If I had to pick one “mega trend” for our industry I would bank on, it would be the inevitable movement from getting paid to “do stuff” to getting paid for “knowing stuff”.   This was the point of my talk last November on election day in London, and Simon Torrence from STL partners recently asked me back to speak at the next Telco 2.0 show in May.  Between you and me, he did not have to move the show to Nice, France to get me to show up, but don’t tell him.  It’ll be our secret.  Simon sent me a link to my talk, which I’ve included above, and unlike most times when I positively hate seeing myself on video, I like this one – not because of I like seeing the my face now, I don’t – but being an American outside of the country when Obama was elected was a real gift for me.   And my wife bought me that tie.

Also, Simon forwarded me a few questions from the audience, pathetic attempts at answers below:

Q: Operators are not global/unique with in an area – how does a web site select one c2C over another – yes one may have better data but its still not omniscient – one web site cant have several c2c options?

A: Indeed, a web site can (and probably will) have many click-to-call options.  The fact that one carrier may have better data might very well be enough that a web site designer will select one over the other. But without regard to that fact, it may also be that the site is provided by a large enterprise that is a strategic partner of the carrier and/or system integrator with a relationship with the carrier.

Q: Where is the money?

A:  Consulting! (Couldn’t resist that, and I bet you thought that in your head.  Didn’t you?  It’s true, but it’s the tip of the iceberg. More money outside the consulting world, and you can hold me that one.)   The question isn’t actually where’s the money. We know where that is.  The current outsourced IT market is currently around $750 billion dollars, with business process outsourcing being the second largest sub-segment of that market.  The BPO side of system integrators is fast growing and for some companies, twice as profitable as the larger “turn the screw” traditional segment of outsourced IT.  Not only is this a large market, but it is still rather untouched by the advances in communications enabled business process.  The real question for carriers is “In this segment of the market, how can we extract our fair share of revenue?”

Q: So why is it so hard to extract value out of this data? The ability to the do the doing has been around for a while.

A: I disagree that we’ve had the ability to do this for a while.  To extract value, we need APIs that we can access the data, a mechanism that allows us to access that API outside of the carrier walls, technologies that make it relatively easy to create those applications in the enterprise and the mind to do it.  I would argue we have three of four now, and we had none of it five years ago.

Q: Every operator (and their dog) is talking about opening APIs / SDKs for ISVs like you. Would you ever work with just one? What would dictate who you and who you don’t work with?

A: Woof.  That’s a fantastic question.  I’ve worked with many, and it typically happens that when I arrive, the application, the customer and even the carrier is selected due to past decisions.  About a year ago, I did some work on with an API on one vendor’s equipment after doing a project with a different vendor’s API, causing them the first vendor to send me a really nasty letter.  Really caught me off guard.  One overwhelming thought I had was “How can you really expect anybody to program mashups to just one API?”, and the answer is “you can’t.”  Here’s the consumer analog : you can only call other people who use your carrier.   I’ve touched everyone else’s API since then, trying to leave goodness with each of them, but unfortunately not theirs.   So, even though I’m fine working on anyone’s API, and fully expect to, I suppose some segments of the market have a different opinion on that.  Today, most APIs have their pluses and minuses, and when I get to pick, I try to match them up right.  For machine side work, I encourage you to look at Jaduka. Got a web site? Check out IfByPhone.  Adobe? Ribbit… and so on.

Q: Are the operators going to make it easy enough to get the innovation from the developers?

A.  I’ll just say that I am soooooo amazed with Apple and how they pulled off the iPhone marketplace with the cooperation of AT&T.  Simply amazing, and I suppose you need a superman like Steve Jobs to get that done.   Now, that said, BT, Orange and Deustche Telekom are doing a great job at working with their developers as well, so it’s possible, but I think it takes a lot of effort and a bit of luck.

Q: How do you ensure the quality of the customer experience is maintained in open source api model?

