This week I am attending the fourth Emerging Communications Conference, or eComm America 2010, with the byline “What’s Next in Telecom, Mobile and Internet Communications”. The first morning was probably one of the best overall sessions for providing an update of where several major players are taking their offerings and how they are contributing to bring more value add into real time communications experiences.

For example:

Erik Winkler, CEO of Bit Torrent, whose  peer-to-peer file transfer service gets caught up in the Net Neutrality debate since their service has the potential to take over all the traffic to an end user during a download, talked about management of congestion and differentiated it as an issue that is independent of management of content issues. Offering a solution that represented a win for consumers, the communications industry and publishers, he talked about taking a “congestion control approach” to address the problem with recommendations that leave management of content out of the issue:

• manage for congestion
• manage in a protocol agnostic manner
• meter fairly
• re-think download caps since they have no obvious link to congestion
• incent network friendly behavior

Next up was Craig Walker, Group Product Manager, Google Voice who talked about moving communications into the cloud. (As a hint to Google’s overall tactics, I had attended a Mobile Monday event in Toronto two weeks ago; the feature presentation talked about “moving communications into the cloud” from a mobile device perspective.) Craig started out with the economic arguments for this shift, eliminating server hardware and oversight resources from a business’s communications costs. As a result a startup can generate interesting communications applications without having to deal with the capital cost overhead of a traditional telco. And he concluded with an overview of Google Voice and how it can provide a person with a “Find Me, Follow Me” single number to reach the person at any of multiple end point devices, while at the same time managing the voice mail that can arise from having multiple “numbers” to reach those end points.

Next we learned some insight into the U.S. National Broadband plan from Carlos Kirjner, Senior Advisor to the Chairman of the U.S. Federal Communications Commission. His three major discussion points: “Why the Plan?”, “The ‘Aha’ Moments” and “How to Make It Better”:

Why: Congress mandated it but there’s really a fundamental revolution, at a level similar to the introduction of the printing press and electricity, taking place that will impact the U.S. economy

The Aha’s: The need to consider the entire ecosystem that brings together a national broadband infrastructure: not simply connectivity but also devices, applications, network, consumer issues, regulatory issues and legal constraints. He went on to define what FCC sees as the role of government including competition policy that will drive and foster innovation, assets to be managed such as spectrum allocation, universal service mechanisms and, not to be overlooked, laws, rules and standards for key sectors.

With respect to competition he emphasized the importance of tracking and benchmarking actual behavior, lowering barriers to entry, device competition, application innovation and empowering consumers. In closing his third major point was to ask for feedback while noting that real data beats analyses which, in turn, beats out opinions when it comes to setting policies.

After the morning break, we heard from Jonathan Rosenberg, Skype’s Chief Technology Strategist, whose presentation on Social Sharing 2.0 and the role of Real Time Communications will be the subject of a separate post.

Jonathan was followed by one of his former Cisco colleagues, Cullen Jennings, a Distinguised Engineer in the CTO office at Cisco, on the subject of Identity for Global Communications and that least common denominator of voice calling identity, the phone number. Cisco’s proposed ViPR technology combines a Distributed Hash Table, the PSTN and SIP to provide “Blue Sky Computing” that can validate that a number being called is actually reaching the party whom one really wants to communicate with for privacy or security reasons. It’s a peer-to-peer solution that has implications for communications business models.

The morning session concluded with two product announcements; both designed to provide intelligent business communications solutions that facilitate PBX-type functionality for managing calls to the appropriate end point within a business’s ecosystem: Ringio (a startup launched yesterday) and CounterPath’s new Nomadic PBX. Both could be represented as solutions for a mobile Call Center with different approaches to the issue and target markets.

Bottom Line: Overall I came out this session with a lot to absorb but impressed with not simply the thinking behind these offerings but also the execution that is taking place to make these solutions a reality.

Note re photos: Photo by James Duncan Davidson, the show photographer.

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Early today Skype released Skype for iPhone 1.3, available as an update in the Apple App Store.

Two key new features:

Landscape Mode for Skype IM:	Call Quality Indicator

The Call Quality Indicator builds on the experience gained with the call quality indicator in Skype for Windows 4.2 beta – a tool I have found most useful in sorting out call quality issues.

Check out Skype’s Peter Parkes post where he also discusses what the roadblock is for “Calling over 3G” as well as progress with incorporating push notification. C’mon Apple – it’s time to allow Calling over 3G: AT&T says Yes, Rogers does not have an issue. What’s the hold-up (iPhone 4?)? Maybe it’s a hardware performance issue?

The first thing I noticed after downloading the update was that the application appears to operate much more “snappily” in that wait times for chat sessions to appear or even to recognize you are Online appear to be much shorter. But I need more usage experience to confirm this perception further.

With the proliferation of WiFi access points in hotels, conference sites, offices, restaurants, airports and other public places, Skype for iPhone has become a very useful calling option for me with the extensive traveling I have been doing recently. And tomorrow I will put up a post about how I use Skype for iPhone to call my BlackBerry. Eh?

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The past six months, with three trips to Europe, have given me the opportunity not only to experience roaming on European 3G wireless services but also the strategies and alternatives that allow me to minimize roaming charges while traveling with both a BlackBerry and iPhone. A key to the achieving this goal lies in the support available for WiFi access points in hotels, restaurants, airports and at conferences that provide robust, scalable WiFi support. But the question outstanding is why would I use both devices? The answer lies in the applications and content.

While one can theorize academically about various low cost scenarios and one attempts to use WiFi wherever feasible, in actual travel, you need access to some form of wireless service wherever you may be. For instance, if lost in a city where you don’t speak the language, Google Maps can often help get you sorted out quickly. Or find the nearest restaurant district (was a big help in Paris, for instance). But you need wireless carrier access to use these services.

