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Alexa

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Iraqi Telecom

• Under Saddam there were one million landlines for 26 million people
• There are now as many as 4.5million cell phone subscribers today

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Covad WiMAX

Andy had a chance to read my Covad interview with Jeff Ahlquist and commented that their was no WiMAX mention.

I reached out to Andy on the matter to ask him what he knows about Covad and WiMAX. This is what he said:

Covad already has Voice and DSL. WiMAX means they deliver the latter without the need for the telco.

Recently they bought a pre-WiMAX company and have already deployed trial service in Las Vegas. It's working beyond everyone's expectations are the reports I'm getting.

Many people feel the LECs will buy all the WiMAX licenses in the US so that they can prevent any real competition. Hopefully a company like Covad has deep enough pockets to play in the WiMAX game and be a big factor in reducing broadband prices and expanding options.

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VoIP's Spirit of 2006

The following interview will soon appear as an Executive Suite on TMCnet.com.

I got a chance to speak with Andrew Sviridenko of Spirit DSP recently. If you aren't familiar with the company, you should know you may be using their products in a host of electronics you use every day and not even know it. That's because Spirit's products and technology are embedded in the products of others. Their products range from vocoders (think Mr. Roboto from Styx) to noise canceling software to speech technologies. There seems to be few areas of multimedia they don't play in as the company also focuses on enabling technology for HDTV and media players.

The company has 80 engineers and 15 PhDs working for them. They consider themselves the Bell Labs of Russia.

There is more to it than that. I believe Andrew is one of the few pure visionaries in our market. He is way ahead of his time. I admit that I am biased in my opinion however. You see, a while back I wrote a slew of articles on voice communities. I truly believe that voice communities are the future of telecom. Andrew not only agrees with me but believed in this concept before I thought of it. In fact, it took the marriage of eBay and Skype for me to have my epiphany on the topic.

I have always said that the people involved in supplying the communications industry with their underlying technology are able to see the future faster than any of us. They work with dozens if not hundreds of companies making products and can see almost in real-time when something is about to take off. They have the perspective of thousands of customers at once. They look through the glasses of their customers who make the products the rest of us use. This is the reason we have invited people like Andrew to speak at Internet Telephony Conference & Expo next week.

Here is the interview:

Where do you see your company in the next few years?

He thinks multipoint voice-conferencing is the future. It is natural for humans to talk in groups and this trend is what followed in text messaging and e-mail. Andrew copies multiple people on virtually all e-mails. The reason he does this is so people can brainstorm on things and share information.

Andrew believes this is happening in voice as well. They are capitalizing on 12 years in the voice space and their goal is to bring voice communities in software, groupware and the conferencing market and become the global standard in this space.

How do you se the competitive environment?

Global IP Sound or GIPS is their only competitor as of today and others will emerge according to Andrew... "Possibly Microsoft," he says. They are speaking with Microsoft about using Spirit's technology. According to Andrew, Global IP sound positioned themselves as a company developing a voice engine and he feels that GIPS is focused on softphone vendors and voice over IM vendors.

"Their deployment with Skype made GIPS popular," he says. He doesn't think GIPS has a strong future as they don't have the resources to move into voice in a full-blown way. He continues saying that Spirit has been preparing for the past few years knowing that multipoint conferencing is the future. They see that global players are moving in this direction as well.

For example, Microsoft, Oracle and Macromedia are all focusing on this space. They are also talking with IM players and having discussions regarding everyone who has a softphone, to learn what they think the next step in communications will be. He feels the differentiator is conferencing as well as other added features and functions. He says that video alone is not enough.

He continues that as of today no one has rolled out multipoint voice conferencing integrated in their own environment. All the VoIP conferencing taking place today depends on backbone [legacy] hardware for voice mixing. Today's voice mixing technology is old and the quality is not good. Furthermore the cost is about $250/channel.

As Andrew says, Spirit is 10x more cost efficient and comes with much higher voice quality where different people can speak and be heard at the same time. Their technology allows full duplex handset free conferencing over IP without [specialized] hardware.

Their experiments show they can run 500 conferences at 7 participants each with one dual processor PC using only 60% of the processor power making their solution very efficient.

What are the conferencing companies telling you?

The conferencing, collaboration, groupware and messaging companies are all showing interest in Spirit's products.

What software will help build voice communities?

If you look a while back, there was text chat and ICQ. Companies came up with tools and services to allow these conversations to happen. Spirit has products today that do this and they think other companies will be coming up with products and services in this space as well. Perhaps Microsoft is going to get in this space.

WebEx and their competitors should do something in this space soon.

WebEx is more of a service company not a technology company and if they don't do something Microsoft will catch up fast.

What roadblocks will we see to voice communities?