A.  In time, I think it will be evident that you can’t ensure the quality of the customer experience without open source approaches.   Would you really want to deal with technology that’s well tested and widely used?

Q: Enabling the APIs increase the cost, need investments, operators have a more limited market but we can terminate a call in any market.

A.  Perhaps, and if you’re simply focusing on termination of calls, then you’re right.  My advice, start answering the larger issues of integration, smarter termination, etc.
Q: How is the resulting privacy issues addressed?

A. That’s actually quite simple, I think. iPhone customers show that they are willing to share their data as long as you ask and that they see some value to it.  If you never ask, and there’s never any value that the customer can see – you deserve the problems you create.   There’s an amazing amount of value that can be provided if you simply ask for permission.
Q: Are Voice 2.0 apps predominantly driven out of a data or Web context rather than a voice context?

A: I say they are predominantly driven out of an applications context, and rarely out of a voice application context.  The fact that they are delivered by one mechanism or another seems to be un-correleated.
Q: There are ways to answer the q ‘is my customer at home?’ e.g. using Wi-Fi or fem to cells or GPS. But we lack APIs both on the network & on the devices. There also needs to be an alert mechanism for ‘tell me when my customer gets home’.

A: Yes, there are ways of answering that, but no standard way for developers to access it, and no standard business approach to monetize it.  Need that.
Q: How do you change the culture for making the business case?

A: Successful business cases.  See VoiceSage for details. I do.

Far from facing extinction, I firmly believe that Telcos have a bright future, and if you are interested in innovation, and in moving communications forward, you simply must include the Telcos in your ecosystem and value chain.

I’ll wait a minute while you catch your breath. For those of you in the United States: if you have pains running up your left arm, please stop reading, grab that evil corporation supplied phone, and call 911.  And, as I’m sure somebody is thinking, I didn’t have a stroke myself. At least, I don’t think I have… my speech is always slurred.

Earlier in the month, my friend and respected thinker Ken Camp posited that Telco 2.0 was a flawed delusion, and I cried foul. (OK, I cried bullshit – and all I’ll say about that is that I won’t hesitate using that term with my own wife, so Ken’s in good company.  Ok – that’s not true either- but only because she’s within arm’s reach and takes Karate.  If she lived on the other side of the country and was not trained to kill geeks like me, I would call bullshit. But I digress.)  In short, Ken’s assertion was that Telcos are a doomed industry, and it was nonsensical to believe that a doomed species would evolve into something better.  Ken further suggested that the points that social media required were exactly what a telco could not provide, and since future communications was based on these principles, the closest analogy to operators were dinosaurs, and they were on their way out.  I blew up, not because I disagree with Ken about how our market should change, but because I believe Ken disregards some fundamentals, because I don’t think that telcos needs the ability to change with the times (no complex organization, biological or not, actually can) and because I’ve been recently memorizing (literally) Richard Dawkin’s excellent expose on evolution (The Selfish Gene) and Nicolas Carr’s future vision of technology (The Big Switch).

In fact, I have come to firmly believe that telcos are a lot closer to enabling communications innovation than I, and probably many, have understood in the past.  That’s not to say that the traditional carrier will be free from change, nor to deny that we will see a different set of players in the future, but instead to say that the essential role of the carrier is safe and sound, and will be for a long time to come.  It will be up to today’s carriers to make those changes (or not) which will benefit their future selves. There’s no doubt that in my mind, some will make these changes – and many others will not.  However, to believe that, as a whole, carriers are doomed belies the facts, and in the coming years, they will most certainly become what we today identify as Telco 2.0 providers.  Why?