So what measures can I recommend?

First step: buy an International roaming package from the home wireless carrier. Over the summer Rogers introduced European roaming packages; here’s the comparison:

The good news about these packages is that the per MB and per minute charges remain the same for any overage over the minimum expenditures. The bad news is that roaming charges are still “huge” compared to the $0.03/MB or approximately $0.10 per minute paid when on my home Rogers network. U.S.-based users should check with their “home” carriers to see if similar plans are available. Rule of thumb and current reality, however: roaming charges remain the last ultra-high margin service for wireless carriers.

So, while relatively expensive, these packages are helpful when away from a WiFi access point; however, as mentioned above, the real saving comes when you set up for using WiFi wherever possible. (In addition I encountered a couple of situations where 3G coverage was weak or non-existent; in these cases access to WiFi became essential.)

Second step: ensure you have installed both Skype and Truphone on your iPhone; you can then make voice calls from WiFi access points at prevailing Skype or Truphone rates. For instance, Skype-to-Skype calls are free while SkypeOut calls are based on using either a Skype Calling Plan subscription or Skype credits.

Third step: buy, at a minimum, a Boingo Global Mobile plan; while WiFi in hotels and restaurants is usually free or has a daily charge, Boingo Global Mobile provides access in over 70 countries at airports and often at hotels where, otherwise, you would pay a daily fee that is usually more than Boingo Global Mobile’s monthly charge.

Fourth step: put the iPhone in Airplane mode but with WiFi access turned on. In this way, no voice calls are received via a wireless carrier; also the iPhone specifically requires proactive user permission to roam on data – leave this turned off. But the iPhone applications, including Skype and Truphone, can all be used when attached to a WiFi access point. (Note: I do not give out my iPhone voice number but do use it for various tests; Google Voice is not yet available in Canada to provide multi-smartphone calling.)

So here is where I use each device:

BlackBerry Bold 9000: email (both BlackBerry email and GMail), BlackBerry Messenger 5.0, Google Maps, SocialScope – still the most comprehensive Twitter application on a smartphone; SlingPlayer Mobile for BlackBerry. Keep in mind that BlackBerry is overall more efficient for handling data due to the data compression provided by the BlackBerry Network Operations Centre architecture for managing data traffic. This ongoing wireless data compression feature is a major reason why I prefer BlackBerry for services such as Google Maps or downloading/uploading pictures in SocialScope as opposed to the iPhone when on a 3G wireless carrier network.

iPhone: main application is Skype, followed by Truphone. Very handy for making calls back to North America from hotel rooms or lobbies, restaurants as well as offices and conferences supported with WiFi access. (But you must have the relevant application open to receive calls and receive/send chat messages.) Other preferred applications include the Safari web browser (faster and more versatile than BlackBerry’s) and Facebook (which has a richer user experience than on BlackBerry) and a few applications that are unique to iPhone. Also comes in handy if the BlackBerry battery has died and I need immediate access to, say, GMail or a browser.

Bottom line: the feature that continues to dominate my preference for BlackBerry over iPhone is the keyboard; it’s a real time two-way communications device whereas the iPhone, with its superior browser capability, continues to be an information delivery device but works best for one way communication. My use of its touch screen keyboard tends to be limited to entering user names and passwords.

A few comments:

• There’s one major application missing on the BlackBerry – with its full multi-tasking capability the BlackBerry is ideally suited for Skype as a VoIP client. One can have real time chat sessions continue in background while using other applications; we experienced this with iSkoot but at this point one would expect to have seen the Skype for BlackBerry that was announced by Skype around the time of last spring’s launch of Skype for iPhone. And now that Skype for Symbian beta supports both 3G and WiFi and the FCC is supporting for “net neutrality”, the “carrier-support” argument for avoiding VoIP clients over WiFi on the BlackBerry no longer holds water. In fact, Rogers has made it clear that they have no issue with running Skype over 3G networks. Let’s hope that Skype and RIM can get the act together such that we can see a product introduction early in 2010.
• On my most recent trip I only bought the 15 minute voice package; with BlackBerry Messenger and SocialScope (for Twitter) available I found little need to make voice calls while in 3G only mode. Skype on my PC at hotel rooms and conferences as well as Skype and Truphone over iPhone addressed 95% of my voice calling needs. (Now, if I could just learn how to order a taxi in Spanish!)
• I realize most smartphone users will only have one phone. I present this post simply to provide an overview of my experience using both these devices while optimizing my roaming experience when traveling out of the home country. I need to have both devices due to not only their popularity but also the different content exchanged and user experiences for each smartphone.

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At about 5:30 (GMT+1) this afternoon members of the Skype Public Chat discussion learned that not only was there a new beta version of Skype for Windows 4.2 available for download but also Skype had released its first beta version of Skype for Symbian (for Nokia smartphones).

Shortly afterwards, while listening to the final Gillmor Gang panel session at LeWeb, I downloaded, via the event’s WiFi network, and installed the newly available Skype for Symbian beta onto a Nokia E71 that I use on Spain’s Vodafone for emergency calls during my trips to Spain. As an initial test I then sent out a few initial Skype Chat test messages. While there were some long delays I finally did receive responses to these messages..

I then realized that the LeWeb official blogger sitting next to me had a Nokia smartphone and asked her to install Skype for Symbian on her N96. About five minutes later, as Michael Arrington of TechCrunch fame was chiding Apple for not supporting VoIP over 3G networks, I made a successful Skype-to-Skype call between my E71 and her N96. While this call went across LeWeb’s WiFi network, the irony here is that Skype for Symbian is a complete VoIP client on a mobile smartphone and, according to Skype’s blog post:

Skype for Symbian works over Wifi or 3G data connection. We recommend having a unlimited data plan when using 3G connection.

