNS service to map IMEI/MEIDs to IP addresses and other entries! Make it possible for users to discover their IP address and tell if its static or dynamic, public or private. 35% of all Internet traffic comes from the BitTorrent P2P service41, but no Cinderella phone contains a BitTorrent client. Spot an opportunity? Support for audio codecs better than that of POTS42. API access to low-level IP services.
41 42
http://www.economist.com/printedition/displayStory.cfm?Story_ID=3422905 Plain Old Telephone Service
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Change the rules

This one is hard, but not impossible. Firstly, take regulation. Even unregulated businesses are constrained by tort law, competition statutes, and contract law. These cant be changed, but the competition statutes might be invoked where carriers are engaged in suspiciously high levels of market coordination. Copyright and intellectual property law remains in a state of flux. Some subtlety may be required in avoiding direct confrontation with carriers. Supporting organisations like IPac43 or EFF44 might be more effective in the long run. The government-appointed regulators are equally open to influence, as amply demonstrated by the incumbent telcos. Do the handset vendors lobby together effectively today? As well as this de jure regulation there are the de facto standards bodies that Cinderella already spends millions on dollars on participating in each year. Are these efforts aligned with a move to end-to-end IP networks, or just serving the local needs of small subsections of Cinderella?
Picking your players

Whilst its fun to have so many strategies and tactics to choose from to achieve your objectives, as the coach youve got to make your mind up as to whether you want to scream to your players to huddle round the goal, dribble the ball about in midfield, or make every effort to score some goals. So heres a map of the playing field, and some suggestions on when to try each method.
43 44
http://ipaction.org/ http://www.eff.org/
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User Utopia
Availability of fast IP networks
MANY
Bribe the public

Use pricing and subsidy to get what you want
Foul the other side

Make price discrimination harder
Be the best footballer

Applications that users cant resist
Have more players on the pitch

Leverage Cinderellas size
Support the winning side

Help carriers where it doesnt hurt you
Plan for the next match

Subversive features for future use on more open handsets and networks
FEW
Change the rules Cheat

Covert features Government and standards lobbying
Dont play with their network ball
Focus on features that dont touch the network
Operator Tyranny
HIGH
LOW
Carrier control over value network

Figure 9 --What to do and when
So some good news we seem to have something to do in each situation. But it also means there is no one-size-fits-all strategy. The fragmentation of the industry suggests that Cinderella may have to follow some quite radically different strategies in different markets. This suggests that regional managers may have more decision making authority over product development than they do today.
Case study: A marriage of inconvenience

