The Pulver Report: March 9, 2000 Issue

THE PULVER REPORT ™ :March 9, 2000 Issue

In this issue:

• Heard on the Net
• The Next "Killer Application": The Personal Service Creation Tool
• Y2K - The "Always On" Generation
• GPS over IP: The Car as an Anonymous Agent
• The Birth of the xSP Marketplace
• Observations from Min-X.com, The Minutes Exchange
• pulverradio.com: March 10/17/24 Shows
• http://slides.pulver.com - new pulver.com resource
• Recap: IP Telephony Executive Summit in Sophia Antipolis, France
• pulver.com Open Test Network at Spring 2000 VON
• Instant Messaging 2000: May 23-25 at the Hyatt Harbor Hotel in Boston
• VON Europe 2000: June 19-22 - Stockholm, Sweden
• pulver.com party on the FOOD NETWORK - March 19th at 09.00 PM EST

Heard on the Net

- People on the Move: The "Year of Transition" continued during the past month as a number of people have been switching jobs:

- Eric Sumner left Lucent and joined dynamicsoft as their CEO -

Dale Skran left Lucent and has joined Sonus Networks - Murali Aravamudan left Lucent and will be involved in a pre-IPO startup

- Andy Schroepfer left Piper Jaffray

- Sanjiv Ahuja has left Telcordia.

- Christian Huetima left Telcordia and has joined Microsoft

- Leo Hindery has succeeded Bob Annunziata as CEO at Global Crossing (Please email: people@pulver.com to report a change in your position.)

- Companies on the Move:

The VON(R) Industry IPOs from the class of 1999 continued to be some of the hottest stocks in February 2000. As Wall Street continues to discover the VON Industry, the number of additional pre-IPO companies in the VON space continues to grow. RADVision and Placeware recently filed their S1s. More will follow.

Global Crossing recently picked up IXNet and IPC for a deal valued around US$ 3.8 billion. IPC is a major supplier of turrets to the Wall Street dealer community and IXNet was launched by IPC to provide direct TDM communication between the Wall Street broker/dealer community members who were customers of IPC. It will be very interesting to watch how Global Crossing takes advantage of this new strategic asset.

A number of companies have recently announced funding activities. Some of those reporting include:

- MetaTel secured $6 Million in First-Round Funding Greylock Management and Matrix Partners led the investment in MetaTel and its new service which is set to add greater value to telephone communications through innovative use of the Internet. MetaTel is dedicated to "developing widely useful telephone services that will advance the ease and convenience of phone communications." ( http://www.metatel.com )

- Syndeo Corporation has raised $5 million in First-Round Funding Redpoint Ventures (formerly Brentwood Venture Capital) and ThomasWeisel Partners led the investment. Syndeo is developing products to help broadband local-loop carriers better manage, differentiate and profit from their service offerings as they evolve to next-generation converged voice-over-IP and voice-over-ATM networks. Syndeo Corporation will be introducing its Broadband Services System(TM), a family of Class 5 replacement/enhancement telephony applications and a softswitch platform for carrier-grade networks that combine voice and data traffic. ( http://www.syndeocorp.com )

- General Bandwidth raised $36 Million in First-Round Funding. Sevin Rosen Fundeds, Oak Investment Partners and Venrock Associates invested $36 Million in General Bandwidth. General Bandwidth is a new telecommunications equipment manufacturer that enables toll-quality voice services to residential and business customers across emerging broadband access technologies such as digital subscriber line (DSL), cable, and wireless networks. ( http://www.generalbandwidth.com )

- Vegastream Ltd. has been acquired by Pace Micro for £40 million. ( http://www.vegastream.com )

For up-to-date daily Industry news, please feel free to visit ( http://pulver.com/news ). If you have news you would like to see posted, please email: editor@pulver.com. To schedule time as a a possible guest on pulverradio.com please email: matt@pulver.com.

The Next "Killer Applications": The Personal Service Creation Tool

During the past few years the VON Industry has been in search of the "killer" application. To me there are a few "killer" spaces under development and I believe that combination of Instant Messaging and Presence Management will be a long term driver of increased call completion across networks - including the PSTN and the Wireless world.

Looking at the evolution of Intelligent Networks (IN), it is my belief the vision of IN will be delivered over IP. This is why I recently joined the IN Forum ( http://www.inf.org ) and why I accepted the opportunity to join the board of directors of the IN Forum and become a Vice President for the current term.

As IN/IP technologies continue to evolve, the ability to create new services will move from the service provider to the customer, enabling the end user to "invent" / build their own "killer" applications. If this is done right, this could become a major driver of new incremental minutes.

For example, I'm looking forward to the time when I can invent my own personal "soft call" waiting service where I set the parameters for times when two people who I know can call me at the same time. Another service could be my personal "Do Not Disturb" service where callers to my home get a pre-recorded message telling them that based on the time of day it is most likely that I'm sleeping but if they want to wake me, they could press 1 and knowingly disturb me or deal with the wrath of my spouse.