I followed up with a successful Skype call to Andy Abramson at his hotel in Madrid, Spain where the voice quality was excellent in spite of the event’s background audio of the panel session.

My LeWeb deskmate has a Vodafone Netherlands voice and data plan and will let me know when she returns to Amsterdam this weekend if she can make Skype calls over Vodafone Netherland’s 3G network.

Skype for Symbian beta is claimed to be a “limited” beta; however, it supports:

• Free Skype-to-Skype calling
• Call phones with Skype credits or subscription
• Receive calls on your Online Number
• Instant Messaging
• Group conversations
• File sending and receiving

The important bottom line here is that Skype has finally released a mobile smartphone client that supports both 3G and WiFi from a full VoIP client with no intermediary servers as has been used on the 3 Skypephone over the past two years. Its use over the data plans of wireless carriers will test several aspects of smartphone services:

• Will carriers attempt to block VoIP clients’ services that bypass their inherent voice channel?
• Will smartphones have sufficient battery life to support a full day’s use of a VoIP client over a 3G network?
• How much data would be used during an average day’s use of Skype? (While many carriers claim to offer “unlimited” data plans, there are actually monthly caps of 5GB or more.)
• Where does a full Skype client provide an economic advantage over various voice plans, especially when it comes to making calls while roaming?

During my recent trips to Europe I have made heavy use of Skype for iPhone (and sometimes Truphone) over WiFi access points. Given the high charges for data while roaming, Skype for Symbian is still not a service that I would use over a “roaming” 3G network but I would continue to look for WiFi access points in hotels, restaurants and airports to access Skype on the supported phones. However, in my home country I can expect to make Skype calls from anywhere in Rogers 3G coverage areas using their relatively inexpensive data plan at little or no additional cost.

Update: Phil Wolff has more details and some caveats about this initial Skype for Symbian beta version over at Skype Journal.

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Two announcements yesterday, when meshed together, create the setting for Skype to become, de facto, the ‘”unofficial” personal communications software provider for the 2010 Winter Olympics at Vancouver and Whistler, B.C. next February:

Skype President Josh Silverman today posted: “Good Move AT&T”:

Since launching our iPhone application six months ago, people have downloaded and installed Skype on 10% of all iPhone and iPod touch devices sold – making it clear that people are extremely interested in taking Skype conversations with them on the go.

All of us at Skype applaud today’s announcement by AT&T (in an FCC filing to be published shortly – update, it’s here in PDF format) that it’ll open up its 3G network to Internet calling applications such as Skype. It’s the right step for AT&T, Apple, millions of mobile Skype users and the Internet itself.

Bell Canada’s Mobility service and Telus yesterday announced both the launch of their new joint-venture HSPA+ network across Canada next month and their agreement to be selling Apple’s iPhone amongst other 3G/GSM phones such as Nokia’s line. In fact, as shown on the right, the existence of the new network, with the identifier “302880”, can already be detected via the iPhone’s Carrier settings .

The implications of this announcement:

• Bell Mobility and Telus expect their HSPA+ network to completely replace their current CDMA/EV-DO network within five years.
• Bell Mobility and Telus will be providing direct competition to Rogers who, to date, has been the sole GSM carrier in Canada and will be able to offer a full range of 3G GSM phones – not only the iPhone but also Nokia’s GSM-exclusive line of phones.
• As a benefit of their current monopoly Rogers has also been the only carrier offering Apple’s iPhone since its Canadian launch in July, 2008. Canada now becomes one of the few countries with multiple carriers offering the iPhone.
• As another benefit of their GSM monopoly Rogers has been the sole network available for roaming by visitors from outside the U.S. and Canada as well as AT&T and T-Mobile customers from the U.S. Since athletes and visitors coming to the Vancouver Olympics from outside North America will have GSM phones, Bell Mobility and Telus will now be able to draw away from Rogers a significant portion of the roaming business that otherwise would have accrued by default to Rogers.
• Bell Canada is the “official” communications carrier for the 2010 Winter Olympics and Paralympics. Bell Mobility has built out their new HSPA+ network from the Telus network connection in Vancouver along the Sea-to-Sky highway to Whistler, site of the alpine and cross-country skiing events as well as bobsleigh, luge and skeleton “sliding” races.
• Additional communications capacity between Vancouver and Whistler has been built by Bell Canada for Internet communications, the 35 to 40 Mbps voice and data backhaul required for each of the wireless towers and the HD 5.1 surround sound television coverage that will include all events. No doubt a lot of fibre has been installed as BC Highways rebuilt the Sea to Sky Highway over the past few years to meet the Olympics’ inherent demands both additional vehicle capacity and enhanced safety. Being the “official” carrier this will benefit Bell Canada’s revenue stream also.

This raises the question of whether an HSPA-only service can run on the iPhone or BlackBerry Bold both of which currently only support 3G. The answer is Yes; HSPA will support 3G devices.

However, an HSPA+ network can only fall back to a 3G network capability when full HSPA capability is not supported by a device. But the iPhone and BlackBerry Bold also support 2G/EDGE networks.

As a result should a Bell Mobility or Telus customer leave an HSPA+ coverage area, there is no EDGE available for fall back when outside these areas. For example,when we drive the freeway from Toronto to Ottawa, we see EDGE for most of the trip except near Toronto, Kingston and Ottawa where Rogers 3G coverage exists. Either Bell and Telus will require roaming agreements with Rogers to provide non-urban service or they will not be able to offer as complete coverage to their customers.