Lets take a piece of recent Cinderella news and re-interpret it in the light of end-to-end IP networks: Group Pronounces Cellular and Wi-Fi Husband and Wife45 A group of 14 operators, handset [inc. Cinderella] and equipment manufacturers joined together to release a new open specification designed to facilitate Wi-Fi - cellular handoffs on dual mode handsets. In the enterprise, dual-mode handsets make sense. Today enterprises with desk and mobile phones pay twice for connectivity and twice for service, and again for transfers between services (e.g. desk to mobile forwarding). Paying once for service and twice for connectivity is an improvement.
Group Pronounces Cellular and Wi-Fi Husband and Wife, The Feature, 3 September 2004, http://www.thefeature.com/article?articleid=101040
45
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But for consumers, this is counter-strategic. Why deploy handsets that are at the mercy of the carrier gatekeepers? The first generation of VoWiFi phones are limited in functionality and often originate from obscure brands46. This is a clear opportunity for Cinderella to seize the one widely available fast wireless IP network technology and integrate advanced IM, presence, etc. features into portable (rather than mobile) handsets. The existing mobile handset base can be leveraged with features like address book exchange. Consider the recently released DualPhone47: The worlds first cordless 2-in-1 Skype Internet telephone - for maximum freedom and minimum telephone bills! The new Cordless DUALphone is the first cordless Internet telephone on the market, using Skype. [] The Cordless DUALphone is a cordless telephone that can be connected to a normal telephone socket and a USB port on a PC. The display shows whether your friends who also use Skype, are online. If they are, you simply have to press the appropriate green button and talk to them for free [] If their PC is switched off, or you want to call someone who doesnt use Skype, you simply press the other green button and call via the standard telephone connection. It just requires Cinderella to stop thinking of itself as a mobile phone company, or even a lifestyle brand, and just meet the unmet needs of users. Isnt this the type of product Cinderella should be using its brand and distribution to promote? Isnt Cinderellas expertise in stretching battery life, building UIs and packaging a match? What happens to Cinderellas traditional handset business if these cordless phones get access to extensive broadband IP networks due to spectrum reallocation? What if Wi-Fi access became more pervasive48,49? How does Cinderella view Ciscos entry into Wi-Fi phones? This is a classic Innovators Dilemma. The new phones appear sub-functional to Cinderella because of their restricted mobility. But the market is satiated in terms of mobility and has moved on to enhanced functionality. These devices have the potential to erode Cinderellas market base from the bottom up.
Q: How do Cinderella handsets stack up against competitors in terms of ARPU, churn, care costs, etc.? Does anyone measure and track this? Q: How does Amazon.com increase impulse and repeat purchase? What lessons are there for handset operators?
For example, Zyxel Prestige P2000W Wi-Fi Phone, http://www.zyxel.com/product/P2000W.php. No, I didnt know about them either. 47 http://www.dualphone.net/ 48 Grand Rapids funds wireless-Web study City officials have commissioned a $19,000 study to gauge the feasibility of installing a citywide high-speed wireless Internet system in Michigans secondlargest city., Detroit News, 17 October 2004. http://www.detnews.com/2004/technology/0410/17/b06e-305642.htm 49 Taipei gets world's largest Wi-Fi grid The Wi-Fi access points that will link computers to the Web in Taipei will be attached to traffic and street lights, creating a network that will cover 90 percent of the city by the end of 2005., CNN.com, 22 November 2004, http://www.cnn.com/2004/TECH/internet/11/22/taiwan.cybercity.reut/index.html
46
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Q: Cinderella has sold approximately x million handsets in the last year. If these customers all pulled out their phones right now, what would they see on the screen? How does this make money for Cinderella or the operator? How does this make Cinderella the most attractive handset for carriers to distribute? How could this situation be improved? Q: How well does Cinderella manage the development of features that require little or no access to the air interface? Are these managed as a portfolio, or in functional silos? Q: How effective do you feel Cinderellas current approach at product portfolio and project pipeline management is at aligning development resources with the trends in this paper? Q: Can retail customers differentiate between open and locked down Cinderella handsets (e.g. missing Bluetooth profiles)? If not, how could this be signalled in a way that doesnt upset carriers too much? Q: How could Cinderella market and distribute handsets that carriers might not like? Q: Was Microsofts approach to Netscape unethical bullying or merely good business sense in the face of a threat to the core Windows franchise? What are the lessons for Cinderella? Q: How might users switch carriers more easily with a Cinderella device? Q: If Cinderella didnt have to get carrier approval for each device, how would the feature set change? Which of those features could be deployed now, even if inactive or inaccessible? Q: To what extent do carrier handset subsidies distort markets and fair competition50? How could Cinderella turn these trends to its advantage? Q: How well aligned are Cinderellas lobbying activities with a move to end-to-end IP networks? (Examples might include spectrum regulation, copy protection mandates, municipal wireless networks.) Do they receive appropriate funding?
See http://www.consumerwatchdog.org/corporate/rp/rp004334.pdf for an example complaint in California.

