January 2009 Archives

Last Sunday I had the pleasure having a Sunday interview via Skype with Malcolm Matson.

The run time is 1 hour and 7 minutes.

Additionally the full transcript is below. To distinguish between us I've indented Malcolm.

(It's interesting to compare what Brough Turner had to say at eComm 2008, the audio of which can be found here)

You have solid telecom credentials, would you agree?  There you go.  There's an easy first question, yes or no? [laughter]

Well, if you ask an average citizen of the street, he would say yes.  If you ask a member of the elite telco community, they would say, "No, this guy is an absolute heretic".  In fact, I'm an entrepreneur.  I grew up in the fast-moving consumer goods industry, FMCG.  It was purely sort of an accident that in 1982, I think it was, in the U.K., and it was information technology.  I was able to have an opportunity to sort of tinker and think about what I like to talk about as FMCI, fast-moving consumer information. 

That brought me into the sort of telecom sector and domain, but I came to it with the innocence and ignorance of a child, which I believe has been the greatest strength.  Because everybody else in the industry had grown up with and was deeply meshed and trapped by the sort of dogma and conventional wisdom, which I think that is still very largely at play and certainly haunts the public policy makers and regulators.  So, I've thought radically but I think I've thought right over the last twenty-five years [laughter]. 

So, you're still being a radical, then?

Yes, but the difference is that twenty-five years ago I was a radical and a heretic.  I shall never forget once, speaking on a conference.  The president of Alcatel, as I'm doing now, wearing headphones to have an interpreter tell him what I was saying, this man - he'd never seen this guy Matson standing on the podium.  When I finished, he banged the table and said, "The conference organizers should be ashamed because of having people like this speaking at conferences like this, if they had their way, they will ruin our industry". 

It's never been my aim to ruin the telecom's industry, but on the other hand, I think history should teach us that it's very dangerous and not in the interest of our society if we are dedicated to preserving an industry.  Where would we be today if we had been absolutely hell bent on preserving the typewriter industry or the canal industry, or the horse and buggy industry?  Progress is always as a result of unforeseen disruptive technology that is the savior for many people, opens the eyes, and creates new industries, but it also creates the death of others. 

So, do you think VoIP is a new, exciting industry [tongue-in-cheek]?

[Laughs] We all like to put these tags on things, but back in 1982, 1983, as a result of thinking from first principles, I began to realize that anything - voice, video, Mozart's 40th Symphony, or a fifty-trillion dollar bond note could be communicated, stored, and manipulated as a string of ones and naughts.  From the very beginning, I couldn't see that either regulating or dealing with content, dependent on how those ones and naughts decoded, regulating and dealing with them separately, depending on whether it decoded as voice or as video.  It just didn't make sense to me. 

Yet, because the preceding industries of television, radio, telephony were all discreet analog industries and all had, even by the 1980's, gotten very strong voices and lobbying voices, were able to persuade politicians to create public policy and regulation, as it were, to perpetuate and extend their shelf life against their view of the world.

Their view of the world - I mean, the telephone company's view of the world - telephony was somehow different from anything else.  It's just bits, as far as I'm concerned.  You know, the fact that we're all now talking about VoIP - they're bits, I couldn't care less.  I don't see VoIP as anything different to anybody else, and neither does anybody else, interestingly, other than the telcos, who have built a business model around the old notion of telephony and the old business models that underpin telephony, and are getting killed.

It was just that a lot of people still seem to view VoIP, using your canal analogy, still view it as the train industry.  I can't help but view plain VoIP as the canal industry.  You know, some people are still heralding VoIP as the new thing. 

If you're thinking about voice, I personally believe that voice is one element, component, or facet that can be present in a communication or conversation between two people.  But, I suspect that more and more conversations will not be simply voice conversations.  They will be voice underpinning or enriching other content that we share at the same time.  As I say, I think VoIP is an understandable expression but it's an obsession that has risen up to be a topical issue because it is basically eating the telcos' lunch.

Back to the telecom credential thing, you were the founder of Colt Telecom, were you not?

Yes

So, come on, Malcolm, is that not fairly prestigious?

Lee, you are talking to the founder of the highest capitalized loss-making company, probably in the history of mankind.  [Laughter]

Exactly, so Colt was fantastic? [Laughter]

No, it wasn't fantastic.  I would say it wasn't.  It grew to be capitalized on the London Stock Market and I don't know how many billion pounds.  I think at the height, in 1999, it was the fifth largest company on the London Stock Exchange, but the fifth largest company without ever making any profit. 

Did you sell high?

I sold very early on.  Let me tell you the story about Colt.  Basically, Colt was the spark of imagination that I had after I began to understand what was happening with this digital revolution.  I formed Colt in conjunction with the Corporation of London, which is the city council and municipality. 

Bear in mind that the Corporation of London covers not the whole of London, but the financial sector of London.  The purpose behind Colt, the vision behind Colt was that it should be a dark fiber network serving this area, which was the financial sector.  I had to have an apartment there, but there are only ten thousand people who live there.  Most of the people inside this small square mile are very sophisticated, global financial institutions and banks. 

Under the unique legislation in the U.K., which persisted for ten years, thanks to the foresight and brilliance of Margaret Thatcher, but actually got neutered because the politicians took their eyes off it and BT kept its eyes on it.  It was to be a dark fiber network.

The business model I put together was that Colt should invest in putting in dark fiber to these buildings, period.  City Bank, or Daiwa Bank, or Deutsche Bank, into whose building the fiber went, could choose to use that fiber either to send bits to other banks in and around the city or to have their global network provider, B.T or AT&T, or whoever it is, to manage the active layer on that dark fiber. 

The business model was to be a passive piece of real estate.  It looked extremely attractive and like an extremely interesting business.  It was to be low risk, low return.  This wasn't a sexy, high return business.  This was a boring utility piece of real estate.

I couldn't get it funded and eventually went back to Harvard Business School, where I did my MBA.  I went into the Baker Library, did a bit of digging around, and found that there was a company called Boston Teleport, which was doing something a little bit similar.  I spoke to the guy who running it, Paul Chisholm, and he said, "We have two shareholders, Merrill Lynch and Fidelity Capital". 