Of course, those landlines will be able to support Skype on laptop PC’s using Ethernet or WiFi connections. But combining the two announcements along with Skype for iPhone’s recent availability in Canada, can Skype become the overall de facto “unofficial” personal communications software provider for the 2010 Olympics? Questions to be answered:

• Will Skype release a version of Skype for iPhone that supports both WiFi and 3G as the underlying wireless protocols prior to the Olympics?
• Will Skype finally release Skype for BlackBerry? (to address Phil’s desire for Skype on a multi-tasking smartphone)
• Will we see execution on Skype’s agreement with Nokia?
• Will the various communications and “Internet cafe” rooms for athletes and press be equipped with enough power sources to keep the various smartphones charged conveniently?
• Will Bell Canada have the same policy re Net Neutrality as Rogers who has publicly stated their primary business in providing Internet access and not managing applications or specific customer uses?
• Has Bell Canada signed the appropriate international roaming agreements with carriers around the world?

Certainly it’s within the realm of current technology to support Skype over wireless networks, whether WiFi or wireless carrier. Bell Canada touts their 2010 Olympics commitment as being “The first all-IP Olympics”. The question that remain:

• To what extent will the Skype ecosystem actually be able to execute on, and take full advantage of, this underlying IP-based communications infrastructure?
• Will Skype’s popularity, ease-of-use and combined voice/chat/video feature set make it the de facto “unofficial” voice, chat and video personal communications software provider for the 2010 Winter Olympics and Paralympics?

Call it Skype Everywhere by Stealth…. but can Skype execute on the challenge?

Disclaimer: Bell Canada, including its Bell Mobility wireless business unit, is the official communications services provider for the 2010 Winter Olympics. Skype is a software application, with over 500 million registered accounts worldwide, that uses these communications services for the purpose of voice, instant messaging and video conversations; however, Skype is in no way affiliated with, or endorsed, by the 2010 Winter Olympics Committee.

Full disclosure: For over thirty-five years the author has personally observed the growth of Whistler from a small and remote “boutique” ski area with one tragically slow 4-person per cabin gondola lift and a few double chairlifts into North America’s number one rated ski resort covering two mountains and capped off last year by the opening of a 4.4km peak-to-peak gondola that takes riders as high 436m above the valley floor. Concurrently the Sea-to-Sky highway has grown from a twisty, up-and-down adventure (and risky) roadway with some sections on wooden platforms on stilts anchored to rock walls over canyons to a safe multi-lane, yet still scenic, roadway. (I still consider it one of Canada’s most scenic highways.)

• A fully redundant fibre-optic network between Vancouver and Whistler to support essential broadcast traffic. Bell has successfully laid fibre to the front door of every major Olympics and Paralympics venue, and will ultimately connect all of the 130 competition and non-competition venues to our dedicated Olympics network
• Bell’s fibre-optic network will provide all voice, data and broadcast services for fans, media, athletes and officials from around the world, and will be the backbone that enables all Olympics and Paralympics connectivity. This includes 400,000 private radio calls, 10,416 hours of dedicated TV broadcast coverage to more than three billion viewers, timing and scoring results delivered in the blink of an eye, and more
• The highest level of reliability and redundancy and the most up-to-date technology for the full range of Olympics telecommunications services, including voice, data, broadcast video and audio, wireless PCS and private radio
• Provision of all hardware, cabling, logistics and support staff
• An unprecedented level of support to the Rights Holding Broadcasters, in particular the Broadcasting Service for the Olympic Games
• Internet portal services enabling an interactive, multilingual window to Canada and the world
• The first all-IP Olympic Games
• All built to minimize environmental impact by co-locating equipment to minimize footprint, coordinating construction schedules to reduce waste and using IP-based technology to dramatically reduce cabling and infrastructure needs

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OK, now I have your attention with a headline different from the “Skype sold for $2.75 billion” headlines so rampant in the blogosphere yesterday….

By now the web has been saturated with stories about yesterday’s announcement of the forthcoming acquisition of a 65% controlling interest in Skype by a consortium of investors, led by SilverLake Management LLC and including a $300MM infusion from the Canada Pension Plan Investment Board. At this point the main story is “old” news but a few comments:

Who is Canada Pension Plan Investment Board?

Since 1965 every employed Canadian contributes a % of their employment income (up to an annual income cap of about $37,000) to the Canada Pension Plan (“CPP”). Between the age of 60 and 65 qualifying Canadians can elect to receive a (taxable) monthly payment from this plan until death along with a “death benefit” to the deceased’s estate. The Canada Pension Plan Investment Board …

… is a professional investment management organization based in Toronto. Our purpose is to invest the assets of the Canada Pension Plan in a way that maximizes returns without undue risk of loss. The CPP Fund is $116.6 billion. Canada’s Chief Actuary estimates that CPP contributions will exceed annual benefits paid through to the end of 2019. Thereafter a portion of the CPP Fund’s investment income would be needed to help pay CPP benefits.

Over 17 million Canadians currently participate in the Canada Pension Plan either as contributors or recipients. So we each effectively have a $16.75 investment in Skype.

And Canada, with its own geographical challenge of servicing a market where 90% of the population lives within 160 km (100 miles) of the 6,000 km (4,000 mile) long Canada-US border, continues its long history of having an interest in communications innovation.

Why was there no Skype-eBay synergy?

Meg Whitman made the same mistake I witnessed at a previous employer where the CEO and Board bought up companies but never got “buy-in” within the acquiring company of any major acquisition that required a rethinking of the overall company business focus and execution.