50
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Summary and Conclusions

The future value of telecom networks lies with the edge, not the core. That means in the long term makers of innovative devices hold more value than carriers of bits. But carriers remain in the application services picture to the extent that they control digital identity and billing. Being posthumously seen as right about IP networks is no good to anyone. The winning handset vendors will have a defence strategy that is win/win: one which makes legacy carriers more successful at what they already do, doesnt compromise Cinderellas future position, and makes Cinderella handsets the most attractive in the market for carriers to distribute. It means less focus on sexy form factors and innovative applications and more focus on innovative sales and distribution methods. TAKE-AWAY #1: Build a defensive strategy that makes Cinderella the most attractive vendor to the most powerful carriers. Do this by making Cinderella handsets clearly better in terms of ARPU, free cash flow and retention. Use the screen as a sales channel. In the meantime Cinderella continues to innovate with handset form factors, features and device convergence. This is a correct response to avoiding direct conflict with carriers whilst not compromising a new generation of IP-powered devices. TAKE-AWAY #2: Continue to innovate in ways untouched by the network. However, this is not a long-term survival strategy. Ultimately communication is king, and it needs an open IP network. An offence strategy is one untainted by command-and-control networks and focuses solely on delivering creative new services on open IP networks. Cinderella is missing out of the first wave of fast, open wireless IP networks: Wi-Fi. Just like the fixed carriers over-estimated the value of audio quality and underestimated mobility, Cinderella overestimates mobility and under-values capability. TAKE-AWAY #3: Build an offensive strategy untainted by the needs of current cellular carriers, even if it means tackling smaller non-traditional markets. The offensive tactics are unlikely to succeed unless clearly tied to a global end-to-end IP strategy with backing from the top. But the defensive strategy is one that can be done incrementally and as a stand-alone business case. TAKE-AWAY #4: The change from smart to dumb networks is the organising principle of the whole industry. Everything from lobbying to R&D needs to be tied to this structural change. Finally, the complexity of the problem requires sufficient humility to realise no one person can address all aspects. Project and product portfolio management is critical to success. Make best use of the collaborative decision-making and planning tools that are available.
Q: What key metrics does Cinderella drive its business by today? important ones for a world of end-to-end IP? Are they the most
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Appendix A Recommendations
DO: Examine the list of points of control the carrier has, one by one, and try to find ways of undermining them. DO: Build a tracking capability for the points of control and toll bypass as part of Cinderellas routine competitive intelligence. Try to build a picture of the battle for control between the user, carrier and hardware/middleware supplier. Track sales margins against network openness, to find the trends. DO: Explicitly model the full value proposition of new products and services. Make a consistent policy on which parts to fight for, which ones to hand to carriers, and which ones to form alliances with other Internet service providers. DO: Tailor pricing policies and distribution channels according to the degree of competition, openness, subsidy and availability of non-carrier distribution networks (e.g. supermarkets, independent retailers.) Build a go-to-market strategy that pushes the market towards more open devices and networks. DONT: Leave pricing and distribution entirely to local sales forces struggling to meet quotas irrespective of strategic needs. DO: Carefully consider the choice of identifier in Cinderella-supported services (e.g. phone number vs. email address vs. application-specific user ID). Treat this as a business decision, not just a human factors issue. DONT: Try to compete with the carriers in offering identifiers that require identity collateral. Youll lose. DO: Look at the data involved in the products and services Cinderella plans to offer now and in future. In what ways is the capture, storage and transmission of that data trusted by the systems users? How will the system work if the elements are distributed in a peer-to-peer fashion? DO: Add appropriate billing hooks into services, even on open IP networks, where value is being exchanged. DONT: Try to set the price of all IP services to zero and just be happy with a handset sale. DO: Consider pushing Symbian towards an open-source model to increase the innovation pressure on the carriers. Increase the rate of innovation and change, unleash unexpected uses. Proprietary platform technologies can only succeed if bolted to proprietary applications: for instance, without Microsoft Office, Windows would give way to Linux in the enterprise. Symbian doesnt have an Office. DO: Look at the functional components of smart network components made by Cinderella (above the TCP/UDP layer), and determine how essential it is that function is performed in the network, on the network or at the edge. DONT: Simply shift old technology, architectures and business models onto IP and expect success. DO: Appeal to the core metrics of carriers: ARPU, CPGA, churn, cash cost per user. DONT: Deploy cool new features without knowing how it impacts these metrics.
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DO: Continue with non-network services and communications, even if the initial market reception is weak (e.g. NGage). Push these hardest in markets where networks and handsets are locked down the tightest. Offer non-network ways of getting data in and out (e.g. flash memory cards) wherever practical. DO: Try to have some theoretical underpinning as to what creates compelling value, and allocate research and product development resources accordingly. DO: Focus on voice and pictures. Its sensuous, interactive, personal. Not stale media content shrunk to a tiny screen and warmed over with microwaves. DO: Understand the point of IP is not cheaper voice calls, its new features and services. GO RE-INVENT TELEPHONY DONT: Just replicate POTS voice calling on IP, which is what is mostly happening today with Wi-Fi and other IP phones. Its a dead end a canal boat pulled by a steam engine. Build a railway instead.
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Appendix B Carrier points of control of value web