• Communications as a Service: As Nicolas Carr posits in his recent work “The Big Switch”, one undeniable trend is that we our outsourcing our applications into the network.  Even the casual observer must admit that the desktop is not where innovation lies, it’s the browser, and for very fundamental economic reasons.  Just like mill owners who abandoned mills powered by waterfalls in favor of mills powered by electricity, the economic advantages of hosted solutions are undeniable, and now in the face of so many successful hosted services, such claims are externally verifiable.  Only something that looks something like a Telco can run applications such as these at sufficient scale for mass market adoption.  For those of you who aren’t bellheads, I want to call out that running an application at scale is a larger issue than simply an efficient network: it requires billing, operations and support.  Smells like a carrier to me.
• Own the Customer:  What’s the hardest thing to acquire? Ask Vonage for the answer: the customer.  Name another set of companies that’s convinced the entire adult population of the civilized world to fork over $30 bucks a month for a renewable resource.  Right – there isn’t one.  Seems like something that any industry would want, but no one’s even close. Why? Don’t over think it -  no big thoughts required.  It’s because it’s hard to do.  The carriers have a trusted, billing relationship with every single adult who can afford it, and no other set of companies does.  Here’s a direct example: I’m happy for Ooma’s recent success, but I remain skeptical that they will in any way solve this fundamental customer acquisition problem.  When, at first, I criticized Ooma, CEO Andrew Frame called me up. He hung up rather quickly when I asked him how Ooma would solve this problem when Vonage was not able to.  Still waiting for an answer to that one.  Facebook is viral because it doesn’t require the establishment of a billing relationship and doesn’t require custom hardware.  Try as you might, it’s hard for phones to be viral.  Skype’s as close as it gets.  Worse yet, for the same reason Facebook is unlikely to be displaced, try setting up a parallel PSTN.  The first customer will be pretty lonely.  In videoconferencing, the joke was that I bought the first videophone, but I had no one to call.  Even the jump from e-mail to phones has been problematic, as we are conditioned to identify on E.164 phone numbers.   Habits are hard to break.  “Yes, Mom. Call my e-mail.” Thus, the carriers have a very valuable, hard to replicate resource: a billing relationship and a functioning discovery mechanism with every single adult on the planet.  Who’s got that? Carriers. Anyone else got that? Nope.
• Data : This billing relationship brings forward another colossal advantage of the carriers: data. The carriers know so much about their customers: who they talk to, where they travel, what phones they carry, their credit score, etc.  As we come to a place where “doing” is very easy, the way we can sustain value and innovation is through the collection and use of data. Google is simply an organization that monetizes hard to replicate data.  Let’s not forget that the front door to the Internet is exclusively provided by carriers, so not even providers like Google have a seat closer to customer behavior. What do you call an organization that knows more about you than you do? Yup. A carrier. In the next century, as any social communications pundit will tell you, the game is in using this data for value creation, and no one (literally) knows more than those “brontasauri” we call carriers.
• Legacy : When I was the software architect for the very first commercially available ADSL chipset, you should have heard all the criticisms lobbed at us from the industry.  We were counted out – we were counted in.  Some was on target; most was just wrong.  At the end of the day, one datapoint dominated: it’s a very big world. Those that said DSL will be universally available were wrong, because there were simply too many lines out there, and you couldn’t light them all.  Those that said that DSL would be a failure were wrong, there were simply too many places where DSL made sense, and today there are hundreds of millions of DSL lines in the world.  (And as a man who still owns unregistered shares of Aware, I thank you.) There are thousands of carriers servicing billions of customers, and very, very few of those customers are in a position to arrange for their own basic communications needs. They are going to outsource it to a large organization (fundamentally so, if only because of Metcalf’s Law ).  You can call those large communications companies something else other than carriers, if you want. I think I’ll start calling roses “smelly plants”.  What will your inner Bard call them? I insist it won’t matter in any practical way.  And look Mom  – I never even mentioned the word “regulation”.
• APIS :  We’ve seen the shift that Carr identifies in the Big Switch a few times in the computer markets, as we’ve gone from mainframes, to minis, to desktops.   The major market force here was control: the desktop allowed us to control our applications and experience better.  If this was true then, isn’t it true now? Why are we giving up that level of control? Web services APIs allow the users, the casual developer and the serious business concern to control the functionality and data from a web based application, satisfying this requirement. In fact, unless you had a really good application on hand, and specialized skills, even desktop applications aren’t as controllable as Web 2.0 applications are.  It’s too bad that carriers haven’t caught on.  Oh – wait – they did. Orange, BT, Deustche Telekom, Vodafone, Jaduka, IfByPhone, Intellipeer, Voxeo, TellMe and Angel have APIs, along with hundreds and hundreds of other larger companies. APIs are here to stay, folks.  Providing a functioning API at scale requires operational excellence… and who do you think will do that?  Is there are a better word than carrier? Fine – we’ll use that.
• Viable Models:  This is the sticky point, no?  Isn’t how we got to this place because carriers were the only ones to provide applications, and because they were so big, slow and far from a customer, they simply couldn’t get of their own way? If we are on the cusp of a brave new world of applications, who’s to provide them? From where I stand, I think the jury’s ruled on this one.   The answer is that the carriers provide them, but they don’t write them.  The iPhone store shows us the future in spades. AT&T and Apple provide the customers, the channel and the billing, the platform and the API. Not the application. Applications are written by schmucks like me, using the APIs provided, allowing for a win-win-win for the carriers that sell them, the developers that write them and the customers that use them. This model depends on the carrier to provide the marketing, the platform, the billing and most importantly the customer. Something they can do, and something they can do well. The application developers need the carrier. Something they can do, and something they can do well. The users need the applications.  Carriers don’t leave, go away or die.  They have just learned their place.