The rollout of Personal Service Creation Tools will put the power of the telephone network service creation into the palm of a customer. What I'm looking at is the effective transfer of power from the Telco Network where traditional CLASS features are being managed to a totally distributed environment where an end user of a carrier could remotely control the call flow and manage the state of the call via a web page, WAP application or IVR.

While the tools needed to make this happen may come from the "stupid network", many class features will stay in the network like Local Number Portability Routing.

When the power to create new services is delivered to the customer, this will represent a time in Telco History which could be considered the equivalent of "Telco Glasnot".

I am a believer in IN because it creates this independence. What I'm looking for is for this to make this a really open environment, so that customers will be able to avoid working with "Politbureau" Service Providers which would in effect push for an open interface for both the end user and the CLECs.

The challenge here is to create and deliver application development environments which solve the equivalent of the "Flashing 12" problem on VCRs for Telecom in advance so that customers have a direct incentive to come in and update their profiles for the services they are defining as part of their daily routine. If the application development environment isn't easy to understand and something which doesn't have a direct positive effect on the day-to-day life of the customer, this new feature/functionality will never be used and the positive effect of power transfer from the Authoritarian state to the people will never be realized.

Y2K - The "Always On" Generation

I've decided that my twin sons who are turning 6 this month are part of something which will be known as the "Always On" Generation™.

Service providers of today should be thinking about how to service the needs of tomorrow's kids (and parents) who learn to live on the Net and deal with the effects of living in a world in which speed is addictive and as a group we suffer from too much asynchronous communication.

My kids have been growing up taking streaming video on the Net for granted and they are part of the first generation using these technologies without first comparing the qualify of streaming video to broadcast television. Broadband to the home is quickly becoming a reality and this will have a direct effect on the way that our kids grow up.

In Europe the advent of widespread wireless penetration has created a new "coming of age" tradition - many kids are given their first cell phones when they are 11 or 12. By the time kids attend college they are not dependent on PSTN connectivity to their dorm room (since they have direct broadband access), and they are dependent users of cell phones and these days take advantage of SMS messaging on their cell phones.

I recently spent a week as a barefoot netsurfer in a hotel room in Palm Beach because the hotel provided a 10 Base T interface directly to my hotel room. My choice was having 24/7 shared T1 access to the net for US$ 9.95 a day or accessing the net via dialup at 16.8k (best connection I was able to get through the hotel PBX) and spending 10 cents a minutes after the first 30 minutes of any dialup session. For me this was an easy sale.

While some people may not consider being directly connected to the Net with an average 140 ms ping time to the office being on vacation, I was real happy that my telnet sessions made me feel as if I never left...which in turn made my staff feel that I never left since I kept on querying them while I was away.

The service providers of today need to get ahead of the curve to better understand what the requirements of servicing those living in an "always on" world will be.

GPS over IP: The Car as an Anonymous Agent

I recently had an opportunity to spend a few days in a car enabled with a next - generation GPS system which included a 5 inch display mounted in the dashboard of the car. While at first this looked like a gadget seen in game arcades or in driving simulators, the technology worked great and I still find it amazing that the car was able to track its physical location as well as it appeared to.

Looking at the operation of the map, while the feature set was cool, after thinking about what was being offered vs. what I believe could be made available, the functionality seemed a little limited because it did not try to establish a wireless connection to the Net to update the list of local restaurants which I was looking for.

Also the lack of traffic knowledge on the maps and no knowledge of road conditions meant that I was routed to roads which were under construction or roads which were very crowed during rush hour. Compare this to the fact that many TV stations report on road conditions as part of their local news coverage. To me this service has been a waste of airtime since unless I'm being driven in a limo and my driver is watching TV, nobody is able to take advantage of this real-time information being displayed on TV.

Now when we wire IP services to the GPS systems being deployed in truck and car, look for the establishment of the next generation American Automobile Association (AAA) except this AAA will stand for the Autonomous, Anonymous, Agent Network(tm) which cars and trucks enabled with GPS report back to a central server real-time observed road conditions to a central car traffic monitoring system and in turn would update real-time Road Condition MIBs on a car/truck internal GPS system.

I believe GPS systems will quickly evolve and will be able to add the needed intelligence to find and suggest alternative routes based on a real-time observed conditions. I'm sure we are not that far away from the day when the GPS system monitors my gas gauge so that the intrusive GPS voice of a car dynamically re-routes me to the closest gas station when it believes I need gas.

The Birth of the xSP Market Place

During the past ten years the Service Provider (SP) marketplace has been fragmenting.

The evolution of the Internet gave birth to the Internet Service Provider (ISP), the addition of telephony created the Internet Telephony Service Provider (ITSP) marketplace in 1998 and in 1999 we watched the launch of the Application Service Provider or ASP and the Free ISP (FISP). During the past few weeks of 2000, I've seen announcements for an Enhanced Service Provider (ESP), Virtual ISP (VISP) and an Advanced Telephony Service Provider (ATSP). In the future I believe we should consider referring to this space as the xSP marketplace.