Point of control Type Balance of power
Handset makers Handset makers Carriers
What it is
Used to exclude non-carrier competition?

Yes
Directly used to perform price discrimination?

No
How it is carriers control changing?

Weakening: Symbian, MS Smartphones, etc. offer cursory carrier control, but this is unlikely to last long. Strengthening: Increasingly demanding and getting custom UIs (e.g. Vodafone Live!) Constant: Still in control, little prospect of change.
Handset software platform Handset UI configuration Default home page
Handset
Which operating system, browser, and middleware goes onto the phone. Menus and look/feel of the handset The URL of the browser home page. Users cant set Yahoo or MSN as their home page. Whether Java etc. applications are able to access handset resources (e.g. address book, camera, air interface). Prevent the transmission of content over the network under complete user control Ensure only approved applications are deployed
Handset Handset
Yes Yes
No No
Integration of application environment and handset OS
Handset
Carriers
Yes
Yes (Pay to use apps that access certain APIs)
Weakening: Increasing profusion of devices with powerful APIs. Some control over air interface access (to prevent abusive applications) likely to persist, but all other forms of handset access likely to be forced on carrier by market competition. Mixed: Stronger legal control (via DMCA, EUCD, etc.) but more powerful handsets offering more opportunity for DRM bypass. Weakening: Not the accepted model on Pocket PCs, wont fly with user-owned Wi-Fi connections, 3rd parties doing most of the work and taking control.
DRM
Handset
Carriers
Yes
Yes
Certification
Handset
Carriers
Yes
Yes (Pay extra for disintermediating apps)
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Layer 1-3 network control
Handset & Network
Carriers
Air interface and lowlevel network protocols that a best-effort IP connection on the handset doesnt see. What content is by default presented to users.
Yes
Yes (QoS)
Constant: or weakening Faster networks make optimizations here less important, although cellular/Wi-Fi handoff of increasing important (until some cracks putting 2 independent radios into an IP phone). Weakening: May control own portal, but users going via bookmarks to non-official sites (e.g. Sprint PCS Vision users to 3gvisioncorrection.com) as well as traditionally popular non-partner sites. Weakening: increasing roaming onto 3rd party and user-owned networks. Potential anti-trust issues for carriers collaborating to block 3rd party services. Constant: No easy substitute that can be initiated by the end user.
Home deck/mobile portal contents
Network
Carriers
Yes (If youre not listed, you cant be accessed so easily)
No
Network packet flow
Network
Carriers
Control the ability to make IP connections, based on direction, IP port number and IP address. Where the handset is, and its IP address. The rest of the world doesnt know that. NAT, Mobile IP, Home Agent, Dynamic DNS. Gateways and proxies through which data flows (e.g. HTTP, SIP, SMS, MMS).
Yes (e.g. Threes walled garden)
Yes
Ability to contact handset
Network
Carriers
Yes
Yes (Forces users via metered carrier gateways, e.g. Blackberry)
Proxy/gateways in network
Network
Carriers
No
Yes (The core basis for billable network events)
Weakening: P2P bypassing some of these (e.g. Skype for Pocket PC). Technical necessity morphing away from patching technology deficiencies (slow airlink, weak handset processor) in favour of bridging technology generations (e.g. transcoding). Weakening: Roaming onto Wi-Fi and other networks makes these harder to sustain.
Numbering
Network
Carriers
Ability to create short codes with unique semantics (e.g. rescue service) Control ability to provision and authenticate to network provider.
No
Yes (Classify billable events)
Provisioning and roaming
Network
Carriers
Yes (No roaming agreement, bad luck.)
Yes (Pricing based on location)
Weakening: Wi-Fi in home, office; ability to self-provision to third party Wi-Fi; likely similar model for WiMax.
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Data pricing
Network & Other
Carriers
Control the pricing model for data.
No
Yes (e.g. Vodafone Live! offers free browsing inside walled garden) No
Mixed: Conflicting tension of technology for fine-grained price discrimination yet customer desire for pricing simplicity. Constant: Will persist as long as carrier keeps out of prepaid and stay in business.
Customer data integration
Other
Carriers
Set of customer data (name, address, credit class, demographic, etc.) that most carrier partners and competitors dont have. Complete marketing and distribution chain, including e-commerce, stores, agents and direct sales force. Trusted applications (e.g. banking, m-wallet) and privacy-sensitive applications (e.g. LBS) require brand support Control flow of money rather than bits: interconnect and termination fees, equal access regulations
Yes
Distribution channels
Other
Carriers
Yes
No
Strengthening: More carrier-owned retail outlets. But only has value if carrier can provide compelling revenue-bearing products to fill the channels with. Strengthening: Consolidation of smaller operators into larger groups (e.g. Vodafone, Orange, Cingular) increases brand presence.
Branding
Other
Handset makers
No
Yes (Higher charges for content than equally available from 3rd parties) Yes
Regulatory
Other
Carriers
Yes
Mixed: Example of 0870 regulatory capture in UK, but increasing EU and FCC insistence on meaningful regulation and erosion of market power.
10 December 2004
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Appendix C An economists viewpoint

