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The disruption potential of VoIP lies not so much in its ability to push down the cost of telephone service than in its ability to get consumers to ignore the telephone business altogether. The nature of the Internet makes VoIP advantageous even after the cost of plain old telephone service goes to zero. For while the network determines all the essential features of traditional telephone service, from audio quality (low) to addressing (telephone numbers), the Internet asserts few constraints on VoIP services or devices. Thinking of communication solutions as an extension of the web and implementation as hosting can help break the grip of the telephone myopia reflected in most VoIP business plans.

Framing the value of VoIP as replacement for traditional telephone service makes interconnection with the telephone network seem essential, but VoIP enables communication solutions that go beyond the
“telephone call.” Think of it as viewing the telephone itself as a more efficient telegraph. The infocom industry needs to unleash new demand associated with new services. A transformation from world wide web to worldwide communication requires interconnection among VoIP providers, not the telephone network. The unwillingness of Vonage and Skype to interconnect with other VoIP providers makes no more sense than Yahoo imposing on users a proprietary browser that can’t be used to access any other sites on the web.

The voice quality of a telephone call remains inferior to even an AM radio broadcast. Low fidelity loses much of the character of voice necessary to convey mood or subtle meaning not contained in the words themselves. A telephone call remains a poor substitute for meeting in person, but demand for high-quality audio still requires an industry wide market push, as in the effort that won HD video momentum. Improving voice quality remains off the table as long as the value of VoIP requires interconnection with the telephone network.

None of the means used to navigate the Internet have analogs in the telephone world. Web site visitors can arrive by entering a URL into the browser address bar. The relative ease of remembering domain names vs. telephone numbers is difficult to dispute; a significant portion of web site visits are the result of people guessing the URLs. And compared to web search engines, both the online and offline versions of yellow pages offer very weak functionality.

Absent a requirement to connect with the telephone network, VoIP implementations can support click-to-connect and flat-rate global connections. The problem is finding a path to critical mass. The rapid growth of the web after the emergence of the browser in 1991 followed the addition of click-to-connect functionality to flat-rate global connectivity associated with Internet. The web browser set in motion a virtuous cycle of growth as expanding content attracted new audiences and audience growth attracted new content. The same process could play out with a worldwide communications model that combines click-to-connect addressing and flat-rate global termination — neither of which can be found by interconnecting with the telephone network.

Daniel Berninger is the CEO of Free World Dialup

A growing number of people expect mobile phones to emerge as the dominant means of Internet access for the 6.6 billion people on Earth; as proof, they point to the 10 percent of the 2.5 billion handsets in circulation that already include such access. But there exists a flaw in the mobile phone-as-path-to-Internet-ubiquity theory in that telcos generate the majority of their revenues from voice services that the Internet threatens to make obsolete — like a power company that makes most of its money through a monopoly laundry service that at-home washers and dryers have the power to put out of business.

In fact, given carriers’ efforts to excise voice functionality, it’s the Internet that seems unlikely to survive, much less prosper. Carriers routinely require device manufacturers to handicap handsets, for example, to remove Wi-Fi functionality in order to make it difficult to bypass voice plans. Another example is that of Apple and AT&T, which require iPhone customers to purchase both voice and data connectivity (i.e. laundry service and power) — a policy that’s even enforced for deaf customers with a doctor-certified inability to speak or hear.

Low cost or free voice functionality helps drive demand for Internet access, so it hardly seems a good idea to sacrifice voice in order to get mobile phones with Internet functionality. The way forward requires making the Internet more useful for connecting communication devices, not less. For example, addressing the three issues below would go a long way toward creating an Internet for devices that competes directly with carriers for mobile phone users:

• Close the ease-of-use gap between configuring session initiation protocol VoIP devices like the Linksys WIP330 IP Phone (a.k.a. “Cisco’s iPhone”) and the provisioning process for cell phones. The former remains sufficiently painful as to exclude everyone without an IT department or geek credentials, but the telcos cannot stop the 100 or so manufacturers of SIP devices from agreeing on a common provisioning mechanism.
• Unify the addressing of all SIP-based devices. The insistence on proprietary screen names and unwillingness to peer leaves real-time Internet services like instant messaging and VoIP mere islands of communication. Even the millions of users claimed by AIM or Skype are meaningless vs. the 3.3 billion wired and wireless phones addressable by telephone number. The secret to carriers’ ability to generate in excess of a trillion dollars in revenue from voice services is interconnection.
• Eliminate the user intervention steps necessary for wireless device connection. Connectivity should get addressed as a matter of reception, as in the case of mobile phones or even FM radios, not by presenting users with lists of Wi-Fi access points. It seems like there must exist automated solutions for picking and connecting to or disconnecting from Wi-Fi access points.