I don't see any roadblocks in particular. The infrastructure is ready. If you look five years back, VoIP was hot between 1996-1999. From 2000-2003 it grew more slowly because of the slowdown in the market and furthermore the processing power was not fully in place to handle voice. Finally, the QoS was not up to speed. Now there are lots of improvements including routers that can prioritize voice packets over data.

I also see that the big players are progressing quickly and they understand the need for QoS. Everyone now understands how important voice quality is. Furthermore, they understand you need to have a good GUI, features and also good quality.

Andrew believes voice is not a standalone technology but a platform technology deeply integrated in service infrastructure powering multiple applications, softphone, voice conferencing, voice search and others. He says that Microsoft understands this well. They built Real Time Collaboration Platform and their latest MSN Messenger works with this platform. In addition, LiveMeeting 8 will also integrate enhanced multipoint voice functionality.

The question is if the technology is in place? Multipoint mixing technology is pretty sophisticated at this point in his opinion.

Andres continues: "Microsoft has been in this [communications] space since 1995 with products such as NetMeeting, MSN Messenger, Communicator and Istanbul. They have devoted much time and effort to this space and they have now quadrupled their efforts. The same thing is happening with Spirit DSP-- we have been in communications for 12 years. We have prepared the best technology platform for voice and data integration which have been polished and enhanced in over 200 product deployments."

We have a lot of voice and voice associated technologies like noise canceling, acoustic echo cancellation and AGC (automatic gain control) and more. It is difficult to develop these technologies quickly.

Technologies and codecs that work in the PSTN space don't necessarily work in the world of IP.

Spirit has teamed up with innovative companies to overcome obstacles in IP communications, broadband and WiFi. For example technologies that deal with delays and packet loss. They are capitalizing on their deep roots in mathematics and algorithmic design in the telecom space to overcome such challenges with others.

He concluded, "These are the obstacles. Not too many providers will make these services widespread but we are seeing that several big companies are entering the space and will move the market fast."

What is biggest opportunity in VoIP? Aside with what we discussed -- or is that it?

The first step was IM to softphone. Now communities are coming in a few months. It will happen fast.

Where do you see your company in 5 and 10 years?

We want to be a standard in this space. This is a long road. The IP space clearly needs some dedicated voice codecs for broadband and narrowband that are scalable for packet loss and delays. Spirit has codecs that can address these challenges but they are not standard.

Advances in the PSTN world take longer than IP but the PSTN is not going away soon. We will have a number of years to make sure the IP based solutions work well with one another.

As more people move to IP the speed of such innovations will increase.

Can you be more specific on where your company will be?

We see our role as an embedded voice supplier -- similar to Intel being a building block supplier to PC industry. We want to supply software companies such as conferencing companies. This is not their core competency. They want to power their products and services.

What about Video

We have a subsidiary that focuses on video. We have a system that lets you control how you are seen in a video conference. We think video has limited appeal to consumers but not businesses. Video is just not popular. We saw a Japanese 3G phone maker embedding videoconferencing in cellular handsets. The idea didn't take off as expected.

We have focused on the next generation of video technology. Our subsidiary, SeeStorm focuses on synthetic video technology which enables people in real-time conferences to control how they are seen. They can control their appearance, style, face, voice, look, etc. This will take a while longer to be seen. It will not be in the next year.

Everyone is focused on delivering voice quality on building good biz models and monetizing voice. Not too made companies have made a good living from voice. The challenge is to find good models for people to use voice services and pay for them. The voice platform will power multiple apps and be integrated. Video comes next then synthetic video will come after that. This won't be immediate but it is a fundamental technology.

In conclusion I am happy I had a chance to talk with Sviridenko. He is extremely knowledgeable and you can sense the passion in his voice. He is obviously looking to change the world of communications by helping us to connect with voice communities, the way we do with e-mail, blogs and chat rooms. In addition he has some long-term visions on where he thinks video will be headed. People always ask me "What's next" in communications and I have a number of answers to such questions. When you speak with Andrew you feel that the communities idea is really going to happen quickly. If it does it will make us all more productive and result in a resurgence in telecom investment. Even if it turns out to be a niche market it will enable people to communicate more effectively and for that we should all be thankful there are people out there like Andrew Sviridenko making our lives a better place.

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Covad

I recently had a chance to interview Jeff Ahlquist who serves as Vice President of Corporate Development and Strategy at Covad. As you no doubt know the company has become a big player in VoIP and has done a good job branding itself these past years. I wanted to delve into the company more and learn how they are doing. I was wondering how the VoIP market is treating them.

Here is my very candid interview:

What is biggest barrier to your success?

Jeff thinks the biggest barrier is market education and the validation of VoIP as a technology ready for prime time. He further believes demand generation is another barrier.