Not everything that counts can be counted
How much did you pay for your car? Did you come away with a feeling you got a good deal? Did the dealer laugh or cry when you left their sales office? The difference between what you paid and the true value to you is called consumer surplus. Its the money that stayed in your pocket. The difference between that you paid and the minimum the dealer was willing to accept is producer surplus. Both of you were better off than before the transaction. Adam Smith saw this and built The Wealth of Nations around it as the foundation-stone of capitalism. But the degree to which you are better off can vary. We can think of this as dividing up the total available profit pool into buckets for operators, handset makers and consumer surplus.
Carrier Profit Pool Vodafone Orange DoCoMo Cingular
Handset Profit Pool Nokia Motorola Samsung Consumer Surplus
Figure 10 - Dividing the profit pool
The effect of IP networks is a massive increase in consumer surplus. For the reasons outlined earlier this is because it is hard to meter the value they deliver and price discriminate. The question is how to measure and reason about something that by definition is not monetised. Recent thinking sees much of this consumer surplus (for communications products) as forming relationship capital. We use the cheap communications tools to create and reinforce our social ties. The challenge is to understand and model this phenomenon, and then relate it to product investment and directing research. Interestingly, it has been suggested51 that as little as 2.2% of the true value of innovation is captured by the innovators themselves. Considering an invention such as the internal combustion engine or fibre optics and their transformational effect on society, this is perfectly plausible.
51
Schumpeterian Profits in the American Economy: Theory and Measurement, William Nordhaus, NBER Working Paper No. w10433, http://www.nber.org/papers/w10433
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Option value
A common myth is that IP networks are somehow more efficient than circuit-switched ones (or any other type of dedicated-purpose networks). This isnt true. IP networks are a trade-off between efficiency and flexibility. The advantage of an IP network is that its creators assume the minimum possible about its future uses. This maximises the option value of the network. For those interest in pursuing this further, I can suggest reading A Real Options Framework Illustrating the Economic Value of the End-2-End Argument by Mark Gaynor and Scott Bradner52. The value of a stupid IP network increases with the uncertainty of the uses it might be put to. The profusion of new social networking services suggests there is a lot of uncertainty in precisely the part of the industry most likely to generate future telecom revenues. However, there is an unforeseen consequence of placing all the complexity at the edge of the network (and thus the costs). The critical part of the value network with the biggest increasing returns to scale effect is the application developer community. Software engineers only want to develop for platforms that will have a big audience. But those self-same developers have little or no interest in the costs of operating the software they produce. Thus the consumer surplus created by high option value is eroded in practice by the extremely high maintenance and operational costs53. For PCs this is typically quoted as being 20% hardware and 80% labour. So will dumb pipes displace all smart ones? No. Efficiency does sometimes count, and not every situation is full of uncertainty. If you send a probe to Mars you know at the outset what hardware it will have and what protocols are needed. You arent going to pop round to Radio Shack and add on some unforeseen functionality half way through the mission. Less extreme examples occur in wireless and enterprise computing. So we can see a co-existence of smart and stupid networks for some time to come.
Lies, damned lies, operator revenue breakdowns