Initially, electric power generation companies were application-specific, which resulted in incompatible voltages and infrastructure being used for everything from street and residential lighting to industrial applications. The decision to abandon the link between application and power generation unleashed an explosion of devices offering the tremendous range of productivity and entertainment options we take for granted today. When it comes to decoupling the connectivity and application, the nature of the Internet makes it possible to create mobile phones with CD audio quality. The Apple iPhone’s elegance does not change the fact that basic voice quality remains unimproved since mobile phones first arrived 25 years ago. The mobile phone companies see the Internet as a threat, not an opportunity.

Daniel Berninger is the CEO of Free World Dialup

The big buzz of the evening is that Twitter, a San Francisco-based startup that allows anyone to post short (up to 140 characters) messages to its platform and thus broadcast them to one or many using different media such as web and mobile, is about to acquire Summize, a Potomac Falls, Va.-based startup that uses the Twitter API to search and find relevant messages on Twitter.

The rumors of the deal were first reported by a little-known blog (not anymore, of course) by Josh Chandler. Subsequent to the news, I made a few phone calls and did confirm that it is not just a rumor and a deal is certainly in the works. It is likely to be announced as soon as next week. I’m still trying to dig up the financial details and will report further when I get hold of them.

The deal would be a good move by Twitter, and would be putting some of its recently acquired $15 million in VC funding to decent use as it would help the company get hold of of a business model. Here is why. Most people think of Summize as a Twitter search utility, and it is a mighty fine search service. It is so good that there are nearly half a dozen other startups using the Summize API. At first blush, it seems like Twitter could bolt on search on their platform and make it more useful. I think it would be thinking about Summize in a limited sort of a way.

“We monitor collective attitudes being expressed right now on the web,” is how Summize describes itself. In other words, it can quickly look at data coming from conversational sources — RSS feeds and Twitter tweets — and offer a quick opinion as to what is being talked about. For example on this page you can find out what people really think of this deal between Summize & Twitter deal. All the data is coming from the Twitter stream.

In a conversation earlier this year, CEO Jay Virdy, formerly of AOL, told us that they had developed a way to geocode public timeline tweets (short messages). This allows one to find out what people are saying about John McCain in Phoenix vs. San Francisco.

In other words, Summize has come up with a clever way of peering through Twitter’s vast data stream and finding out what’s hot, where and how. The results are essentially keywords — topic-, person- or location-based — and thus can be used to show contextual advertising next to the pages that show these results. Summize has thereby developed an ability to monetize conversations without being intrusive.

Summize could have easily done this on its own and started to make money. It would surely need to compete with Twitter for attention and figure out ways to keep generating more traffic. Instead, if Summize is bolted onto Twitter, that can help the tiny startup get instant traction.

Just as AdSense serendipitously turned Google into a giant cash register, with Summize, Twitter can take the first step towards a business model. Of course, Evan Williams & Co. have to quickly figure out a way to fix their patchy-at-times service before everyone decides to switch loyalties to one of the many Twitter rivals currently being plotted by clever minds.

P.S.: Since Twitter doesn’t want to charge me for having too many followers, and it doesn’t cost me anything, go ahead and follow me on http://twitter.com/om. Not that you are going to read the tweets anyway :-)

P.S.#2: My jet lag has finally hit so if you notice errors/mistakes, please excuse my tardiness. I will rectify when I wake up.

Session initiation protocol-compatible VoIP devices already account for as much as 20 percent of landline telephone traffic, thanks to the efforts of companies like Cisco, which sells to enterprises, and Comcast (in the U.S.) or Free (in France), which target consumers. Mobile telephones will not remain a safe haven for long, however, as more companies like Fring and Truphone start to offer VoIP alternatives to operator voice plans.

Such plans involve downloaded SIP User Agent software that can also voice-enable gadgets like the Nintendo DS, Sony PSP or iPod Touch. Dan Borislow claims the marketing blitz for his SIP-based magicJack puts him on track to sell 500,000 of the devices by the end of this month. Yet the displacement of analog phones by VoIP devices has not displaced the telephone network itself.

