Customer-owned Networks: ZapMail & Telecoms

sasha writes "Here's a good article that describes how we, the consumers, can play the role of competitors to the vendors of products and services we buy. The author draws a parallel between FedEx's ZapMail failure and current situation with VoIP and WiFi in regard to the phone companies."

Comments

Fiber has replaced copper?

[Anonymous Coward]

"Those days are long over, as copper wires have been largely replaced by fiber optic cable."

Tell that to the guys working at the thousands and thousands of wiring frames in telco central offices.

Re:So get up get, get get down, 911 is a joke in V

[stratjakt]

I work writing/maintaining software for public service, including CAD (computer aided dispatching) systems. So I pretty much set up 911 systems from the police's end, and pretty much everywhere it's run at a municipal level. No 3-letter gov't agency need be involved, the 911 service is contracted between the city/county and the provider.

So there's really nothing stopping a city from contracting an emergency service from a company like Vontage - all that needs happen is someone like me codes the interface to it.

It is, however, unlikely. Agencies loathe change. They don't want to upgrade. Right now they're all pitching a fit because HP is phasing out the 3000 line over the next 10 years - they dont plan on buying new hardware before then. So I doubt we'd see any citys/counties signing a contract with a 'new kid on the block' .com company.

Heck, my company is only 20 years old and it takes a lot of shmoozing (and vaporware promises from marketing that I have to keep - grr) to get in the door. They'd rather shell out the big dollars to a company like Motorola for vastly inferior software and support, because they know Motorola will be there in 30 years when they decide to upgrade the system.

They're a decidedly technophobic bunch. You'd be surprised to see how many agencies in sizable cities still do their dispatching via cue cards and a bulletin board.

A few FedEx details

[Anonymous Coward]

While the article makes some reasonable points about the ZapMail / personal fax machine 'competition' as usual there are a few details that fill out the picture (and maybe make it a little more interesting).

- FedEx's 'fax machines' were 300x300dpi devices. This was important because a signed document could be sent that would still contain a legal signature. Keep a 1986 perspective on this (with very few fax machines anywhere during planning much less laser printer quality)

- A communications satellite was part of the network (so much for not owning the network as some have said). Problem is, it was on the Challenger. Not only was the satellite lost, so was the launch system for an indefinite period.

- The tax laws were scheduled to change in 1988 (?) to change that would reduce how much FedEx could write off in the case of a project cancellation. With no launch capability, it probably was reasonable to shutdown sooner rather than later and get the best writeoff possible.

- Lots of Tandem systems were purchased to support Zapmail. Most of these are still in operation in the FedEx network. Also, for a long time Zapmail hardware was used internally as copy machines... (oh, that old thing - its a Zapmail leftover...)

- FedEx hired a lot of IT people around the Zapmail time (mid 80's) and many are the old hands of today. By the way, FedEx laid off ZERO personnel when Zapmail was cancelled even though reported from 1500 to 2500 were involved. All were reassigned and a large number played significant IT roles later in the evolution of the FedEx network to what it is now. Many even referred to themselves as being 'Zapmailers'.

If a few things had gone differently, the project might of at least been launched and operational for a while. There's little doubt that the Zapmailers did not understand how much the common fax machine would spread, but what would have been launched would still be in its own 'league' even now.

Can you blame them?

[Goonie]

If a new system has bugs, people can (and sometimes do) die. This tends to be a pretty powerful incentive to keep an old, working system going.

We had this in Victoria (Australia) when ambulance dispatch was contracted out to Intergraph (who you may remember as a graphics card manufacturer). The inevitable teething problems occurred, a few people died, the government ended up in very hot water.

Jane Black article predated Shirky's

[SiliconEntity]

Jane Black wrote an article making a similar analysis in BusinessWeek Online a few weeks ago. She discussed commercial WiFi companies like Cometa and brought up the example of FedEx's ZapMail to illustrate that commercial WiFi could face the same failure. Some quotes:

When fax machines were first introduced in the 1980s, several big companies planned new fax-delivery services. In 1984, visionary FedEx CEO Frederick Smith introduced a service called ZapMail that he hoped would replace jet fuel with ink toner. The plan: FedEx would buy the then-pricey fax machines and place them in every FedEx office. Customers who wanted to send a fax would have FedEx pick up their documents and bring them to a local office. Within the hour, the documents would then be faxed to the FedEx office closest to the recipient. FedEx would put the fax in an envelope and hand-deliver the service.

At the time, it made sense. ZapMail began as a value-added service that leveraged FedEx's core strength--reliably delivering information overnight. It also saved customers the trouble of installing and maintaining expensive equipment. But ZapMail ultimately failed as the price of fax machines plummeted. Rather than pay someone else to send a fax, businesses just bought their own machines. FedEx shuttered ZapMail only 12 months after the launch--and $190 million in losses.

ZapMail may prove a cautionary tale for Cometa. Right now, Wi-Fi seems like a new, whiz-bang technology that requires corporate oversight. But in time, business users and individuals may not see the need to pay someone for Wi-Fi service. After all, bandwidth is sold at a flat monthly rate. That means there's no cost difference to a hotel, restaurant, or public park if 1,000 or 100,000 people log on to their network.

"This is a corporate land grab. Ultimately, though, users may realize they can make this work on their own," predicts Dewayne Hendricks, CEO of the California-based Dandin Group, which promotes wireless technology in remote areas. That would be good news for Wi-Fi. But bad news for Cometa.

Let's give Ms. Black credit for coming up with the ZapMail analogy first. Shirky may have thought of it on his own, or he may have borrowed consciously or unconsciously from this earlier article.