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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."
"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.
The problem with communications technologies is that there is a monopoly in the industry. Well perhaps not a monoply, but certainly an oligopy. How many phone companies can you name off the top of your head? 5? How about ISPs? Communications aren't advancing at the pace of technology because none of these capitalists want to give up their precious money.
Perhaps that's why we don't have wireless internet access everywhere in the U.S. or why cars still run on non-renewable resources even though there are safe, clean, easy-to-produce alternatives. Companies which fill our cars with gas, provide us with barely stable internet access, and manufacture paper take advantage of public ignorance so much that "we are literally wiping our ass with our own future," as a great man once said.
You're right, I wouldn't steal a car. But if it were possible, I sure as hell would download one!
Damn, that doesn't rhyme at all...
I see biggest stumbling block to be the complete lack of 911 service when using a VoIP service like Vontage. Sure, these systems are a pretty nice replacement for your long distance provider if you spend a lot on long distance, but don't fool yourself into thinking that this is a decent replacement for a local land-line just yet. You are better off using your wireless phone instead.
I would hope that someday soon, VoIP systems like this and 911 would play nicely together, but I don't see that happening unless some three-letter governement agency steps in and mandates it.
"Tomorrow's forecast: a few sprinkles of genius with a chance of doom!" - Stewie Griffin
But it failed to point out that the big players in the telecom game are already well aware that their product (voice services via copper) are already obsolete. Why do you think the big boys (MCI, Sprint, Qwest) have such massive investments in the internet backbone? They recognize that the future of communications isn't land-line telephones, it's massive internet backbones. This is where every major player in the telecom game has banked their future. They're not idiots sitting in a smoke-filled conference room with no vision -- these people understand that their revenue stream on the internet side will ultimately replace their revenue stream on the consumer / voice side and they are already geared for it.
The point is that switching to the internet backbone for your voice services doesn't hurt them -- it simply moves your service from column A to column B on their balance sheet.
-- People who hate Windows use Linux. People who love UNIX use BSD.
Don't the phone companies already have pretty good control over internet access? Dial-up through the phone lines, DSL kind of goes through there too, and the cable companies are either phone companies or closely related to them. Once the phone companies lose the revenue stream from over charging us for phone access, they'll just charge us more for internet access. Well, I guess they'll do that either way.
A. VOIP isn't that simple. Not yet. I can't buy anything at Wal-Mart and plug it into the wall. Until it's that easy, people won't do it.
B. You need broadband. Broadband is far from ubiquitous, and will probably remain so for a good while until customers (such as myself) see a real need for it.
C. My options now are to pay $50/month for broadband plus some amount for software and hardware, or pay $25/month for phone service plus $5 for a phone.
D. VOIP is moot as cell phones are becoming increasingly better and cheaper. I can call anyone in the country from anywhere in the country as part of the minutes I buy every month. Why would I want to step backwards to be tied down to a land line (ie: Net connection)? I don't.
"The creation of the fax network was the first time this happened, but it won't be the last. WiFi hubs and VoIP adapters allow the users to build out the edges of the network without needing to ask the phone companies for either help or permission. Thanks to the move from analog to digital networks, the telephone companies' most significant competition is now their customers, because if the customer can buy a simple device that makes wireless connectivity or IP phone calls possible, then anything the phone companies offer by way of competition is nothing more than the latest version of ZapMail. "
The entire article makes a lot of assumptions most of which make no sense. But this paragraph being the most ridiculous IMO. There is a reason why products like Lindows is doin well. Mainly the majority of users on the internet don't know how/care to know how or want to do most of these things them selves to get online. This in no way compaers to zapmail. The alterantive was a very easy soloution and it was hardware only. Many people don't want to have to setup hardware and software to get a service. They want it commeing from the OEMs ready to go. The fax machine was a simple matter of pluging it into the wall. WiFi is all that simple (maybe to some). A horrible comparison and overall FUD aimed at Telcos that won't work.
Zapmail failed because the users were able to sidestep the service provider (FedEx) by connecting directly to the network, for the cost of the fax machine. In essence, FedEx put themselves in as a middleman with zero added value.
The author then states that wireless ISP's are making the same mistake, except that wireless ISP's aren't targeting the home users who can already get cable: They are targetting users where deploying a traditional wireless connect would be impossible, like rural areas, or rest areas where the users don't own the property where they want to use wireless internet.