Within two or three weeks, I was sitting down face-to-face, on the opposite side of the table with Ned Johnson, III, who is one of the richest men in America, whose father founded Fidelity.  He was interested in this.  I was sketching out on the back of a napkin what I was planning to do.  He said, "How much do you need?"  I said, "We're showing thirty million pounds for the first...," and he said, "You've got it".  [Laughs]

I was elated.  I got on a plane, flew back to London.  It reminded me of the time when Alexander Graham Bell went to Western Union and said, "Hey, I've got this thing called the telephone.  Would you like to use it," and they said, "No, it doesn't really fit with our business plan".  He wandered off and bumped into J.P. Morgan.  I thought, "Gosh, this is my J.P. Morgan moment.  This is it, wonderful.  I will come back, we'll build Colt, and it will be demonstrated to the world that in the new world you don't have a vertically integrated service-provider model.  You have the bottom passive layer.  You have a contract to somebody to light it in the middle and all the applications run on the top of it".  This is basically the model of the Internet.

Anyway, within two months he called me back to Boston and said, "I want to introduce you to Jim Hines".  Jim Hines was a big, bruising, ex-Vice President of AT&T, who immediately came and said, "What the heck do we want to be a boring utility for?  Crickey, all the value is at the top of this in offering services". 

I argued with him and said, "That's crazy because as soon as you start offering services you're going to be competing with your customers".  I couldn't persuade him so I exercised a put option.  I got out reasonably well.  I probably made a higher return on the investment than anybody else ever has.  I had to wait for ten years and watch this share price - it was subsequently IPO'd.  I watched the share price go through the roof, all the time predicting that it was heading for disaster.  I can't show it to you now, but I have this lovely article from the front page of the London Times, saying, "Colt's founder forecasts disaster for this company," literally within days of the 1999 crash. [Laughs]  Within days, the whole dot com meltdown had impacted the telcos and so forth.

Yes, I suppose in a sense, everybody looks and says, "Malcolm is the founder of Colt," and they see the fact that this company...

Colt was seen as one of the first new players, a great disrupter, and it was the first company to lay pan-European fiber.

It was the first all-fiber network in Europe, absolutely. [Laughs]  What it did was blindly use the old business model.  If I could buy back Colt now, I would do and I would take it apart and it would be a much more profitable and interesting business.  I forecast that this was going the wrong way, and it still is going the wrong way.  Colt is still a basket-case company.  I mean, it's going to have real problems.

What you have is the infrastructure; the passive layer is stuff that has a twenty year or twenty-five year life cycle.  There isn't a lot of technology change in ducts.  There is not a lot of technology change in fiber.  The technology change and advance is in terms of the active equipment that you hang on the fiber. 

So, if you stay at that bottom level there, it's a very high capital investment but it's a very low return.  As I say, it's the same principle as in the real estate business.  Just because land securities or a major property developer can finance the building of a shopping mall, he doesn't say to himself, "Oh gosh, now why don't I put my Sock Shop in there, and my own coffee shop in there".  [Laughter] That's [14:53.8 over speak] retails in there separately.  They can take the risk of the fads and fashions of content. 

I like that analogy.

It's interesting.  The time has come.  One of the problems, Lee, I've found that because the telco industry is probably the largest global cartel that mankind has ever known, it's not surprising if you're in the communications business, very early on the telephone companies around the world got together and said, "Hey, Mr. Foreigner, you lay the lines in your country.  I'll lay the lines in my country.  Let's not compete by laying lines in each other's country.  You hand me the calls halfway across the sea.  I'll hand you my calls halfway across the sea.  We'll charge an arm and a leg to the end users and then we'll get together twice a year in Geneva and we'll split the spoils".  That's basically, what was done. 

The accounting standard of rules for sharing the revenues from international traffic is a major issue that is hidden from most peoples' eyes.  For a lot of third world countries, it's the greatest source of foreign currency that they earn.

So, what we've seen over the years is governments listening to their telecom's operators because apart from anything else, they're a) major employers but b) they generate massive tax revenues.  Unfortunately, we've neutered the free advance of disruptive technology in the hands of end users.  Never try to, as it were, use public policy or regulation as the stimulus and the catalyst for innovation.  Just go out and do it.  Exemplars are what change the minds of politicians, ultimately.

I don't know whether you're aware of the railway having, one I constantly use,  if you look at railway history, the Stocktons of Darlington Railway in the U.K. was what...

I know nothing of the history of railway so please tell me.

It's what started it off.  Basically, railways were things on which little trucks ran, pulled by horses and donkeys.  They brought coal out of the coal mines on tracks.  That's what a railway was.  Suddenly, there was this great invention of the steam engine.

The conventional wisdom was why would you want to go five miles an hour?  You get the coal out of the mine.  Why would anybody want to go faster than five miles an hour?  It wasn't until the steam engine, until Stephenson created the Darlington Railway and put a few carriages on there, invited some MP's up and some entrepreneurs to sort of feel the wind in their hair that suddenly their imaginations started saying, "We could do..." 

The rest is history, as they say.  Whole new industries of shipbuilding, leisure, and tourism were created.  One of the biggest benefits of the railways was that in the U.K. the quality of the population's teeth were suddenly improved because fresh milk, with its calcium, was able to get to city centers in a way it could never have done if it was going by horse-drawn carriage.

There wasn't anybody sitting around in the office of rail regulation saying, "We need to deploy this because it's the solution to the dental problems of the nation".  This was an unforeseen, unimagined consequence.  I believe that's what we're being starved of at the moment, the unforeseen, unimaginable consequences of allowing high bandwidth, zero marginal cost, peer-to-peer connectivity in the local environment. 

Whether we like it or not, most of us live in physical cities, communities, villages, rural areas.  We live in towns.  Most of our lives are circumscribed by a rich network and matrix of communication as we love, live, leisure and learn in relationships, in the context of where we physically live.  When we can enrich those by all sorts of new, unimaginable peer-to-peer connectivity with high bandwidth...

So, we've kind of jumped from the founder of Colt Telecom to the amazing credentials.  Now you seem to be jumping to where your mind is nowadays.  That's another new world you're speaking about.  Is that correct?

No, it's not correct.  No. 

[Laughs] It's not correct?  You seem to be talking about not the big Internet, but doing stuff locally.

Absolutely, this is what Colt was to have been.  The whole point of Colt was to have been an open, local, public access network.  It was to provide a pipe, a big, fat, bit pipe into all the buildings in the city, and then to allow the people inside the buildings to use that pipe, to connect with whomever they wanted, whether it was directly, to the building next door, or to somebody on the other side of that city who was offering a service to connect you to the rest of the world, over the Internet. 