The state of affairs is analogous to printing email before it reaches the destination in order to preserve a role for the post office. It will not last. The ubiquitous use of SIP makes it possible to configure VoIP traffic to peer directly via the Internet, but the business models of VoIP companies depend on the minutes-based charging enabled by the telephone network. Companies like Skype and Vonage, as well as the Web 2.0 voice plays Jajah or Jaxtr, provide for free calls between users, but they all generate revenue by sending off-Net calls to the telephone network.

The 20 percent VoIP penetration number implies that both called and calling parties have VoIP devices about 4 percent of the time. This leaves plenty of work for the telephone network, but the long-term utility of passing VoIP traffic through the telephone network does not look promising. At some point, the penetration of VoIP devices will cross a threshold that makes the minutes-based business model of telco and VoIP players alike untenable.

The strategy of using VoIP to make the telephone network more efficient has short-term merit in that it avoids the expensive process of changing end user behavior. The usual mode of price competition serves as a reasonable placeholder until VoIP devices get sufficiently mature and achieve critical mass. A regulatory environment that requires VoIP players to implement traditional functionality associated with E911 and CALEA contribute to preserving the status quo. In the meantime, patent litigation remains a drag on investment capital, and the availability of suitable Internet connectivity remains particularly weak in the mobile context — Internet access in any form remains an obstacle in many locations around the world. Reliability gives the telephone network an edge over the Internet for sales calls and other high-value communication.

Telephone network integration may provide a useful transition strategy en route to VoIP nirvana, or it may represent a unrecoverable dead end for the current crop of VoIP startups. Companies that depend on the telephone network inherit of a range of artificial constraints. VoIP devices connected via the telephone network lose the prospect of delivering high-quality audio. Traditional telephones do not support the use of domain names for routing or hyperlinking. Global flat-rate termination that serves as a driving force for applications of the Internet get sacrificed. Embracing the telephone network postpones the search for new forms of communication.

The dependence of VoIP plays on the telephone network does not erase the risks VoIP poses to the telco status quo. At this point it’s not even clear if there exists a role in a VoIP infocom ecosystem for traditional service providers. The metered usage charges that make the telephone network attractive from a business model perspective do not exist in an Internet context. Infocom seems likely to mirror the existing infotech bring-your-own-device ecosystem with hardware vendors, software companies and access providers. It will take at least another decade for the forces at work to play out, but this provides little consolation for an industry that traces its roots to 1876 and telco executives unable to retire before the music stops.

eBay and by proxy Skype wants to do just more than IM and voice chats. And that is why they’re pushing the service, and its clients, into new directions — from telepresence to video to whatever they can think of next. (My inner skeptic says they have to keep that user base growing in order to spin out or sell Skype.)

According to NewTeeVee, Skype today signed a new deal with San Francisco-based Jaman that “will let Skype users insert film clips into their conversations to share with friends. The new service will be available on Skype over the coming months.”

The way it’s supposed to work is this: There will be a video button added to the bottom of the Skype client, between the green and red call buttons. That will invoke a window where you will be able to share clips and trailers with as many people as you like. By doubling-clicking on the clip you’ll be taken to Jaman, where you can rent or buy the film. But while I unequivocally love Jaman — its wide array of foreign films helped me through my recovery process, especially when I couldn’t blog — I’m not sure many people would use this new feature.

That said, video on Skype is seriously hot. I was talking to one of their PR people last week and she told me that 28 percent of Skype calls are video calls, proving that video calling is going mainstream much faster than even my best guess. The Skype people, however, think it recently got a big boost because of Oprah.

Oprah has integrated more than 25 Skype video calls on her TV show in the last eight weeks. (Check out how Oprah is using Skype to chat with Jenny McCarthy.) But Skype doesn’t have a lock on the video chat market. A startup called ooVoo in New York launched a video chat service last June that’s connecting over 2 million video conversations per month. It’s now working with laptop maker Quanta to bring HD chat to computers and TVs. Of course, most PCs now come equipped with webcams — indeed, calling and seeing family is one of the most important things we use our computers for now.

A single commodity hard disk is fast on its way to being able to store every song ever recorded;* a close examination of how the rapid improvement of storage technology might apply to communication, therefore, is long overdue. Consider email, where the retention of messages enables the threading of conversations by recipient, subject and date. For while recording telephone calls usually means government wiretaps, the merits of a communication archive from an end user’s perspective deserves some consideration.