Also, he makes a similiar mistake with the traditional arguments about the value of VoIP.... except that the telephone monopolies most certainly offer a couple must-have value-added features, such as a centralized telephone number database and the handling of the last-mile wiring + service in one contract.
ZipMail failed because they offered no value as a middleman. This argument doesn't apply to most wireless ISP's or telephone monopolies.
There are a number of countries (I can only think of South Africa as an example right now) that have banned VoIP and are forcing the ISPs to comply.
This has been done purely to protect the phone companies. With enough lobbying that can happen anywhere.
The problem that faced Zapmail doesn't translate here. Zapmail failed because Fed Ex didn't own the underlying technology behind it, the telephone wires. Fed Ex had to buy the technology, the line and the fax machine, just like its customers. That's why the pricing never made sense, since nobody would pay the Fed Ex premium when they could go directly to the source.
That analogy doesn't work here, because the telcos own the underlying technology. Once they bundle phone and internet together, you have both no matter what. Sure, you can cancel the phone, but why, you've already paid for it.
Take my case for example, I can only get SBC DSL here. I don't like SBC's phone service, so I want to quit. Well, that's too bad for me, because I can't. In order for my DSL to work, I have to have SBC phone service. Since, I can't get a cable modem, I'm stuck with the service.
For now, someone (telco, cable company, etc.) owns the 'last mile' of the circuit. My ISP tells me that about 2/3 of my monthly DSL bill goes direct to the ILEC (telco). They get 1/3 to fill the line with Internet. That means that they get 17 bucks a month out of the 50 and the telco gets 34 just for providing the last mile. To add insult to injury, to get ADSL I must also have an analog telephone line, (at 20 bucks a month) which means that the telco actually gets paid TWICE for the last mile.
It seems to me that the telco's are committing highway robbery. They're getting over 50 bucks a month for providing a single copper pair about five blocks. Cable's pricing is no better, and all the cable companies are capping upload limits which limits your ability to use VOIP (the reason is clear here too; cable wants to charge you for THEIR OWN VOIP).
Seems to me that a community could make a small fortune by running fiber and charging even half what the telco's and cable companies charge for that last mile.
Finally, I have Vonage VOIP service. Had it for over a year now and I love it. I use it with DSL.
My wife talks to her mother over 10 hours a week. I call all my friends and my kids constantly. The bill is always the same: 39.99 plus tax. Also, their international calls sound better then AT&T and you can't beat calling most of Europe for 5 cents a minute. Plus it's great having a 617 (downtown Boston) incoming phone number that is a local call for all my friends there, yet rings at my condo in Los Angeles.
It looks like the Vonage boxes have the direct dial number tied to the box. It's like a mobile phone in that respect, except the boxes hook onto a public infrastructure (TCP/IP), which means you can pay $40 to Vonage to have a phone number in the 310 area code (Los Angeles), even though you might physically be in some place like China (assuming you have broadband there.)
You could put together a DIY call center on the cheap - get a business number, have it set to forward to a set of 310 numbers, get a dozen Vonage boxes, put them in some place where labor and broadband are cheap (someplace in midwest Canada?), and there ya go! Local customer calls 310 number, local teleco forwards to the Vonage number, Vonage rings the box, which is NOT in LA, and there ya go!
Hmmm, even cooler. Take the box with you on vacation - as long as you can get TCP/IP, you won't have to mess with phone or message forwarding. Damn, this is one way to have a portable number, even if the local telco won't let you have one (even though by state law they're supposed to!!!)
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.
.com company.
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'
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.
I don't need no instructions to know how to rock!!!!
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.
You're comapring apples and oranges. Don't think that today's Type 3 plain-paper "just plug it in and it works" fax was like the fax machines of 1984. Those fax machines costs thousands of dollars, had poor quality, were difficult to set up, and required lots of maintenance for their toner replacements and special fax-only paper.
The reason we have easy to use cheap fax machines today is that there was a market for difficult expensive ones 15 years ago. The same thing happened with radios, calculators, and, of course, computers.
Today's VoIP and WiFi installations are cheaper and easier than they used to be, and will be both cheaper and easier again by the end of this year. Comparing a mature technology with one still in early adoption phase, and concluding that the latter has no chance, is to mistake the acorn for the oak.
-clay
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.
Any sufficiently advanced technology is indistinguishable from a rigged demo
--Andy Finkel (J. Klass?)
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.