It's the same way, Lee, as your home or your office, you have an open access network.  You have a network, whether it's wireless or CAT5 cable, whereby the PC's and the printers and the hubs and so forth communicate with each other at the direction of you.  You can send stuff from one PC to another PC, to the printer, to the scanner, or wherever it is, as you like.  There is no charge for that.  It's not a service that's been provided to you by anybody.

I enjoy that in my home.  I enjoy that in my private domain.  I have my cell phone and my laptop and I can sync those.  There is nobody providing me a service to sync them.  I just actually have the two.  I own, finance, or borrow the cable, or I have access to a piece of license-exempt spectrum, 2.4 GHz, which allows these two to communicate with each other. 

When I get onto the Internet at the other end, once I'm on the Internet, we have exactly that environment of net neutrality.  By net neutrality, I think I mean what most people mean by it.  I mean it's a passive, open, unmetered connectivity.  It's a direct P2P connectivity anywhere across that domain, across the Internet.  It's a symmetrical connectivity on the Internet and the primary value of it resides with the people using it.

There are some big boys out there, like the telcos, who are desperately trying to change that.  They're trying to change it to get it into line with what persists still, in the final domain, which is the city or the local domain, the "local Net" as I call it.  Unfortunately, there we don't have a Net neutral environment.  We have a network that is closed, controlled, metered.  There is no local, P2P connectivity.  I can't send bits between my home, my hospital, or my school, or my neighbor, directly over infrastructure in the same way I can in my office.

yeah, but can I begin jumping in here just to clarify.  You can use the Internet to go where you wish to go.  You just said it was a passive infrastructure and that anybody can use it.  So, if you want to sync PC's at distance, just use the Internet?

Once you get onto it.  But, suppose I'm sitting in my home.  I'm an old person, a seventy-eight year old person. 

You're seventy eight, wow. [tongue-in-cheek]

If I was seventy-eight.

[Laughs] Wow, Malcolm, I didn't know you were that old.  [Laughter] Okay, just kidding around with you.

Suppose I'm an old-age pensioner, sitting in my home.  I want to have a high definition ability to chat with my doctor, my daughter, my church minister, or whoever it is.  I want to do it in real time and I don't want to have to be charged per minute by doing it.  I can't do that at the moment, because the only way I have connectivity is over an asymmetrical piece of copper.  Even if I wanted to connect over the Internet, there are potential latency problems that I may have.  In any case, why should bits that want to travel one hundred yards have to clog up the Internet?  That's half the problem.  If we can cache and keep, in the local domain in the same way that I do on my - thank goodness all the A4 pages I sent to my printer don't need to be sent over the Internet.  If we all had to do that, gosh, we'd be loading the Internet with even more capacity.  Why not keep; in the local domain, and a domain that is not an arbitrary one, it's a real one.... 

For example, let's take Amsterdam.  It's putting in an OPLAN, an open, public, local access network, into all four hundred thousand of its social housing units.  They reckon that they will have, immediately, a fifty million Euro plus saving each year.  Old people will be able to stay in their homes that much longer.  Why shouldn't they have the benefit of that?

What do you mean by stay in their homes a little bit longer?

At the moment, the only way an old person...

Internet shopping, or what do you mean?

No, no - care.  At the moment, the only way an old person...

Oh, stay in their own private home, instead of

Correct, before they need to go into care.

[Laughs] Okay, it's not Internet shopping.  We're stopping old people leaving their house.

[Laughter] No, sorry, it's just explained to me why everybody looks to me with a glazed look when I make that statement.  [Laughter] At the moment, you have these alarm systems and so forth that cost an arm and a leg per month to do.  It relies upon the person pressing the button saying, "I need help". 

Of course, this isn't a Big Brother thing; this is somebody who might want to do it.  Somebody can say, "I've got a problem," and have a face-to-face.  I think some of these Hewlett Packard and Cisco and others are beginning to demonstrate how video communication and conversation, if the bandwidth is there, can be very, very different to the old sort of video conferencing, out of sync and scraggy pictures we used to have a little while ago. 

If bits don't have to get onto the Internet, why clog up the Internet doing so?  The other thing, of course, is that if you have such a network, and this is the frightening thing from the telcos' point of view, at the moment, they operate in terms of the Internet connectivity on a divide and rule basis.  You're at number two Park Road.  "Mr. Dryburgh, we'll contract for your ADSL connectivity".  The next door will have a separate contract, and the next will have another contract, and so forth.  What if we were on this fiber bus, as a city or a community and there was a single terabyte fiber connectivity for the whole city, to the Internet?

Okay, but then this is what Amsterdam is doing, and France as well.  I mean, this is just community-owned fiber you're speaking about here.

I'm actually talking about - we'll come to that in a minute.  I'm talking about what happens if we have massive high bandwidth - what I'm basically saying is that the service provider model, as we know it, is dead.  There is no earthly reason why we should have ISP's or telcos, as we know them, in this digital world.

Moving onto the point that you just made, a point that I suppose over that last few years I've increasingly come to appreciate and believe, is that the fiber that serves a community or city, just as the fiber or coax that serves me in my home network, you really want to finance that in a way that aligns the owners' interests with the users. 

To that extent, I believe, and this is what I'm working with now, on cities that are saying, "Well, we don't want this to be state-owned, but we want it to be owned by a corporate vehicle that is not a conventional profit-making company, but is one whereby the primary value and benefit out of the investment goes to the users on it".  That could be by some community bond or by some cooperative ownership or a company like the Network Rail Company in the U.K., a not-for-profit company.

What you don't want is somebody owning the fiber who is trying to maximize the return on that investment.  To the extent that a city is reliant on that person, it's going to be less competitive, in the years ahead, with a city on the other side of the world that is trying to attract inward investment and e-knowledge workers and new entrepreneurial activity.  It will be more accessible because the bits are cheaper to go there because there is not a massive pricing of access based upon having to serve an independent shareholding group.  I'm not sure I've expressed that clearly.

What we do see in Sweden and other places are communities organizing themselves.  I think we're going to see the birth of a new industry in the next five or ten years, with companies who do that in collaboration with communities and public authorities.

I thought KPN had some kind of collaboration going in such a fashion?

KPN is the most interesting example.  I'm not sure whether KPN - KPN understands it's probably better than any incumbent telco in the world.  They have more local access fiber, not laid by KPN initially, but by Volker Vessels, the big construction company.  They've done it in association with a lot of the housing associations in the Netherlands. 