Few over the age of 25 will like the idea of creating a permanent record of telephone calls and other forms of communication, but the discomfort of mature adults can represent a counter-indicator. Plus, it seems safe to assume that people can distinguish between government (bad) and personal (good) uses of recording technology. Communication archives will require strong privacy tools and a reliable delete function, but an argument against a permanent record is an argument against communication. After all, people avoid email in some contexts, but no one proposes eliminating email archives.

The retention of telephone numbers for calls dialed and answered represents an important feature of cell phones. A record of the content of a call could provide a similarly rich resource. The ability to play back a conversation could improve understanding or resolve disputes the same way as re-reading an email can. Voice conversations might get forwarded or included with a reply. Search technology could be applied directly to the audio or after a speech-to-text conversion. An accumulated body of communication would represent an important source of information and a treasured asset in the same manner as email and traditional letter writing.

Unified communication and messaging efforts seek to converge diverse modes of communication into a single stream, but the ability to link all forms of communication by subject, time and recipient may prove to be more useful. Conversation threading might work something like CRM for personal relationships. Tristan Louis offers a detailed wish list in his blog post describing a Personal Relationship Manager. Importantly, trust and the inflexible nature of the telephone network make AT&T et al. poor candidates for implementing conversation threading. The challenge is far better suited to the Internet-enabled communication tools of the emerging infocom industry.

How recording might alter communication behavior remains to be seen. The fact of a permanent record may improve the prospect for civil behavior or it may not — that certainly hasn’t proven to be the case for email. There exist laws regarding the recording of telephone calls, but the extension of off-line laws to an Internet context can prove hazardous. Efforts to implement conversation threading might give rise to an entirely new category of communication, as different from traditional telephone calls as email differs from writing a letter. And the utility of conversation threading may prove greater than the discomfort associated with recording telephone calls. Regardless, there is ample room for improving the communication status quo.

* 4 terabytes holds 1 million, 4-megabyte song files — the equivalent of 20,000 recorded songs each year since the arrival of record labels in the 1950s.

About two months ago, I wrote about my decision to get rid of my land line and rely strictly on my cell phone — with its unlimited plan — for my voice needs. It was a mistake. My social network (namely in the form of my mother-in-law) couldn’t take it, so my husband and I capitulated and returned to AT&T for a basic land line with no frills for about $20 a month.

I should note that when we lost the land line, neither my husband nor I really noticed. There was one awkward moment when I had to send a fax and realized I couldn’t unless I went down the street to the grocery store, but other than that, I never missed the cord. My mother-in-law, on the other hand, a wonderful woman who still carries around a copy of the Yellow Pages in her car for when she needs to look up a number or an address, was very uncomfortable with the idea.

Since she regularly comes over to watch our daughter, and never charges her cell-phone battery, I saw her logic. And it got me to thinking about babysitters in general, and the possibility that we may one day hire one who didn’t have a cell phone (hey I suppose it could happen). More likely would be a case of bad reception, but if that coincided with any sort of emergency, they’d essentially be left incommunicado. It just seemed safer and easier to keep a cheap, dedicated land line.

To me it’s an important reminder that technology is essentially about linking us to one another (and being able to carry 10,000 songs in a gadget smaller than a cigarette case). To really make it work, your friends and family have to participate as well. That’s obvious on a social networking site, but less so when it comes to hardware and networking. For when I tried to cut the cord, my family wouldn’t let me

photo from wikiHow

Jajah, one of the many callback service providers, is slowly trying to transform itself into a voice platform, offering others the ability to use its network and back-end billing and fulfillment infrastructure. It struck up a partnership with Jangl back in November 2007. This managed services focus seems to have gotten a big boost, thanks to a deal with Yahoo. Yahoo and Jajah share a common investor: Sequoia Capital.

Jajah co-founder Daniel Mattes tells our friend Alec Saunders that Yahoo will outsource voice services for their 97 million Yahoo IM users to Jajah. Mattes says it now has 10 million users, about 8 million of them joining Jajah over the past 12 months. I guess if you include widget users and people using services on other networks, the 8 million additional Jajah users starts to make sense.

If Yahoo is turning to Jajah for voice on IM, then AOL wants to offer others an ability to integrate AIM Call Out service via its Open Voice APIs into softphones, as well as SIP-enabled hardware and cell phones with Wi-Fi connectivity. AIM Call Out is a pay-as-you-go outbound voice calling service built right into AIM.

Jajah, AOL Open Voice, Ribbit and scores of others are taking a platform approach to VoIP, hoping that adding voice to applications will drive up minute volume and turn them into a viable business.