I would not be surprised to learn that somebody has been grabbing all of the A-Z combination of domain names so they could sell them to the future market leaders in the future xSP spaces.

With the advent of the alphabeting of this new generation of A to Z type SPs, it is important to remember that the operate word here is Service. And being successful providing Service is not necessarily easy. Providing service is a challenge, even if you try to do via a portal.

While the web has enabled provisioning within the web site, anything that requires support, from customer care, to overnight shipping or on-line trading requires an ability to manage customers and their expectations. As the T for telecom gets mixed in to these acronyms, the need for provisioning is what makes providing Service a reality.

Providers of Service that intend to reach the customer directly and not as a portal need real time provisioning solutions. Some readers of The Pulver Report are focused on these problems in the cable / DSL space. The real issue is two fold. First is how to provision through multiple elements the service requested, and the second is how to configure the systems for growth requirements when capacity is a concern. This is a concern we would like to work on with the industry, so if you are interested in looking at this please email Carl Ford - carl@pulver.com.

Observations from Min-X.com, The Minutes Exchange

The Next Min-X ( http://www.min-x.com ) Dealer meeting will be taking place from 18.30 - 20.00 on March 27th at the San Jose Convention Center.

Stu Milberg (stu@pulver.com) recently joined the Minutes Exchange in January, 2000 as the managing director and is looking forward to meeting with the NextGen Telcos, Clearinghouses and Telecom Brokers attending Spring 2000 VON to help them with their business development activities. Stu joined Min-X after spending the past 7 years working on Wall Street at Cantor Fitzgerald Securities.

Based on our activities with Min-X, our observed International Phone-to-Phone minutes run rate was 175 Million Minutes a month in February 2000, giving us a 2 Billion+ annualized run rate which is up significantly from 35 Million minutes a month that we observed in September, 1998. Please keep in mind that these are observed minutes and it is quite possible that there are major operators who are operating in "stealth" mode so the international minutes marketplace may be larger than this observation.

>From the equipment perspective, the February, 2000 top Min-X equipment vendors are: Clarent, Cisco, Vocaltec, Lucent, Ericsson, Nurea and Netrue.

Looking at the composition of the current minutes run rate, the majority of observed minutes are "H.323 enabled" minutes. For those equipment vendors wondering how the VON Protocol Soup Mix of 2000 will be playing out, our suggestion is to build protocol agnostic equipment which allows your customers to effortlessly add/remove one protocol stack with another as MGCP, SIP, H.248/MEGACO enabled minutes start to grow.

To learn more about Min-X.com, or to become a Min-X Dealer, please visit ( http://www.min-x.com )

http://slides.pulver.com - new pulver.com resource

pulver.com has recently launched a new resource for readers of The Pulver Report and the delegates attending our events - ( http://slides.pulver.com ).

With slides.pulver.com - once you are registered with the server, you will have complete access to past and future presentations as they are added. By teaming with Elity systems ( http://www.elity.com ) pulver.com is now able to offer the first stage of the web personalization which pulver.com will be adding during 2000.

Recap: pulver.com's 2000 IP Telephony Executive Summit

During February 15-16 2000, Internet Telephony Industry leaders returned to Sophia Antipolis to spend two+ days discussing the future of the Internet Telephony Industry with a specific focus on the evolution of next generation IP-based communication services. Among the presenters were service providers implementing cable modems, data services company adding voice and traditional providers using the new technology.

Since the last summit, the audience and the concerns have moved up the IP Telephony "food chain". Last year we talked about the impact of MGCP in comparison to H.323. The discussants' rough consensus was that both served a purpose. That view was reflected, this year, by the universal view that we implement what is needed when needed. A trend of the discussion reflective of next generation work in wireless was the similarity in architecture, now at a point where the issues are much the same. Not quite to a point where they will be totally integrated, but moving towards that trend, including direct GSM over IP.

Other areas of concern that were being addressed in the market last year were also moving forward. Firewall concerns were making progress for those trying to implement off-net traffic for LAN - based VON services, and management concerns were being addressed with clarification on what really is required from a H.345 MIB to make the network elements have the same look and feel when monitoring traffic.

New to the discussion was that QoS was no longer a major concern. For most the view was that DIFserv was close enough that implementations could do well. But the protocol was clearly not as important as the commitment to manage service for quality. The implication is that managed bandwidth is handling the Voice Quality well, but VON on the Internet is not as far along.

The discussion of Instant Messaging and its integration yielded some interesting observations. One was that many implementations are in process, and many of them are incorporating SIP. This means that telecom IM includes divergence from present IMPP work effort to provide a TCP solution that is firewall - safe and email - friendly. This trend will be further explored at the Instant Messaging 2000 and the Summer 2000 VON Developers conference.

The Sophia summits are best described as a reflective time for the industry. While in the day to day we often spot trends, we rarely are capable of seeing progress. But the industry is progressing. Presentations from Sophia Antipolis are now available at ( http://slides.pulver.com )