It's unclear, as yet, how it's going to end up, in my view.  I'm not sure whether KPN's view of the world, at the end of the day, is that there is a business in being a tollbooth, extracting money from content providers and traffic that passes across the Internet, or the local network, or whether it's just going to say, "The ownership, funding, and the financing of the fiber and wireless is as independent from the services we provide as the way we finance the roads is of the trucks, cars, and goods that are carried in the trucks and the cars".

So, you're wanting to see a hundred percent separation between applications like telephony, SMS, and underlying infrastructures?  That's what you ultimately wish to see.

I'm saying it's inevitable, as inevitable as the wheel.  What I want to see is this inevitability happen sooner rather than later because it will bring great benefit and open up new opportunities for new businesses and new business models. 

People will start shouting back, "Hey, what about quality of service?"  I know I'm talking to you over the public Internet, at the moment, using Skype, and that seems fine to me, but people will starting shouting, "This could be an emergency call," and the call could have dropped or the quality call was bad, or your ISP was down and don't have any real service level agreement, except to get it back up within for two days.

Of course they will do, yes.

So, you don't think we need certain voice quality guaranties and so forth?

You could argue the same thing about refrigerators.  You could argue the same thing [laughter].  At the end of the day, business opportunities for making sure that the bits travel without drop off, across the local network, of course we're going to be worried about it.  It can't.  We know all too well that this isn't delivered absolutely on a guaranteed basis from some huge, central authority sitting at the middle, in the same way that all this idea of security by having some central government authority monitoring all my bits, or keeping a database.  That's not going to work.  It's just special pleading.  Of course, people are going to say that. 

As you say, I don't even have to argue it.  Here am I; we've had a perfectly good, higher quality conversation over the last hour or however long we've been talking, that I could have ever possibly had.  Who is responsible for this?  I don't know; the guys who made the headphones and my microphone have obviously got the quality quite good there. [Laughter]  The USB plug that goes into my laptop seems to be good quality.  I haven't had any problem there.  The laptop is made by Samsung.  That seems to be all right.  I've got a bit of cable from there that I can see going to a Drytek router.  That seems to be all right.  The one that goes to the wall seems all right.  It's going across some cruddy, old copper wire.  Blimey, heaven knows how they've managed to keep going during our conversation, but still, they have. 

Okay, you know, the telecoms industry is stated as being up to a 3.4 trillion dollar a year industry.  Eighty percent of that revenue comes from telephony.  So, if you're saying that telephony will break away from the underlying infrastructure - personally, I don't think telephony will keep existing, but let's imagine that it does as an application.  The big question is telecoms' infrastructure is incredibly expensive.  I mean, Google couldn't even afford a build out in the States that was noteworthy, in terms of telecom network.  The infrastructure is massive, in terms of cost.  I've been looking at figures of how much networks cost. 

First of all, most people live in cities. 

Listen, if you take telephony out of the picture, what's happening, as we all know is that telephony is paying for the underlying infrastructure.  What I don't get is where you think money may move and the infrastructure may break away from the services, but all it means is that people get charged a lot more for access.  How do you marry up the cost of the infrastructure and maintaining it?

This is myth.  Look at the facts, Lee.  You go to one of the major guys who are leading the building of - if you look at the current cost of putting in a brand new fiber network in a fairly urban environment, you're going to build a new fiber network around ...

What we understand here is access network costs a lot more than the core networks.  We're taking it ...

Let's say the core network.  Over the last twenty years, we've had masses of fiber running up and down our countries and across the oceans.  Ninety percent of it isn't lit.  There is unquestionably no shortage of capacity of fiber outside of the local access network.  The problem is it's in the hands of an industry that's business model is based upon creating scarcity and creating value out of selling access to scarcity.  But there is no scarcity.  So, what they have to do is to pretend that there is scarcity. 

So, all these tales about the Internet falling over, due to the sudden rise in YouTube and so on, you don't agree with?

That's absolute crap. Absolute crap . All I can tell you, and I talk to physicists; you take one, tiny strand of fiber; nobody has yet found the upper limit of it.  In other words if you were to light all the spectrum colors in there, you have infinite capacity.  Obviously, you have to invest in the kit to put on to access that capacity in the fiber, but one of the things we're beginning to see happen is that Moore's Law is going to hit the DWDM kit in the same way it did the silicon chip.  We're going to find we're going to be able to access, out of that strand of dark fiber, twice as much bandwidth for half the cost, every eighteen months, for the next two to four decades.  There is absolutely none, no shortage of capacity out there.  The only people who are saying it are people on whose business model it depends. 

You and I knew when we went to school in the second grade that anything that is infinite supply, in a free market, is worth zip.  What's the value of sand in the Sahara Desert - nothing.  If you have a business model based upon selling sand in the Sahara Desert, you're in trouble, and they are in trouble.
Let me just give you the figures I was telling you about local network.  The current costs for building an average, new build, in an urban environment, fiber to the home not to the cabinet, brand new, is about seven hundred Euros. 

Per user?

Yes, per termination.  Of that, about four percent is the cost of the fiber, thirteen percent is connectivity products, seven percent is engineering, ten percent is project management, thirty to forty percent is installation, twenty-five percent is civil engineering, and five percent to the financing.  Twenty-five percent for civil engineering is a huge killer.

This is CAPEX only.  What about OPEX?

Hold on, let's just get it with a CAPEX first.  We're talking about seven hundred Euros.  How much do you pay, per year, for the line rental of your copper telephone line?

Well, I don't have a telephone line and I had a naked-DSL before.  It depends on the country, but if you take the country I'm currently in, I think it's about thirty Euros a month for connectivity, for cable.  I have fiber in the house; I just haven't paid for it.

You say connectivity; that includes the DSL connectivity, doesn't it?

Well, it includes the cable because I decided to go with cable since it's cheaper.

I would use a hundred or hundred twenty Euros a year. 

So, like thirty times twelve, so three hundred sixty Euros a year for connectivity.

That's got some active equipment on it.  I'm just talking about the line rental, the basic, physical, copper line rental that the average person is paying.

Yeah, but with cable lines...

They've got a telephone line.

Why do I need to have a telephone line?

You don't need to, but I'm trying to prove to you that it costs nothing.

In the U.K., where they don't offer a naked-DSL unfortunately, then I think British Telecom charges about eleven British Pounds per month, just for that piece of copper, without any service, no DSL.  Okay, now I've got you.