From here our conversation went into the area of pure hosted VoIP providers. Covad doesn't want to be considered a pure hosted VoIP provider and they understand there is more to the market than just hosted solutions as not every company wants to go this route.

This is why the company has focused on a portfolio of options consisting of a traditional hosted services as well as a product called PBXi that is similar to the offering from Cbeyond Communications as it plugs into a current PBX.

I asked about the competitive landscape and Jeff replied that they have own network so they are well positioned in the market.

What about 911 support?

In regards to E-911 compliance. Covad has two types of customers: those who get their broadband service from Covad ("managed circuits") and those who get their broadband service from another provider ("unmanaged circuits"). Covad is at 100% compliance with its managed customers. On the unmanaged side, Covad isn't there yet. Covad is working diligently on the issue and will be providing full 911 functionality to nearly 99.5% of its stations in Q1.

What is your pricing?

The price boils down to three parts for a hosted solution:

First there is access for SDSL, T1, etc.
Then the equipment price which us supplied by a dealer/VAR.
Finally the monthly service fee per seat/all your long distance and features for ($30-$50) depending on total number of seats.

Will prices in the hosting market go lower over time?

Jeff feels the price will compete well with PBXs. He tells me the up front costs are lower for their hosted solution and he also feels the price is lower on an ongoing basis. For example Ahlquist mentions you don't a technician for moves/adds/deletes when you use a hosted provider.

What about the cost of service for truly large enterprises?

Ahlquist says they don't do many really large installs. Their sweet spot is 20-150 seats. (This guy is gaining points for honesty. Rarely does anyone tell me they don't do something)


How do you compete with on premise equipment?

There are many interesting ways Covad can attack this problem. They can complement it with PBXi service or they can have a hybrid of on-premise and hosted. They can also add phones that are hosted and even add a dashboard for voicemail.

How is your reseller market?

They have approximately 400 dealers selling their service. These dealers can also sell PBXi product with hardware.

What is the reason resellers would rather sell a service instead of a PBX?

This boils down to customer need primarily. In addition there are compensation differences as resellers get a recurring fee for service and also get to sell equipment along with the service. In the end, Covad takes on the brunt of operating costs of ongoing service.

Is pure hosted better than hybrid?

This depends on the deployment. There is room for everything based on customer need. With a hosted solution, upgrades are easy. Customers aren't locked in. You can't easily upgrade a PBX Jeff points out. It is a piece of hardware. Covad upgrades their service all the time. They provide a constant service refresh which is cheaper and provides a lower TCO.

How is your solution better than Centrex?

Centrex was static and used centralized equipment. It was not a software platform. With IP you can easily integrate apps into service according to Ahlquist. Telephony becomes an IP application. You take all the value of IP applications and apply it to communications.

Then Jeff pointed out the ease of distribution and consistency. With Centrex you were limited to the LEC in the region you were in. When you went to a different area, the service changed. IP Centrex does not have these drawbacks and stays consistent internationally as well.

What competition from other hosters?

There is a lot of competition out there but this validates the category according to Jeff. It doesn't take a lot to become a hosted provider. He is concerned that some players may taint the industry by providing inferior service. "This can hurt the VoIP reputation," he concluded.

What is the feedback from customers?

It has been good. The customers have been direct and poignant. In addition Covad has done some custom voice work which companies love according to Jeff. Other customers are ecstatic that their VoIP service came back in 48 hours after the hurricanes in Florida while the LECs were down for weeks.

Will hosting gain share? When?

It is gaining share. The analysts are pushing out expectations a bit. Some businesses are waiting to see how it plays out but as ILECs get into game it will validate the space. He feels 2006 will be good year which will be one year behind analyst predictions

Do enterprise customers need education on the hosted market?

Yes

Who should be doing the education?

"You guys" meaning TMC/Internet Telephony and analysts. There needs to be market awareness built through advertising. The LECS won't push hard to validate VoIP as they have a core TDM network. Jeff added that equipment providers may not push the market in the hosted direction either – but they do sell phones to hosted providers. He feels that Covad and others are the ones that need to drive market forward.

Are you concerned about a Skype-like hosted model?

This will cost money to produce but if it is offered as a loss leader – yes there is potential danger. Jeff went on to say that VCs won't give money to acquire customers at a loss. He thinks this model is easier to pull off in the consumer market than business.

Covad has been a major marketer in getting businesses aware of VoIP and they have been a great educator of the market. With a number of products and services in its portfolio the company is in a position to be a supplier to all but the largest of enterprises. As a carrier providing voice and broadband the company is in a great position to not only provide VoIP but VoIP at guaranteed service levels.

In my view, the company's decision to sell a hosted solution and one that allows companies to work with a standard PBX is very smart. In the end, companies will go hosted when they are ready. Covad is well positioned to supply customer's VoIP needs, regardless of what they are.

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