According to their financial reports, data revenues of carriers are surging. However, these numbers have to be treated with great caution. The problem is that operators dont normally break out pure IP transport revenue from service revenues. Thus we have the Fallacy of Data Revenues: operators claiming business success when in fact they are being displaced from the services layer. Being pushed into a transport-only service results in suffering from the Paradox of the Best Network (see below). Would a hypothetical carrier that lost all voice revenues to Skype but sold a lot of IP connectivity be counted a success? Only if you naively believe all data revenues are good for the carrier. The specifics of knowing the difference between good and bad data revenues involves discussion of bundling theory, indifference points and marginal preferences, and is beyond the scope of this paper.
52 53
See http://netecon.berkeley.edu/Gaynor-Real_Options.doc For amusing examples see http://slashdot.org/articles/04/11/19/2331210.shtml?tid=126
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Appendix D History & further reading

The design philosophy of the Internet was first explicitly documented in a 1984 paper by David Reed54 and others. In particular, he coined the phrase end-to-end principle. This states that the default place for application intelligence should be the edge of the network, not the core. Clearly not good news if youre a carrier. It took a long time for an academic paper on network design to be re-cast in a manner that business people could grasp hold of. The man who succeeded in that quest was David Isenberg, who wrote the seminal subversive white paper Rise of the Stupid Network whilst at AT&T. His employer wasnt amused, and they eventually parted company55, which turned out to be AT&Ts loss: AT&T has not had much success in adapting to new technologies and to competition since it was broken up 20 years ago. All the old-model telcos are on their way out, says David Isenberg, a telecoms expert who accurately predicted the fall in value of AT&T's network in the 1990s when he worked for the company's famed Bell Labs (though his warnings went unheeded and he resigned). AT&T, he adds, will show them the way. The Rise of the Stupid Network laid out the same arguments as Reed, but with an economic rather than technical architecture spin. In essence, stupid networks returned control to users, who could then innovate without their unforeseen communications being prejudiced by the inflexible smart networks of a carrier. This was followed by a number of corollary papers and manifestos. Two of note are World of Ends56, which has a more marketing-oriented outlook on the Internet, and Paradox of the Best Network57. The former is the Declaration of Independence for the Internet: Because the Internet is an agreement, it doesnt belong to any one person or group. Not the incumbent companies that provide the backbone. Not the ISPs that provide our connections. Not the hosting companies that rent us servers. Not the industry associations that believe their existence is threatened by what the rest of us do on the Net. Not any government, no matter how sincerely it believes that it's just trying to keep its people secure and complacent. Because the Internet is an agreement, it doesnt belong to any one person or group. Not the incumbent companies that provide the backbone. Not the ISPs that provide our connections. Not the hosting companies that rent us servers. Not the industry associations that believe their existence is threatened by what the rest of us do on the Net. Not any government, no matter how sincerely it believes that it's just trying to keep its people secure and complacent.
End-To-End Arguments In System Design, J.H. Saltzer, D.P. Reed and D.D. Clark http://www.reed.com/Papers/EndtoEnd.html (originally pub. ACM Transactions in Computer Systems 2, 4, November, 1984) 55 Great-grandma Bell: Is the once great telecoms company on its last legs?, The Economist , Oct 28th 2004. 56 World of Ends: What the Internet Is and How to Stop Mistaking It for Something Else., Doc Searls and David Weinberger, http://www.worldofends.com/ 57 The Paradox of the Best Network, David Isenberg and David Weinberger, http://www.netparadox.com/
54
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Whilst it recaps many of the same points as Rise of the Stupid Network it adds these vital and succinct observations: No one owns it. Everyone can use it. Anyone can improve it. The Paradox of the Best Network was inspired by the observation of analyst Roxanne Googin that the best network was also, in her words, the perfect capital repellent. It is impossible to understand the dynamics of telecom without understanding this paper. That said, I dont completely agree with their ideas there are some escape clauses like identity that they miss. Examples include the carriers advantage in the digital identity business, and the dynamic rather than static nature of telecom (profit exists where there is change). Also on your reading list should be Digital Imprimatur58, which is a comprehensive overview of the social failings of the Internet, but equally could be viewed as a manifesto of business opportunities of problems to be fixed. Finally I can recommend Tussle in Cyberspace: Defining Tomorrows Internet59 which covers many of the same issues as this paper, but with a more academic background and much greater rigour.
Digital Imprimatur, John Walker, September 13th, 2003 http://www.fourmilab.ch/documents/digital-imprimatur/ 59 Tussle in Cyberspace: Defining Tomorrows Internet, SigComm 2002, http://www.acm.org/sigs/sigcomm/sigcomm2002/papers/tussle.pdf
58
10 December 2004
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Geddes - Stupid Network