It's about a hundred twenty Pounds.  All I'm saying is that money is on the table.  Everybody is paying that money already, for access to a copper, local connectivity. 

Sorry, I forget; it seems pretty old-fashioned paying for a copper but I forgot most people are doing it. 

Forget the copper.  That money is on the table.  That money is already being paid out.  That money is more than enough to finance, if you convert it.  What I'm saying is that a seven hundred Euro investment, over a twenty-year period, doesn't require anything like a hundred twenty a year. 

Any talk about how this is an impossible thing to finance - it isn't impossible.  The figures work out easy.  The problem is, of course, how do you go to a home and get them, as it were, instead of paying the hundred twenty pounds to BT or to France Telecom, for the copper, what is the strategy for getting that money to go to support the financing of a fiber.

What's the OPEX cost?  I'm wondering if it's high.

Again, interestingly, no - the question of OPEX is slightly more difficult.  Obviously, for the large enterprises connected on that network, they will have their own operator but for the mass of residential and SMEs, there will be a contract let by that OPLAN, that passive network-owning company, I believe, as has been the plan in Amsterdam.  There will be a five to seven year contract to a company to provide the active layer.

I think one of the problems at the moment is that this is a brand new business.  There isn't a lot of experience and precedence there.  The trick is going to be to make sure the contract is let on a basis that recognizes there will be increase and upgraded quality and bandwidth, at a reduced cost.  That benefit has to be shared equitably between the contractor providing it and the network users.  That's the business.  I don't know who is going to own that business.  Is it going to be Cisco, or BT?

But the question is; what I'm trying to get at is, the operating expenditure, more than the original CAPEX; is it more than seven hundred Euros a year?  Is it ten percent of it?  Is it the same?

No, it's fractions of that.  You only need to realize that the reason, the primary reason why BT and all the other major telcos are investing in fiber to anywhere, fiber in the core network, is because it has a massive reduction in OPEX, a massive reduction compared to maintaining and running the copper network.

The interesting thing is, as I say, if you actually price up the active equipment, the network could go out and buy the active equipment and it would cost you very little.  The problem is if you do that, what you have installed is going to be out of date next year or the year after because you're going to be able to buy something twice ...

Okay, so the OPEX is a fraction of the CAPEX.  What you're trying to say is that you're paying "x" amount in line rental.  If we could find a model to convert those payments away from the telecom operator, we could fund something that is a much better value to end users.  So, end users would still be paying the same amount of money but deriving a lot more value.  You think you would speed up splitting away infrastructure from telephony, SMS, and other applications, i.e. the two services become separated from infrastructure.  Do I understand correctly?

Yes, in other words the entity that would be providing this connectivity would have nothing to do with what ran over it.

Is it not nice that game players get "x" network characteristics, people who are just doing FTP uploads get other network characteristics?  This seems kind of anti free market, that everybody gets given the same type of network, with the same ping times, same latency. 

No, they don't.  As I said to you, if you are a major corporation or you're somebody like yourself and you want to have the network lit at a particular active layer, a particular speed, or capacity, you could opt for that.  There is no reason at all.

So, it's not the communist network, then?  [Laughs]

No, it's less a communist network than it is now.  You could have everything you like, as long as it's ADSL. [Laughter]  Bear in mind, you and I are unusual animals.  For most people, all they want is a very fast and increasingly they want a symmetrical connectivity to the Internet.  That's what they think. 

However, there are a lot of other people in the community that want to have the ability for peer-to-peer.  I would argue that the average person will discover the value and opportunity of peer-to-peer, and certainly, local peer-to-peer.  Where we have these open access, local networks in place, we see kids doing unbelievable local peer-to-peer video activity. 

Like sharing their Blu-ray disc images with each other, within five minutes - fantastic!

Absolutely, there is another industry that is going to rethink itself.  [Laughter]  I think another thing we need to recognize is that there may be a lot of people who want to communicate with the houses, the homes, or the offices, other than the people inside the homes, and the offices themselves.  For instance, I am told, from talking with colleagues who are involved in the energy and power sector, that if you could have real time telemetry and remote control, at zero marginal cost, i.e., you're not paying for the bits for doing it, of a home heating system and you could then link this in with knowledge of what's happening with the coming ambient weather temperature and so forth, you might be able to start selling comfort rather than electricity.

I like the idea of buying comfort.

You might be able to say, "I'll contract to have my home at 68 degrees Fahrenheit, day in and day out," or "68 degrees in March and 49 degrees in July," or whatever it is.  If you could do that, that contract would have a massive impact upon the cost of energy.  The problem with energy, of all the utilities, is you have to manage the load and everything from the center.  If you could actually do it because you have real live, zero cost access to knowledge at the periphery, it changes the pattern of the world.

The need for high bandwidth, net neutrality in the local access loop in the community, is something that is wanted by a lot of people other than just the people living there.

What happens, for instance, in terms of security and all sorts of other things, if you could make the locks on the doors intelligent?  All this is not some special service linked to the infrastructure.  At the moment, you can go around suggesting they have webcams all over the place, but they're sitting on dedicated infrastructure. 

If you could have this open access fiber bathing and pervasive throughout the city or community, many people now, as I do, believe it will be transformational socially as well as economically.  That's my day job. [Laughs]

It sounds like a great day job.  I really look forward to the talk you're going to give at this conference.  I just wish to ask you a couple of things, straight away. I consider telecoms "my industry".  I mean, It's always been the love of mine.  So, want to put this question to you and feel free to answer it from any direction you like, and briefly, if possible.  What do you see as the future of the telecommunications industry?  Pass some comment on the future of the telecommunications industry, please.

Most of the telecoms' incumbent operators and the sort of parasitic, competitive local exchange carriers (CLECs), I think, are heading for a precipice.  Now, when I talk to the senior management in most of these companies, they don't like acknowledging it.  They understand it though.  They can see the evaporation of revenues, just uncontrollable. 

For the last ten or fifteen years, they have hung onto the old business model.  They thought they could make sure the terrain in front of them was level and as much like where they'd come from as possible, by resorting to influencing public policy and capturing the regulators, which they seem to have done in most countries, fairly successfully.  [Laughter]

What we're talking about here, Lee, are fundamental dynamics of physics.  They just are running out of space.  They know that they are getting very close to the cliff. 

So, if I'm being cynical about it, I would say that most CEO's, if they find they can no longer cudgel their governments and regulators into giving them some privileged access to this technology or imposing regulations that favor them, what they're doing is they're getting out.  They're resigning.  [unclear name] of BT; brilliant.  Let's get out before we hit the wall.