As a result there were no internal champions within eBay for executing on the stated intentions of the Skype acquisition. And the statements of the day demonstrated that eBay senior executives (and Board) did not understand a basic principle of auctions – there is no role for “conversational negotiations” during an auction; this is critical to maintaining the integrity of the auction process. You see the goods and make a decision as to whether or not you want them badly enough to pay the final auction price; the auction process itself is the “negotiation” of a price. Bidders have no opportunity (and do not want) to communicate with sellers; the auctioneer (in this case eBay) is simply a neutral third party who moderates the transaction to establish a price.

Why is eBay still an investor?

Back in the spring when a potential IPO was announced, we learned that eBay expected to continue to have a minority interest in Skype. With a $1.9 million cash infusion and a remaining 35% interest, eBay can still hope to recover, over time, the approximately $3+ billion it has to date spent on the Skype investment four years ago. At the same time it allows eBay executives to focus totally on getting their struggling “markets” business back into a growth mode.

With this strategy eBay can assuage Om’s concerns in Skype Sale Nears: Why eBay Shareholders Should Be Mad. As a sequel, once the sale was confirmed, Om states:

So Donahue gets to say that he got the higher valuation of Skype, got rid of a potential legal nightmare and can get any upside that comes with the initial public offering of the stock. Seems like a win-win, but that IPO — don’t count on it. To be honest, this deal makes much more sense compared to all the rumors that were floating around earlier. [My italics]

What are the positives about the acquisition?

#1 – Keeping the current executive management team. In his eighteen months as President of Skype, Josh Silverman has brought a lot of business process and experience into the company with the result that business processes and programs are being built to build sustainable and increasing revenue streams. Two recent examples of this are the availability of the FREETALK Everyman headset designed to improve the user calling experience at a very low cost and yesterday’s launch of Skype for Asterisk. Expect much more activity and announcements along these lines of building a stronger Skype ecosystem during the fall. This momentum can only be sustained with a continuation of the current executive team. Skype needs to focus on execution at this point; it does not need any further high level restructuring activity to distract from execution.

Two statements confirm this is the case:

• Josh’s own post, A new chapter, concludes describing “a new group of owners who believe passionately in our mission and in the ability of our team to deliver on it”.
• Egon Durban, Managing Director at SilverLake, states: “Josh Silverman has done a strong job leading the company and we look forward to working with Josh and his team to grow the Skype franchise.”

While there are some “technology heavyweights” becoming involved as investors, the real challenge is to build an effective and synergistic relationship between those “heavyweights” (who will probably become board members and/or advisors) and the current management team. This is where corporate culture and value sets, as established at the executive level, can play a strong role in leaving individual managers the freedom to execute on their goals most effectively.

What are the gotcha’s?

• Resolution of the patent dispute with JoltID. No deal would have been done without some understanding of the part of the new investors of the outstanding issues and prospects for how this issue can be resolved. On the other hand, with the experience of the various new investors, many heads can be brought into the negotiation of a resolution. My take: this will never reach the High Court trial scheduled for next spring.
• Why the $125 million note? My guess: it’s escrow funds to cover costs arising with any litigation issues that may arise in closing the deal. Is a first guestimate of a settlement with JoltiID in the range of $100MM? Can Skype develop a replacement for JoltID’s  infrastructure technology so critical to Skype’s business model for under $125MM? Again from Om:
  

  If you think about it, what Donahoe just did was follow the golden rule of business: If you’ve got a problem, make it someone else’s problem. And the problem for the new buyers is that the legal issues of Skype are not going away. Some of my smart friends think that Skype can sidestep these problems by switching to a SIP-based infrastructure, but I won’t hold my breath.

  Any SIP-based infrastructure would sharply increase the need for building a massive global infrastructure. It would also mean working with partners (that make Skype devices) to re-configure their products and getting 400 million-plus users to switch to a massive new model. In other words — like skating in the middle of a semi-frozen lake underneath a brightly shining sun.

• Employee motivation: what will be the stock option opportunities for employees now that Skype has effectively gone private?
• Financial reporting news: by effectively going private, Skype also has no investor reporting obligations. On the other hand if these investors intend to exit via an IPO in a couple of years, they must provide some level of financial reporting. (By being a minority investor, eBay no longer needs to report on its Skype investment any more that it does on its craigslist investment.)

What do Canadians want?

Now that 17 million Canadians have an investment in Skype can we expect to get;

• Skype Online numbers? Canada’s 911 regulations provide a roadblock. (Note to CRTC – when lightning struck my home’s Rogers and Bell communications lines two weeks ago, for four days Skype was my only landline service.)
• Skype for iPhone? Requires resolution of a G729 codec patent issue. (Sorry folks, it’s not a Rogers issue.)
• Skype for BlackBerry? Given that Research in Motion has become Canada’s leading technology company.

Bottom Line: With this acquisition Skype is finally free of what Andy Abramson describes as “an extremely conservative, bank-like culture”. Yes, Andy, “Skype is about the democratization of voice”; I would extend this to say that “Skype is about the democratization of conversations – whether voice, chat and video”. I certainly look forward to innovation and a much stronger Skype ecosystem as a result of this change of ownership.

Other posts of note:

• Omar El Akkad provides a great summary overview in today’s Globe and Mail: EBay hangs up on Skype Strategy.
• Globe and Mail Report on Business: What is Skype and Why is it important?
• Om Malik on GigaOm: Skype Sold for $2.75 Billion
• Andy Abramson at VoIP Watch: (after the announcement) Skype Sold, JoltID Suit Still Remains In Place As of Now; (adding to speculation prior to the announcement) Is Skype in Play?
• Update Sept. 4: Dan York, on returning from IT Expo adds his comments in Onward the disruption – Skype’s sale to private investors is a great step; includes Phil Wolff’s Skype Journal graphic showing the ownership post-acquisition based on Om’s reported numbers.