Freeswitch has been quietly growing in both popularity and stability, not as a direct competitor to Asterisk, but as a fully featured, carrier-grade Softswitch. Get the full lowdown on Freeswitch over on Ostatic, our open source blog.

The declining relevance of telephone directories erased 95 percent of publisher RH Donnelley’s market capitalization over the last 12 months. Although Google’s free 1-800-GOOG-411 service may attract some share of the directory assistance business, the crux of the problem lies with the diminished standing of wired telephones in an increasingly crowded communications landscape. The demise of paper directories does not, however, mean there exists a clear alternative to accommodate the growing list of communication coordinates most people juggle. A “social directory” created by merging the telephone directory with the social networking model may provide a way forward.

Given the open-ended nature of the information that gets indexed, search engines remain poorly suited to the task of finding contact information. Success depends on a cleverly structured query; search engines do not, after all, distinguish contact information from other types of information. But while a directory with a relatively finite and narrow data set (e.g. contact information) would greatly increase the probability of success, the process of creating directories still awaits an Internet upgrade.

The standard model for directories fails with respect to mobile phones, email addresses and instant messaging screen names. Posting the Yellow Pages online retains the same city and state search limitations of the paper directories, and the infrequent publishing cycle of directories becomes unworkable at the current pace with which communication coordinates get added and subtracted. Further, the growth in communication options makes it impractical to rely on a single service provider directory. What makes much more sense in our Internet-heavy world is a user-generated directory in which individuals own and update their own listing.

The lack of a directory for mobile phone numbers traces to the fear of unwanted calls. A directory that supports authentication along the lines of social networks solves this problem. Keeping your number secret and employing Caller ID are poor substitutes for actually controlling who can call you. The social directory could implement an invite authentication process like any other social network. People already include some contact information in their social network profiles, but a purpose-built social directory could offer additional communication functionality.

The social directory represents a far more elegant solution than that of spamming friends with requests to update contact information through services like Plaxo. The social directory could make a social circle accessible via clickable links while hiding the actual contact information. Rather than giving out a telephone number or email address to a new acquaintance, users of a social directory would associate their listing with keywords (such as “plumber” or “dog lover”).

As the number of communication options increases, so does the burden of managing contact information, yet Internet-enabled directory options remain lacking. Google’s 60 percent share of Internet searches gives the company both gatekeeper status in the information Internet — not to mention a rich market capitalization. However, Google’s revenue represents less than a third of what the declining telephone directories generate in the U.S. alone. Riches await the infocom company that achieves gatekeeper status for the Internet’s communications applications.

The web-to-mobile calling efforts are starting to get interesting. Last week Jaxtr talked about how it planned to make money by selling ads, and today Jangl launches its own ad efforts tied to a partnership with Pudding Media. The plan is to target pre-roll ads on Jangl’s existing voice calls and SMS messages by using location and demographic information provided in the profiles on various social media sites.

Jangl has already made money by selling the ability to receive calls without giving out a phone number on dating web sites, but the ad efforts are targeting bigger money. Jangl’s CEO Michael Cerda estimates the CPMs are around $30 to $60 for SMS messages ads, and around $10 for voice. Now that revenue is entering the equation, we should soon have less subjective ways to judge who is successful in this crowded market. Sales are a better metric than user numbers when it comes to figuring out which services will succeed.

RingCentral, a Redwood City, Calif.-based VoIP company, has raised $12 million in Series B funding, doubling the amount it raised in its Series A round. New investor DAG Ventures led the latest funding, with existing investors Sequoia Capital and Khosla Ventures participating as well. The company claims some 50,000 customers, making it one of the more successful players in the hosted VoIP sector. I was highly skeptical of RingCentral when it launched, but I guess there are 50,000 reasons why I was wrong. (I am going to post a long overdue review of RingCentral’s service later this month. )

The ingress and egress of executives at Skype has given us much to write about, especially the changes in the C-suite. Niklas Zennstrom (co-founder) left a few months ago and was replaced by interim CEO Michael van Swaaij who is now being replaced by Josh Silverman, currently CEO of Shopping.com, another eBay company.

Silverman faces some interesting challenges - he needs to figure out how to grow the revenues. Skype has seen a sharp increase in Skype-to-Skype minutes. He is making the right noises and is going to be moving to Estonia to spend time at what I personally think is the “heart” of the Skype operation. (Update: We are told this move to Estonia is temporary, about two-to-three months. )

I’m the new guy, and have a lot to learn. To really understand Skype’s cultural and technological DNA, my number one priority is to do a lot of listening and learning.