Many of these companies are going to hit the wall in one form or another.  When they hit the wall, what I mean is, and we have to remember this, that the management and shareholders get crucified.  The assets don't go away.  The knowledge and experience that exists within the company, great knowledge, and experience of telecoms and how it works at an operational level doesn't go away.

What I believe we will see is a rapid, after one or two Stockton and Darlington's we will see a rapid restructuring of the industry.  We will see the old, vertically integrated "we can do everything" telco disappear.  It will fragment into a hundred, a dozen, or a few pieces.  There will be local networks.  There will be a very interesting business providing global connectivity, on a highly competitive basis.  There is going to be the business of lighting and managing these networks.  Again, some of these telcos are going to be able to move into that space very well.  There are going to be some services for major enterprises and global ...

So, are you are not a fan of the Telco 2.0 double-sided business model that is going to save the day?  [Laughter]  I don't mean to pit you against others who are in our friendship group, but everybody has different opinions.  That's what makes the beauty of the whole thing.  So, comment on a double-sided business model, if you can.

In case somebody is listening, summarize what you mean by that so we're talking about the same thing.

Well, it's a fact that instead of just trying to sell downstream to consumers, i.e. you charge them for telephony, you give away telephony -  I don't personally think telephony will exist long term, but since everybody understands it, we'll keep using it - you give away telephony free of charge to the consumer but then you start making money upstream by enabling sellers, the likes of Google and so on, enabling connectivity between businesses and consumers. 

It's like Google; Google gives search away free of charge and that gains them a massive number of users.  Then, they make money by selling upstream to advertisers.  Maybe there are ways of selling packaging and postage.  When somebody sells you a movie over the Internet, it doesn't get subtracted from your monthly allowance [broadband cap].  So, it's other parties are paying the bills behind the scenes.

Martin and I have had discussions on it.  Obviously, being cynical, Telco 2.0 depends financially and utterly on people going to listen to it, who can afford to pay the tickets from the industry that is being given the message.  Undoubtedly, that double-sided model is a glimmer of hope if you're a telco wanting to think "We can extend the cliff a bit further and we can make it last a bit longer," I would certainly grasp onto that.  As far as I'm concerned, it's simply an idea to smooth the future a bit.

The idea that there is a non-disruptive, smooth, migratory way from where we are to the future, I think, is an illusion.  It will be messy.  It will be all sorts of ups and downs and so forth.  I don't think the vertically integrated service provider model is sustainable in the digital world.

I know you've been focusing on infrastructure so maybe it's a bit unfair to ask you this, but how do you see the opportunities, in terms of telecom innovation, if I even call it telecom?  That's a question; should we even be using the world telecom or communications anymore?  I don't know.

Interestingly, the two words I personally like using when talking with individuals is connectivity and conversation.  People want to converse.  That's not just talk, but communicate or converse.  I think telecoms - I wrote an article about ten years ago, "Telecoms Is Dead; Long Live Telecoms".  We're not going to get away from that phrase, but you asked the question about the applications. 

Where is the excitement?  I know you've been focusing on infrastructure. 

The excitement is when I meet a twelve, thirteen, fourteen, fifteen year old and I know that when they have a abundant bandwidth and capacity and cheap digital processing kit in their hands, they will dream them up.  It's not for me or you to do it, anymore than it is "Oh, let's invent the wheel so that".  It will happen.

I always remember Ken Olsen, when he was the head of Digital Equipment.  Do you remember he came out with that famous statement, "It's inconceivable that every home will want a computer"?  It was inconceivable.  It's inconceivable today, what all these new applications and services will be.  All we know is that when we all got low cost PC's, there was an explosion of applications and new uses that we never could have thought of.

I may dream up one or two, and if I have some good ideas - as I say to people, I don't believe in intellectual property.  I believe if I have a good idea I must either get out and exploit it faster than you or I must keep my mouth shut.  So, I'm going to keep my mouth shut.  [Laughs]

Okay, you do that.  [Laughter]  We'll be popping over and seeing what you're doing. 

I have been, literally for twenty-five years, frustrated and angry, I suppose, at what I see as these rich and abundant fruits that society will be able to derive from these technologies being held back because it's been channeled through some preordained sectors.  I have been wrong.  Looking back on it, my biggest error and insight was to see that there was going to be this inevitable bifurcation between the bits and the pieces, the hardware, and the stuff that runs over it and that they were going to be as separate in the digital world as they were in the analog world. 

If I was wrong on anything, it was in my expectation that it would become apparent to one and all, this year and next year, but the power of vested interests is extremely strong.  I shall ever forget, just before that BT conference I was having a conversation with the then Minister of Secretary of State at the Department of Trade and Industry, who was responsible for telecoms.  I was saying to her, in a one-to-one conversation with Patricia Hewett (MP), that what we need is an exemplar.  We need an example of the other way of doing things in terms of the local access network.  Once one can see that, kick the tires, and look at it, I'm convinced people will say, "Oh I see now.  If you'd have told me that that was what you were talking about you would have persuaded me a long time ago".  You're going to do the same, Lee.

Are you going to have that exemplar in the go by eComm, do you think?

I don't know.  This is why I'm cautious.  I've always been wrong about the timing.  When she said to me, "That's great, Malcolm, what can I do to help?"  I said, "What you can do to help is nothing".  She said, "What?"  I said, "Guarantee to me that you will do nothing".  She said, "What do you mean?"  I said, "Guarantee to me that when British Telecom or GEC or somebody else knocks on the door of Number 10, and the then Prime Minister Tony Blair answers and says, 'What do you want," and the vested interest says, 'Stop this; it's ruining our business.  If this thing goes ahead, we're going to be out of business all together.'  I want you to guarantee that Tony Blair will say, 'Push off, I'm not interfering with the free market and enterprise.'"  She said, "We can't.  I couldn't do that, could I?"  BT is a very major company in the British scheme of things.  It employs sixty thousand people. 

I don't know what's going to come out of the woodwork to sort of hinder this in the short term.  All I know, Lee, is in the long term it's inevitable.  I hope I'm here to help make it happen.  I hope I'm here to see it happen.  There are some very good signs.  I would say, in conclusion, if you're going to look at one place and keep an eye on one place, if it emerges anywhere ahead of where I'm trying to do some things, I suspect Singapore may be a very interesting place to watch.