And previous Voice On The Web Posts;

• The Skype IPO: “It Ain’t Over ‘til It’s Over”
• Skype – eBay: Passive Separation

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It all started when I attended the June 2 Android launch on Rogers Wireless. During a scrum I had asked “Fringe” actor Joshua Jackson if he had made a call from Paris, France to his wife in Vancouver using Skype for Android (Skype Lite). Rogers Wireless CMO John Boynton interjected that Rogers allows all applications to run on their networks; the inability to run Skype was an issue that required Skype’s initiative to resolve (there’s a regulatory issue). Later during a demonstration of the Android when I had noticed the Skype Lite beta icon on one of the HTC Android phones, a Rogers marketing person volunteered that Rogers does not block any applications.

Fast forward to the Canadian Telecom Summit two weeks later when recently appointed Rogers CEO Nadir Mohamed made similar points about Rogers policy on network management during his leadoff keynote presentation. But it was during a Net Neutrality forum presentation the following day by Rogers Chief Strategy Office Mike Lee that we got to the meat of the topic; three of his slides articulate the story:

followed by:

followed by:

In his commentary, Mike pointed out that the focus of Rogers’ network management policy is on optimizing the behavior of the network such as to give customers the response they expect. Other points Mike made:

• In today’s world a service provider needs to deliver the best possible experience for the broadest range of customers.
• Rogers primary business is providing Internet access in a market that has a focus on speed and accessibility.
• Rogers is not in the business of managing applications or specific customer uses.
• Rogers’ traffic management is designed specifically so that Skype works well.
• The only throttling of traffic relates to p2p file sharing traffic (i.e. BitTorrent) to which a dedicated channel is assigned so that p2p traffic does not swamp the network and interfere with other customers’ access to the network.
• In response to query from the audience, Rogers only provides network management for their retail customers. Any MVNO using the Rogers backbone via a wholesale arrangement gets the “raw” Internet and must establish their own network management practices.

Mike’s presentation was followed by Skype’s Christopher Libertelli, Director of North American Government Relations, making Skype’s usual pitch supporting network neutrality. The final forum participant was Dave Caputo, CEO of Sandvine, a provider of network infrastructure software focused on improving the quality of customer experience. Dave’s main point was that an unmanaged network does not equate to network neutrality; however, Internet service providers have the most to gain from permitting the diversity that attracts the most customers.

In the end all three agreed that a focus on the customer experience, while managing the network only to the level of protecting the network’s integrity while achieving customer satisfaction, will make a sustainable win-win for both the network operator and the end user.

But the Rogers’ approach to network management really hit home when, the day after the forum, I found a post by Skype’s Director of EU Government Relations, Jean-Jacques Sahel, “’You touch my Skype, you touch my freedom of expression and communication’ – access to the Internet recognised as a fundamental human right (at last)” where it appears the European Parliament is at odds with individual European governments over net neutrality issues.

EU law should ensure that citizens can exercise their freedom of expression and communication and can benefit from Internet access that is open, taking into account the requirements expressed by users to make use of, and distribute, content, applications and services on the Internet. Access to Internet content, services and applications, as confirmed by the French Conseil Constitutionnel, is an explicit part of the fundamental rights of citizens to hold opinions and to receive and impart information and ideas without interference and regardless of frontiers. Additionally, unrestricted Internet access to content, services and applications is also a necessity for the preservation of the effectiveness of European and national policies designed to combat social exclusion, promote education, training, employment, etc.

Seems like some European carriers have not quite yet got the message being put forward by Rogers – these operators can’t quite deal with the gradual shift in power from the carrier to the consumer.

My own experience: When I am able to run SlingPlayer for BlackBerry over Rogers 3G service, whereas AT&T feels that this application would overload their network, I am getting the response I expect. When Skype video calling runs such that, on full screen mode, I feel the other party appears to be “across the desk” I am getting the response i expect. When Rogers is offering WiFi-based services that complement their 3G network service I get the response I expect (hello Verizon!).

Bottom line: Under new CEO Nadir Mohammed Rogers’ focus is on the customer experience as their ultimate sustainable advantage. Their network management practices address network integrity issues: spam, viruses, denial of service attacks and ensuring that p2p file sharing does not deprive others of their expected service level. They simply do not have the time nor resources to worry about “limiting” or manipulating access to Internet traffic based on applications or offerings.

Certainly there are still issues outstanding at Rogers with respect to, say, roaming charges and length of contracts. But, in response to my question to Nadir about roaming charges, he stated there is currently a disconnect when there is such a disparity between local and roaming “per MB” data charges. However, he continued by saying that this is an area that Rogers is reviewing. In fact, Alec Saunders found a “customer service fairy” when he called Rogers this past week in anticipation of a forthcoming trip to the U.S. On the other hand, Alec would like to see increased upload speeds for the coming flood of video applications. (DOCSIS 3.0, anyone?)

In summary, Rogers appears to be establishing a world-leading benchmark for adhering to application-agnostic net neutrality policies in practice; they are not simply mouthing the network neutrality message but also executing on it.

Footnotes:

• My thanks to Rogers CSO Mike Lee for providing me with a copy of slides used at his Net Neutrality forum presentation at the Canadian Telecom Summit.
• Rogers WiFi-based services include participation in the Canadian HotSpot Network and Rogers TalkSpotTM service that allows one to make voice calls via any WiFi access point in Canada for a fixed monthly fee.

