• 07/07/2011
    4:42 PM
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How Skype/Facebook Will Kill The Phone Network

To a 20-something, the plain old phone network is about as useful as a Fletwood Mac 45.
The likelihood that you're a big Skype user is inversely related to your age. If you're over 50, you probably understand what Skype is, but have never used it. If you're closer to 20, it may be the primary way you make voice or video calls--your cell phone, after all, is really just for texting. So as Microsoft/Skype and Facebook announce their new venture, we baby boomers tend to wonder what all the fuss is about. If you've used Facebook chat, you know it's extremely limited, so it seems like a nice thing that those young kids at Skype and Facebook have gotten together to improve both of their services. But the implications go far beyond a new way for kids to communicate.

I'm talking about relegating the PSTN (public-switched telephone network), and the notion of making a call, to the pile of technology that also houses broadcast TV, your Fleetwood Mac 45s, and now your Michael Jackson CDs.

Most 20-somethings would be just fine with a cell phone that only has a data plan. If they can't text a conversation, it's probably not worth having, and if they really need to elevate a discussion to voice or video, they'd just as soon use Skype, like they do at home on their laptops.

For those out of the know, from within the Skype application you can send text and SMS messages or make a voice or video call. You can also do more advanced things like desktop sharing, conference calls, and videoconferences. You can get a phone number if you want, and you can place calls to other phone numbers--and you're still in the Skype app. You can't do almost any of that from your traditional wired home phone. The one thing the PSTN had going for it that Skype didn't--until now--is ubiquity.

Everyone has at least one of those quaint phone numbers, and so if nothing else will work, you can always make a call. Twenty-somethings do it with their parents, and sometimes do it in the course of their jobs, but they don't like it. The Facebook, Google, and Skype folks all get this, and to its credit so does Microsoft. Not so clued in are the likes of Avaya, Cisco, and many of the VoIP sellers. They tend to want to build many of these capabilities on top of their voice systems, which provide their customers with islands of functionality in a sea of voice-only communications. It's the wrong model, the kids get it, and we're just figuring it out.

If you were scratching your head about why Google would let itself lose the bidding war for Nortel's patent portfolio (and I'll admit I was), this is why. In the short run, Google will have to license some patents for Android. But in the long run, the customers it cares most about won't use the technology protected by those patents, so the company is far better off putting its effort and money into getting into competition with Facebook.

And it's important for Google that it does get into competition with Facebook. While Skype provides various communication technologies, many of which Google already has, Facebook provides the directory mechanism to find the people you want to talk to. One assumes there will be some sort of meeting of the MSN and Facebook directories, and while there's going to be a lot of overlap in those two lists, you'll probably find a billion or so of the most connected people on the planet. That's a pretty good start, and it's one that Google will have replicate for itself and its Android licensees.

I'll admit that I've never thought Facebook was worth its estimated valuation. It's a company with vast information resources--information about you and me--but it also needs to walk an extremely fine line when capitalizing on all that data. If Facebook goes too far, all 750 million of us will go across the street to Google, or some startup that's got some cool tricks. But be that as it may, Facebook is the only entity right now with enough audience to make a deal with Skype a real game-changer for real-time communications.

So what does this mean for the enterprise? In the short run, probably not a lot--though you'd better be letting your newest and youngest workers have access to Skype and Facebook, as they'll use it routinely in their jobs. If you're planning heavy investments in intra-company unified communications technology, you may want to examine just what you're building. Being one of those islands of functionality is going to seem like an expensive yet crippled system in a couple years.

Last but not least, the FCC is going to have to think about its own requirements in this age. E911 capabilities aren't on the minds of 20-somethings, but the service is important and now is the time to figure out how to implement it without ham-handedly restricting the abilities of the technology. The smart folks at Skype would do well to have solutions to propose the E911 issue. The last thing you want is Uncle Sam doing this thinking for you.

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re: How Skype/Facebook Will Kill The Phone Network

Thanks, interesting article. From an Enterprise perspective a Facebook/Skype communication island would hider productivity. These sorts of siloed environments tend to only be used part of the orgnaisation and not all. Making it not effective.

A better route would be a social platform that fully integrates into existing systems including UC, video calling, calendaring and backend office systems. That way both younger and older employees would feel more compelled to use it. Ironically Cisco are already delivering this via their Quad platform.

re: How Skype/Facebook Will Kill The Phone Network

Thanks for the comment, though I must say I'm perplexed by it. So you figure skype/facebook with the 1 billion users is the island and Cisco with maybe a couple hundred thousand is... what exactly? I'd say Cisco and its user community represents a prety darn small island while Facebook/Skype is closer to a very big continent.

But let me try a different analogy on you. We're in the early days of this all, maybe not so disimilar to the early days of the auto industry. Now if you look back on the cars of that day, you might remember the elegant and insanely expensive Duesenberg that represented the pinnacle of finely crafted cars. Beautiful, great features, and made for those who could afford them. Then Henry Ford came along with one that got you from point a to b and was affordable by everyone. Duesenberg missed the market in its day and age, and Cisco's about to do the same. It's not the presence of every bell and whistle that makes a winner. It's having the right combination of features at a price that makes sense a broad market.

Unless Cisco and its ilk greatly change how they view the UC market, they'll go the way of Duesenberg in less than a decade.


re: How Skype/Facebook Will Kill The Phone Network

My hunch is that Skype/Facebook won't be used much by employees, because the free version of Skype limits you to a two-person call. In my experience, most people use their work phones for conference calls, and that's about it. That leads me to believe that Skype on Facebook won't change employee behavior much.

Interesting comment about Google's attempt to get the Nortel patent portfolio. Do you think Google ran up the bidding with the intention to drain the resources of Apple/Microsoft/etc.? Maybe that would explain Google's odd bids - some people think its bids show it wasn't that serious about the patents in the first place.

re: How Skype/Facebook Will Kill The Phone Network

Hey Alex,

That's a pretty "version 0.9" kind of perspective. As it stands, no, Facebook/Skype won't replace your business desk phone. But I doubt very much that things will remain as they stand. I don't know that it'll be facebook/skype that cracks this nut, but the existing PSTN is going to give way to something new, and this is the first combo of features and sufficient user base that I've seen that could give it a serious challenge.

re: How Skype/Facebook Will Kill The Phone Network

Art is right on the money regarding rendering the old telecom network to the trash heap.

Skype's greatest value is the directory service, which is based on people, not devices. I can go to virtually any device and leverage the network, log out and not leave a trace of my use. Facebook is a phenomenal connection platform, open to innovation. the old line (pun intended) telecom network is neither open nor available for innovation

Take location based services. the telco's had this information for years, and refused to open it up, even on fee basis , to app developers. Google and others said, "Fine, we'll develop our own version", and they did, now a free service exists that is much more flexible, open and valuable than anything the telco's had.

this will happen over and over unless the incumbents "get-it", which may be never.

as long as Skype, Google, FaceBook , et al., stay open, they will rapidly replace the conventional applications running on switched networks, both wireline & wireless.

And frankly, with Federal subsidies (USF and others) going away, and the depreciation schedules nearing an end, telco's are more than happy to substitute IP network infrastructure for the old circuit switched stuff. they will pretend to be application providers, but culturally, they can never be app providers. that's OK, we need bullet-proof IP infrastructure to run everything on, too.

expect not only very large migration to IP service's but also keep an eye out for the return of Value Added Networks, as transaction based routing becomes a requirement.