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Telepocalypse Ltd.

The Stupid Network: A User Guide

Prepared by: Document version: Date:

Martin Geddes, Director 0.1 10 December 2004

About the Author

How network operators gain and lose control

Come on down, the price is wrong

Keys to the operators power base

New ideas, not lower prices or arbitrage

Speak clearly after the tone

Playing your cards in the game of telecom

Telepocalypse Ltd. 2004

Telepocalypse Ltd. 2004

Telepocalypse Ltd. 2004

Telepocalypse Ltd. 2004

Part 1: Where we are

State of the Nation

Telepocalypse Ltd. 2004

Case study: Elvis has left the building

How the carrier controls the value chain

Telepocalypse Ltd. 2004

Handset software platform

Provisioning & Roaming

Which vendor is more in control?

Certification Home page URL Proxies & gateways Home deck

Network packet flow

Branding Contact handset Numbering

Layer 1-3 DRM Application environment integration

Figure 1 - Market power map of wireless today

Telepocalypse Ltd. 2004

Handset software platform

Which vendor is more in control?

Network packet flow

Provisioning & Roaming Numbering

Layer 1-3 DRM

Figure 2 -- Dynamics of market control in wireless

Telepocalypse Ltd. 2004

Absolute user freedom

Device software platform

Network packet flow

Application environment integration Device UI configuration

Branding Customer data

Which vendor is more in control?

Figure 3 -- Market control map of wireline world

Travelling without a ticket

Telepocalypse Ltd. 2004

Mobile originated message charges Download vending machine Gateway/proxy

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Part 2: Where were going

Case Study: Dissecting SMS from an IP viewpoint

Telepocalypse Ltd. 2004

Figure 4 Functional decomposition of SMS transmission

Availability Accountability Database

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Telepocalypse Ltd. 2004

The disintermediation forecast

The carrier doesnt know the value of the traffic

The carrier doesnt have anything left to charge for

Users wont play the game

Other carriers undermine efforts to charge

It hasnt worked yet

PC Magazine, undated, http://www.pcmag.com/article2/0,1759,1639784,00.asp

Telepocalypse Ltd. 2004

The only way is down