Okay, so if we swing from Number 10 in the U.K., all the way across that pond, do you want to make any recommendations if you were advising Obama and his appointment of Chairman of the FCC?

He probably doesn't know my phone number, but I'd be happy to go and give him a hand.

I know somebody who knows him, so I could pass it on?  [Laughs]

What you should do - what I would say is don't look in the conventional areas.  I did hear Lawrence Lesig's name mentioned.  That wouldn't be a bad thing but you have to have somebody who is pretty strong, understands the fundamentals of it, and is prepared to 'sacrifice' what might appear as some pretty big beasts, in the short term, for the sake of the long-term future and wellbeing of the American people, and indeed, the free world.

I am always tempted to say that the current financial crisis is a good thing in all this because it is really causing people to think, "Hang on; there is something different about the future".  I look forward to Barak Obama's appointment.  I don't know who it is.  Whoever it is; give them my phone number.  I'm very happy to help, [Laughs] but I really do believe it needs some radical rethinking. 

Interestingly, when Powell was at the FCC, he got it.  But, he was moved on.  Some of his statements, in his last few days at the FCC, were visionary and unbelievable in talking about the segregation between infrastructure and services.  But as I say, George Bush moved him on and we went to a new era.

What would you say the biggest issue facing incumbent telecom players is, today?

The biggest issue, I think, is have they left the decision to late as to what their business is?  Are they going to release infrastructure in order to climb up the value chain, into the service application area or are they going to forget the service application area and fall back into focusing on the infrastructure? 

The other thing they're faced with, because most incumbent telcos currently are nationalized or national carriers, most cities have, as their local incumbent, a national carrier.  They're going to have to also face this issue that the city of Chicago is going to want to have a better local connectivity than the city of Detroit, or the city of Lubljana is going to want to have a better local connectivity than the city of Sombor, in order to compete.  There is a growing awareness; this is where we came in at the beginning, there is a growing awareness between a new breed of local, political leader that the open quality of connectivity in a town is going to be the fourth utility.  It's going to be one of the key determinates of that town or community's ability to compete in a global market, for attracting inward investment, in an ever increasingly e-economy.

Okay, that's interesting, actually.  I wish I had asked you that at the beginning because there are a lot of things I would have like to pick up on there.  There are other Sundays.  We've had a few calls now, but we haven't bothered recording them.  So, listen, it's been great having a Sunday cup of tea with you.  I'm going to get the kettle on and make another one.  Thanks for letting me record our casual chat, today.

When I've got time, I try to be open.  I like to share as much as I can and to listen as much as I can.  I look forward to the conference.  I'm sure that will be a great time for conversation. 

I'm sure it will be.  Hey, listen, take care, and have a good Sunday.  Thank you very much.

Whilst in the midst of transit I had the pleasure to have a pre-conference interview via Skype with Matt Ranney of Rebelvox.

Unusually for me, I did not know Matt personally and had not even had a pre-interview call with him. So this was both a live interview and a first meeting. So it's a bit more two-way and with a lot of informal chit-chat, particularly during the first 8 minutes.

The run time is 50 minutes.

Sorry for the slight clicking sound, it was entirely my fault due to playing with a software setting.

Additionally the full transcript is below. To distinguish between us I've indented Matt.

...I just want to jump in and say thanks to RebelVox for sponsoring, either a lunch or a breakfast.  I can't remember which.  You probably know.  Do you, or do we both not know? [laughter]

I believe it's a breakfast.

Okay, breakfast, thanks a lot for that because the ticket prices would be double.  The venues, especially that one is astronomical.  Nobody wants to be paying double the current ticket price.  So thank you very much.  Can I ask you why RebelVox sponsored?

Sure, I attended the first eComm in 2008.  I was blown away.  It was the conference that made the best use of my time in my career of attending conferences.  The content was high.  The schedule was rigid.  People got to the point.  It was a huge fire hose of great information.  That is the world we are playing in, that we at RebelVox are playing in.  We want to see more of that kind of thinking and the kind of people that go to eComm.  Those are our people.  We're happy to be a part of that.

Hey, that was absolutely fantastic, not even scripted [laughter].  Perfect answer [laughter], you've blown me away.

Is that going to be a sound bite and a little quote on your blog now? [laughter]

I think it will need to be.  That was perfect [laughter].  I'm going to need to interview you more. [laughter]

Maybe next time I'll prepare. [laughter]

Yeah, prepare a two pager [laughter].  I should probably get into this, but because we've not spoken, you might find it could turn into a two-way instead of a one-way.  For example, with Martin, because he is a close friend of mine, Martin Geddes that is, I was able to ask him questions I knew were good for him because we'd been chatting together for years.  Wheras we're just getting to know each other here. 

So anyway, I have to say that meeting with yourselves made me laugh because I posted on the blog, about the death of telephony and the you emailed me saying, "Hey, have you been influenced by RebelVox?" [laughter]  And I had to reply to you and say, "No".  I looked into it after you said that and I thought you guys were influenced by me. [laughter]

We all had a good laugh about that. [laughter]

So each end has been laughing about each other end, thinking the same things, and thinking each other had influenced each other.  Then tonight, when I asked you by email what you wanted to speak about, it reminded me so much of a chunk of the opportunities that I helped Martin Geddes highlight, by means of a long interview with him nearly a year ago.  I don't know if you read that interview I had with him?

Yes, I have.

You are a good eComm citizen. [laughter]

The overlap in thinking was just too great to ignore.  It's really interesting stuff.  I read it, start to finish.

Hey, that's pretty awesome.  We should have spoken before but I think from now on, we're going to be doing a bit of speaking.  It's a shame we haven't had a chance to meet up but  I'm sure we will, a bit longer than thirty seconds in passing.

You know, we were in stealth mode for a long time.  We weren't really talking to people about what we were doing.  That explains a lot of why people such as you haven't ever really talked to us because there was really nothing to say, until very recently.  Now, we're ready to tell the world what we're up to.

Maybe I'll say a little about myself here.  I can go on forever so I'll keep it short.  I I was away to say that you don't want pillow talk from me, that does sound a bit outlandish, but I'm allowed to say these things since it's a 2:00 a.m. here. 

