Verizon

Doug Mohney’s The Fallen – Crashed and struggling VoIP companies is worth a read, if for no other reason than to learn the fates of some of the companies we have all known in the VoIP industry.  One could summarize what he has written as:

• the carrier competitors,  excepting Vonage, ran out of money.  Vonage hasn’t run out of money, but it’s always touch and go with them.
• the companies developing applications that needed carrier support for distribution in order to really prosper have either sold or closed their doors.  In some cases, they were sold and then closed their doors.

And then there’s the oddball — the much lamented Pulvermedia, now reduced to a landing page sporting advertisements for Israeli entrepreneurs and colon cleansing treatments.  As go the fortunes of the industry, so go the fortunes of those who provide services to the industry.

Any guesses as to who the owner of that sock is?  Here’s a hint — a bunch of folks from the “rebel telecom” universe got together on Wednesday night in San Francisco, courtesy of an invitation from Lee Dryburgh, founder of the eComm conference.  One was wearing these socks.

In all there were over 50 people in the room at that dinner, representing companies that are variously developing solutions, go-to-market strategies, and providing consulting services many of which are independent of carriers.  Apple’s success on mobile, coupled with the clear demonstration that one doesn’t need to be a carrier or partner with a carrier in order to succeed in telecom applications, has emboldened many to try again.

In contrast, earlier that afternoon at Under the Radar, a panel of carrier representatives from AT&T, Verizon, Sprint and T-Mobile variously made excuses for the way in which they lock down their devices and customer usage models. Chief among the excuses — “preserving the customer experience”. “What if the customer loaded an application that used too much battery?”, asked AT&T’s Rupert Young. One indignant audience member elicited loud cheers when he stood to tell Mr. Young that in fact it ought to be his right to load such an application if he felt that it provided value to him.     Later, when moderator Jeremy Toeman turned to the audience and asked how many folks in the audience would disagree with the statement that the carriers on stage provided “a great user experience” to their customers, every hand in the room shot up.

Over lunch a day earlier, VantagePoint Venture Partners Eric Ver Ploeg praised one entrepreneur’s business model because it wasn’t dependent on the carrier for success.  To Ver Ploeg that model held out the possibility that the business could scale quickly, at Silicon Valley speeds, rather than telecom speeds.

That innovators in the telecom world might chafe at carrier restrictions is not, in and of itself, news.  Times are changing, however.  These entrepreneurs are noisier now than at any other time that I remember. And that VC’s might eschew the carrier distribution model certainly is news. The real question we should be asking is whether this a fundamental shift in viewpoint, or merely an artifact of Apple’s successes today? How will the carriers react?  Will they behave as AT&T did, allowing Apple to establish an outside distribution channel, or will they do as Verizon’s Jennifer Byrne suggested, which was to establish a Verizon specific channel and platform?  Ms. Byrne also, perhaps unintentionally, dismissed the iPhone App Store as “nice UI”, leaving one with the impression that she fundamentally doesn’t understand the needs of developers and the impact that App Store is having on the community of innovators.

More than ever this battle is important to the colourful entrepreneurs, innovators and service providers that dot the telecom industry — the folks like Jeff Pulver and the mysterious owner of that sock.  With luck, between the iPhone team at Apple, the Android team at Google, and soon RIM with their Blackberry store, a sufficiently large market may emerge that is unencumbered by carrier restrictions. In turn, that may provide sufficient opportunity for developers that mobile applications might avoid a repeat of the crash and failure of the VoIP industry.

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