Shirky's Machines

"Thanks to the move from analog to digital networks," writes Clay Shirky, "the telephone companies' most significant competition is now their customers, because if the customer can buy a simple device that makes wireless connectivity or [Internet] phone calls possible, then anything the phone companies offer by way of competition is nothing more than the latest version of ZapMail."

ZapMail? That was the Federal Express service that promised to deliver documents in just two hours, using a then-newfangled technology called faxing. What the company didn't realize was that, while faxing via FedEx may be quicker than sending a physical package, it's even easier and cheaper to buy your own fax machine.

"The business Fred Smith imagined being in -- build a network that's cheap to run but charge customers as if it were expensive -- is the business the telephone companies are in today," Shirky explains. "They are selling us a kind of ZapPhone service, where they've digitized their entire network up to the last mile, but are still charging the high and confusing rates established when the network was analog." Between wireless networks and voice-over-Internet devices, he argues, consumers will be able to route around the phone companies' barriers. That's bad news for the industry, but good news for the rest of us.

Comments

[Anthony]

Between wireless networks and voice-over-Internet devices, he argues, consumers will be able to route around the phone companies' barriers.

Except when the government enforces those barriers, or helps the phone companies destroy companies like Covad who enable the consumer to route around the ILECs.

[Jesse Walker]

I'm not familiar with the Covad case, but I concede the larger point.

[Fred Thompson]

A friend had fone-via-internet for a while. I couldn't stand talking to him on it and neither could anyone else. It was far worse than the worst cell-fone. Buzzing, static, delayed phrases, echos, repetitions of what one just said, etc. It must be greatly improved before I'll talk via conmputer.

[grant]

I've repeated this so many times I feel I am shilling for the company. I've been using Vonage (an NJ co since ~October 02) with no problems and very good call quality. The VOIP service works over a high-speed line (cable in my case). You get a little box from cisco and hook it up to your cable modem or router and away you go. Supposedly you can take this box and plug it anywhere there is an internet connection (like a hotel) and make and receive calls from your number. Pretty cool. I've completed my "trial" and cancelling my Verizon and long distance.

[Henry]

Hopefully the larger picture is that it will destroy the sub-industry of telecom billing that exists. Goodbye to ridiculous contract rates and the need to hire people (indeed, whole companies) to recover millions in bad billing? I certainly hope so!

[Tim Stich]

We used an internet phone handheld reciever that worked a lot like a regular phone, on both dial-up and DSL. The problem with this technology is that it still requires an intermediary to make the connection, unless you are talking to another geek with a computer and associated phone gear. This rules out making calls to computer phobes like Mom. Quite a pain.

When all was said and done, Internet phone calls to Europe through Net-2-Phone were about 17 cents a minute. Calling cards my wife now buys run anywhere from 7 to 11 cents per minute. So we gave up on the internet phone - too costly and a pain to use.

[Rus]

Umm.... if you're making phone calls over the internet, who do you think owns that infrastructure?

The phone company. Even cable modems eventually terminate in t1 and t3 lines upstream, usually owned by worldnet, att, et. al.

The only way to avoid them would be to use something like a private 802.11b network. Depending on how close the people are you want to call, you might need many, many people to share their connections with you to relay the call.

Telcom shouldn't be too worried about this yet. Right now, voice over IP just shifts you from one column in their ballance sheet to the other.