(As for the issues Skype is facing with respect to offering SkypeIn, Skype To Go, Skype for iPhone and Skype for BlackBerry in Canada – that will be the subject of another post. But they are NOT Rogers issues.)

Full disclosure: the author is a full paying Rogers customer for all their services: wireless, cableTV, high speed Internet and Home Phone.

The past Monday/Tuesday/Wednesday I attended my first Canadian Telecom Summit – where Canadian telecom carrier and vendor executives have an opportunity to provide an overview of their goals and directions encompassing both recent accomplishments and future plans. Overall many of the speakers succeeded; however, there are still a few telecom executives who want to preach motherhood. The audience comprised a mix of participants in the Canadian telecom ecosystem including both national  and  independent carrier management personnel, telecom business consultants, regulatory body staff, financial analysts and service providers amongst others.

Some highlights:

Building out a national broadband infrastructure (wireless and wireline). While the country can be considered “covered” with broadband and 3G wireless access, there are a multitude of private companies who have invested several billion dollars to build this infrastructure. Bell Canada, Rogers, Telus and MTS Allstream are the major carrier players but there are several regional or local private operations providing backbone to vertical or regional markets, (Atria Networks, Hydro One Telecom and Internetworking-Atlantic are some examples.)

But doing the interconnect between these players, especially at the wholesale/retail interface, is governed by CRTC regulation. A “regulatory blockbuster” forum, encompassing the heads of government relations for four major carriers and a public policy advocate, brought out several of the issues and conflicts from the participants’ perspective. Multi-billions of dollars are being spent this year to build out fiber and wireless infrastructure. Shareholders want to see return on investment; business and consumer customers simply want value for their charges independent of how the connection is routed. CRTC personnel were in the audience but there was no indication as to whether they heard anything new.

Customer Expectations: Simply put, several of the presenters focused on the customer as the primary consideration and marketing target when it comes to developing services. Lots of talk about how the user experience is changing and will change with the range of new services available via mobile data/Internet. However, execution is the challenge.

From comments by various Rogers personnel related to Net Neutrality (separate post) through to the demonstration of user-friendly interfaces that aggregate local and cloud-based personalization of a mobile device the conference covered a range of end user issues. Both the Palm Pre and Comverse demonstrations provided specific examples of how such aggregation can work to the user’s benefit. Microsoft’s “Surface” table demonstration was pretty amazing but it can only become a consumer experience with a significant price drop from the stated $12,000.

It’s about bringing broadband speeds to mobile services: One common theme across most of the presentations was the exponential growth of user demand for mobile services across the data networks. RIM co-CEO Mike Lazardis used physics as the basis of his talk about the future need for more wireless data network capacity through not only additional spectrum but also scalable applications and, based on an inherent strength of BlackBerry devices since their introduction ten years ago, effective wireless data compression to reduce bandwidth demand.

Rogers Chief Strategy Officer Mike Lee pointed out that current investment in wireless and fiber infrastructure dwarfs all other investment in Canadian ICT combined. Four outcomes that I have experienced this year as a result of these investments: launch of their 7.2 Mbps HSPA wireless service reaching 75% of the Canadian population; fiber-to-the-node installed to my neighborhood cable head, 3G service to two central Canada resort areas which I frequent and, most importantly, a robust, stable 3G service compared to my AT&T 3G roaming experience.

The disconnect: However, I also felt a major disconnect with the emerging communications opportunities being discussed at conferences such as Lee Dryburgh’s eComm Conferences and Jeff Pulver’s recently launched HD Communications Summit. Innovative applications, communications enhanced business processes and the productivity benefits of HD Voice were amongst the subjects NOT discussed at Canadian Telecom Summit. Innovative yet profitably successful services such as Voxeo and Jaduka ride over the carrier networks. Yet the Canadian Telecom Summit was an opportunity missed; it had the audience that needs to hear these stories and to build awareness of the services required to facilitate sustainable revenue streams at the carrier level.

Friend Thomas Howe, CEO of Jaduka and more commonly known as Mr. Mashup, puts it succinctly in a recent post, The Sophomore Slump, concludes with:

My suggestion is simple: instead of putting out another solo album, today’s operators need to team up with other musicians. They need push out of their current ecosystem and into others, showing how voice and communications can make other applications better.

…….

The challenge? Operators need to step back from the spotlight, and give somebody else a turn at the microphone. Operators need to admit that they are not expert at anything other than real time communication. The most rational path is for the carriers to partner with others companies that bring other talents and values to the table, [rather] than to use what operators do best to extend their partner’s offerings.

Bottom line: Canada continues to lead the world in delivering communications over a large geography but with relatively small pockets of population. But, instead of hearing oft-stated platitudes about the need for increased business communications, let’s hear about specific examples where enhanced communications applications and services can deliver true productivity enhancements to the both enterprise operations and the end user while bringing significant benefits to our social communications.

Suggested reading: Thomas Howe’s various posts on The Jaduka Exchange – a primer on new telecom services in action. Especially relevant: Unified Communications? No, CEBP.

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Ok, so the term “Net Neutrality” has different interpretations for different people. Convergence of voice, Internet and broadcast media has created an entirely new set of stakeholders with divergent issues:

• Users: they would like to exploit the Internet for all its various features: email, web browsing, viewing videos, exchanging text messages (think IM, not SMS), voice and video conversations, remote viewing of their cable TV subscription (one-to-one), researching and booking travel, researching purchases, buying goods and services … the list goes on…
• Service Providers: basically they want to simply deliver the electrons in the form of data packets; they are not media mavens, do not care about content other than security issues. They are the extension of the copper wire, coaxial cable or fiber optic strands used to deliver the content but they are not and do not want to be content producers (other than portals that help users set up and use their services).
• Content producers: fundamentally these are the talents that produce content who hope they can draw an audience. They want to be rewarded and compensated for their efforts and deserve to be at the artist, author or director level. Their traditional business models are breaking down but, in many instances, they do not have the leadership or enthusiasm to figure out the new business models for generating revenues.
• Commercial enterprises want to promote and sell their goods and services. e-Commerce is growing, especially when it comes to travel, memberships, books, legacy catalogue operations and long tail goods and services.