These points keep the future of the carriers bright.  Carriers of the past weren’t that far from robber barons, and I actually expect some level of this behavior in the future.  But, and this is really important, it is simply not necessary for carriers to understand these issues and react to them. Evolution absolutely does not depend on intelligence to work. It depends on changing environments and variation in organisms and organizations. Giraffes did not get together a million years ago and decide to grow their necks. Some had longer necks: they lived longer and had more offspring. Others didn’t, and the population progressively, brutally and unstoppably changed until all the short necked giraffes were dead.  As Dawkin’s the Selfish Gene details, all organisms can be viewed as survival machines for the genes that live in our cells.  Genes don’t think, feel or have intentions.  The reason that we have our particular set of genes is because of all the possible gene combinations, the ones in our cells have been the most successful at replicating themselves.  Why is that?  Dumb luck, people.  Some carriers will be successful in adapting to a more open environment, other’s won’t. But some will, and those will most likely look like Telco 2.0 companies.  However, remember that evolution is absolutely unavoidable and absolutely provable, but it takes time. A lot of it.

Let me close out with this: VoIP is certainly not dead, but we certainly called it wrong. I predict that social communication pundits will call it wrong again if we don’t learn our lesson. We as a species are doomed to understand backwards, yet live forwards.  We expected that VoIP would usher in a new world of applications development, but we were disappointed.  As a man who worked on the very first VoIP protocol, I can assert that no one that I met actually designed it to enable voice applications.  We were trying to get two heterogeneous multimedia terminals to negotiate, setup and control a call. All this VoIP stuff happened afterwards; we were not looking to change the applications development world.  SIP was not designed with voice applications in mind; it was designed to create multi-media sessions in an Internet architecture. It’s a long trail from streaming a concert to being the platform for applications innovation.  In contrast, web services APIs were designed to enable applications to be written based on loose couplings of data and services.  Thus, we should expect success now, right? Well, I hope so – but what am I but a survival machine for my genes.  I’m skeptical that we’re calling it right now, as our track record is spotty at best.   However, I do know that I can be a fairly accurate weather man by simply predicting that tomorrow’s weather will be just like today’s.  In the same respect, I reject the notion that carriers are gone tomorrow, for reasons fundamental and simple.