A recipe for conflict. Even though the legacy voice carriers never concerned themselves with the spoken words (content) of a conversation, convergence of infrastructure and content, resulting from the potential of IP-based communications technology, has been muddying up the waters when it comes to considerations of what content is delivered over the Internet. And, of course, they need additional revenue streams as they see their previous business models and associated revenues evaporate.

“Net Neutrality” has become the modern equivalent of separation of church and state; the debate centers around separation of ‘”pipes” (copper or fiber) and content. As with our gas utilities in Ontario, give us the “last mile” pipes into our homes and negotiate/deal separately for whose “gas” will be delivered through those pipes.

The Stockholm “structural bypass” model, as described by Brough Turner at eComm 2009, demonstrates “a simple proven path to ‘Real Broadband’” : 1.2 million kilometers of “dark” fiber around the city as a public utility with a low cost ($11 per month) for 100 Mbps connectivity complemented by over 300 service providers delivering content (or “lighting up” the fiber). Separation of pipes and content – one concept of “net neutrality”.

Politics and incumbent interests have presented challenges in the U.S. and Canadian markets. However, we’re starting to see some seeds being sown that hopefully will build a base of support for some level of “structural bypass”:

• US: appointment of Blair Levin, a veteran of telecomm regulation, to help coordinate the FCC’s national broadband plan. Phil Wolff at Skype Journal comments in his post, King of Broadband:
  

  Astoundingly great, ubiquitous, pervasive, cheap, uncensored, clean, accessible, fair and market-driven broadband might be possible with a national plan. A former commissioner, Levin understands the deeper tech, social, economic and political forces at play, and the players. Skype’s Chris Libertelli told FierceVoIP last year that “Levin would make an excellent FCC chairman.” (He didn’t get the job.) Blair’s a nice guy who knows the lyrics to Winnie the Pooh songs.

• Canada: at the Rogers Android launch last week I picked up vibrations that Rogers is doing and will do nothing to impede the evolution of services such as Skype onto their network. At this point, in response to my “scrum” question about Skype on Android phones sold by Rogers, Rogers Wireless CMO John Boynton stated that “it’s a Skype issue”. Further investigation has found that it is a matter of Skype establishing a business relationship with a carrier, not only to obtain Canadian numbers but also to establish the relevant physical interfaces into various Canadian PSTN carriers. It was made clear to me later by another Rogers marketing person that Rogers will do nothing to inhibit any services (as long as they do not impair their ability to deliver a quality service). And certainly they have made no issue of their customers using SlingPlayer Mobile for BlackBerry over their network. (Walked the BlackBerry two evenings ago watching a Stanley Cup Finals game while on the dog’s evening stroll.)
• Canada: The Canadian Radio and Television Commission (CRTC – the Canadian version of FCC) recently decided to continue its policy of not regulating “broadcast content” delivered via the Internet or mobile phones. This is a classic case of the conflict created by the differing interests of service providers and content producers. From the Ars Technica post linked above:
  

  Internet broadcasting has had a special regulatory exemption since 1999, but some cultural groups and content creators argued that it was time to apply the same standards that govern TV to Internet broadcasting. ISPs were totally opposed to the plan, which would in some ways regulate them like traditional broadcasters.

• On the same issue, The Globe and Mail quotes CRTC Chair Konrad van Finckenstein:
  

  “We do not believe that regulatory intervention is necessary at this time,” CRTC chairman Konrad von Finckenstein said in a statement. “We found that the Internet and mobile services are acting in a complementary fashion to the traditional broadcasting system. Any intervention on our part would only get in the way of innovation.”

• Canada: Southern and eastern Ontario is seeing growth of several fiber optic initiatives where the focus is simply on building “last mile” fiber connectivity without regard to content:
  • Fifteen independent rural carries in southwestern Ontario are installing fiber-to-the home that will eventually reach even farms within two years.
  • Atria Networks has become a major supplier of fiber optic and wireless services to regions and counties surrounding the Greater Toronto Area as well as in the Ottawa region. School boards, government agencies and enterprises (including RIM) are users of what, in some cases, are multi-Gpbs services. At a press event last month Atria made a point about getting fiber to the end points for use as the customer sees appropriate for their operating needs with no limitations other than ensuring network security and operating integrity (as defined by an Acceptable Use Policy).
  • Cogeco, a major cable TV and Internet service provider across Ontario and Quebec, recently acquired Toronto Telecomm’s fiber assets within the Greater Toronto Area and established a separate business unit, Cogeco Data Services with plans for continued expansion of their high speed fiber services in the GTA.

Small signals in a world fraught not only with business issues but political agendas as well. These moves are a start but until, as we did with other utilities in past history, we can figure out a “Structural Bypass” model, there will always be challenges to obtaining “Net Neutrality” in terms of separating the “pipes” from the content.

It will be an interesting forum next week at the Canadian Telecom Summit when Skype’s Christopher Libertelli, Director of Government and Regulatory Affairs – Americas participates on a “Net Neutrality” panel along with Rogers’ Chief Strategy Officer, Mike Lee, and Dave Caputo, CEO of an infrastructure engineering company that attempts to ensure and improve quality of service, Sandvine.

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