I see that it’s snowing outside.  Just like yesterday.

Since Ken Camp’s post calling Telco 2.0 a flawed delusion, I’ve been ruminating on his premise and his arguments surrounding them.  After resisting the first impulse to respond, I finally succumbed after reading Rich Therani’s commentary.  In particular, this is where I sort of checked out of Ken’s argument:

I find the idea of Telco 2.0 an anathema to good business sense. I know
the carriers all want to be Telco 2.0, but why? If I extend my Yucatan
event analogy a bit, the Mastodon was simply Elephant 1.0. It’s gone
and pretty much forgotten, but why on earth would you aim to become
Elephant 2.0, the pachyderm that’s shrinking in population today? To
what end? Why would you aim to become a slow, lumbering beast of burden
that’s faced with extinction on the horizon?

And I really hung my head with

… it’s time to recognize that the entire construct we call a Telco is simply not relevant to society, business or the world today. Those companies aiming to become Telco 2.0 are already doomed
because the worst thing that can happen to them is to hit the mark.
Imagine the agony of working to achieve prehistoric ignominy and defeat
at the jaws of a fierce new predator that’s smaller, faster, more
adaptable and built to evolve.

The real question I’m facing right now is how do I accurately express an emotional truth without profanity, because this is simply bullshit. I’m all for future communications (obviously), but let’s step off the moon-bat bus for a second. Let me get this straight, telecommunications, a two trillion dollar market, indisputably critical to every single civilization and citizen thereof on earth and delivered nearly exclusively by telco’s is not relevant to society, business or the world.  Sure thing. Makes sense to me.

Or perhaps the point was that the Telco’s natural tendencies towards control and closed gardens were not well suited for social media….

Five words that do not describe telecommunications or the telecom
industry – Participation, Openness, Conversation, Community and
Connectedness. The industry, the whole construct of that framework is
to control four of those by ensuring there is no community in the first
place. To embrace community is not to become Telco 2.0, but to create something entirely new.

Fine. Here’s a suggestion – why don’t we all put our money where our mouths are, and in the name of social media, do everything we can to avoid the telecom industry.  All of us in social media should promise to never use cell phones, the internet, wireless, or anything else provided to us from that evil, horrible thing called the telco. And, just in case a bit should go awry, let’s disconnect our computers from the local network, because it’s a fine line between LANs and WANs. No sense risking it. Utopia is right around the corner.  (As a side note, I’m sure that everybody reading this is at least somewhat comprimised and feels in their gut that there’s an upside to operators, because I’m using the INTERNET to publish it, effectively excluding all potential readers that feel that it’s not relevant to society, business or the world today.)

Go ahead and hate Telcos if you want. Hate them for reliable services. Hate them for the revenue they generate. Hate them for the jobs they create. Hate them all you want.  Thank god all of the really great social media communication efforts like Twitter, Facebook and Jaiku have nothing to do with those evil corporations.

Telco 2.0 refers to a new and expanded role for telcos by opening up their network resoures for developers, and in my neck of the woods, I work on Telco 2.0 by using APIs to accelerate and reduce friction in the business proceses.  Now over nearly a hundred projects, I’ve found that my customers save money, time and even lives.  Well, if the worst thing that happens to me and my Telco 2.0 customers is that we hit the mark, and realize the $750 billion dollar Telco 2.0 opportunity, I’ll just have to spend my old age trying to understand how something so irrelevant and doomed made so much a positive difference to all concerned.

Oh yeah, I hear VoIP’s dead too. Darn it, just when it looked like it was going to represent the large part of international termination minutes, we have to rip it out and go back to TDM? What a pain that’s going to be! And what about the majority of PBX seats? Aren’t they VoIP too? Man, I really hope somebody somewhere rethinks this stuff. Telcos are done. VoIP is done. Maybe the Internet is next.

I think I’ll just go home. The world’s gone crazy on me.