Anyway I think you've gathered, since you're clearly in the eComm community, that I have, or had, not sure which to say anymore, built my career in telephony.  I'd been reading the British Telecom Engineer Journals, it was a general post office back then, since I was twelve.  By the time I was fifteen, I was reading the CCITT signaling specs.  But around four years ago, I realized that telephony was dead.  It hit me like a ton of bricks because the thing I love most, I realized, was dead.  It's dead, dead, dead, and dead.  Yes, we're using it every day, or at least most people are.  But it's categorically dead!  There is going to be a massive wakeup to that!

Anyway, so, when I looked at what you had been saying, your proposed talk for eComm 2009, you are also saying that telephony is broken.  I say it's dead because I know, in the long term - well I won't go into it all here, but it is certainly broken.  In the short to medium interim, the money is in fixing it. 

Can you elaborate on why you believe that telephony is broken?

Sure, it's funny that you think I'm not being strong enough by saying broken versus dead [laughter] .  I thought I was being a little too strong by saying broken.  I think that telephony, as we know it, will probably be around for quite some time.  It's just in too many places.  The bit about it, that I think is broken - it's not so much that telephony has really changed in some way that is now broken, it's just that society has sort of changed around this thing that is essentially unchanged since it was invented.

Now that information moves around very easily, and very inexpensively, we can communicate over great distances for the same cost as communicating over short distances.  All of this inexpensive communication in our lives has put crunches on our time.  As Martin points out quite succinctly, time is the new scarcity.  That's exactly right. 

The thing that's broken about telephony is it doesn't respect the time of the people who are talking through it.  That's what we aim to fix. 

Can you give me some examples?  I tend to be a little bit harsh in my questions.  It's because the whole thing interests and excites me.  Can you elaborate on "it doesn't respect people's time"?

Sure, I hate to be regurgitating things I've just read on your blog, but as you point out in something you wrote, "Party A summons party B with a bell, and that's why we call it a 'phone call'".  I want to talk to you, so I ring you.  I wait for you to decide whether you want to talk to me or whether you want me to go away. 

It puts you in this really uncomfortable position, where you might be talking to somebody in real life or might be doing something important.  You might be driving a car, or whatever you might be doing.  I'm saying I don't care.  I demand your attention right now.  There is nothing in between.  It's [telephony] a continuum with only extremes.  We're trying to open up some spaces in between the "you get to talk to me now," or "you don't get to talk to me now". 

The way it doesn't respect your time is, sort of, like it wasn't designed to respect.  This granularity of time wasn't even considered because of the other time it was saving, of travel time.  It used to take a long time to get places.  It used to be a big deal.  You couldn't fly places.  Calling was a lot cheaper than going someplace. 

We have so many different ways of moving information around, now, that time does become more important.  Telephony can respect people's time.  At the moment, it's just ignorant of it. 

I had to smile there because another little question came to my mind.  Have you noticed how the B party still behaves, for the most part, as it had in the past?  Because the A party was the one who bore most of the cost, i.e. because of the scarcity was the networking, they were paying large rental costs, i.e. call cost was higher than the human cost, then  B parties feel obligated to answer.  Yes, the older demographic is still up there, but it's still in the bulk of our society that you must answer a ringing phone, no matter how important the context that you're in.  Do you notice this? [laughter]

Absolutely, the problem is on both ends.  Not only do you sort of have to be interrupted, but then you think, "Geez, A party is already taking the time to call me.  I might as well".  They have sort of forced this obligation of your time and attention on you, out of nowhere.  This is exactly what I mean when I say it doesn't respect people's time.

A lot of the problem is because you don't know what the value of the inbound call is.  You don't know if it is critical to you or if it's something that would be better suited to another channel or another time.  It's completely and utterly blind.  Would you agree?

Yes, it's the same sort of live voice stream, whether it's just chatting, just calling to say hi, some short message, or some long message that's a conversation.  The way you initiate it is the same, in the current model.

If you look into calls, there are so many different types of calls.  For example, in his interview, Martin had been speaking about how a lot of calls are pure rendezvous as he calls it.  They're actually, calls in order to organize the real call, like, "Where are you," "I'll be home in five minutes," "Okay, I'll call you then".  It's kind of funny that we're using calls to do the rendezvous to have the proper calls. 

Then, some calls are just information transfer, like to pass over credit cards.  It's very strange that we're using the system to do all these things in such an inefficient way.

It's funny; I think the ultimate problem is that the only building block you have to work with is the call.  Even after you have something like some other way to set up that call, let's say you get one of those; you can send a text message or you can do some other thing that helps you set up the call.  At the end of the process, you've rendezvoused now.  Now you have a call.  I think even that is going to need to change for the brokenness to go away in telephony. 

Could you expand upon that? 

You and I are now talking on the phone.  We're using fancy computers to do it.  That's really neat, but here we are; we have a full duplex telephone call.  If the call were to drop because the network screws up or if one of us needs to stop for a second and tend to another call, the things that each of us say just sort of go away.  They're live only.  Live is the building block for all of telephony. 

The live, two-way call is the way it all works.  I think that is actually broken.  It should be more flexible in that.  You should be able to have some time-shifting, if you like to call it that.  You should be able to sort of listen whenever you want to listen, to whatever kind of media is headed your way.  

So, calls take on some kind of permanence or semi-permanence, if you want?

That's another way to look at it, as a side effect of doing that this way; you end up having more of a context, more of a history of your interaction.  I think we have to get rid of calls.  I think that's ultimately the problem and why we find all of this so inconvenient.  Once we've completed this rendezvous, we still have a call. 

For some things, of course, a call is the right thing.  For this conversation right now, this is the right medium.  We need to have sort of a two-way...

It's handy. [laughter]

It works very well.  I wouldn't suggest that we should do some sort of asynchronous, wildly delayed scheme, like a 187 milliseconds of latency is pretty nice, halfway around the world.  The thing is; for a tremendous number of different usages of voice to communicate, it's actually not. But it's the only thing we have to work with if you want to talk.  There's really nothing in between - of us talking, if you want to use voice.  There's nothing in between us talking live and us going into each other's voicemail. 

If you take the word telephony, generally telephony means a particular thing, what you're saying is - do you believe that the term telephony will disappear, will cease to have meaning, going forward?

I think that is one possible side effect.  I think telephony is going to be one of these words that ends up being meaningless, like broadband.  Broadband used to mean one thing and now it means fast Internet, I think.  It will take on some sort of different term, or not, or maybe we'll always use it to refer to this kind of old-style of phone calling that we used to do before we figured out something better.

If I just jump back to this rendezvous thing, just looking around the Web here, I have ADHD [not officially, just get bored easy] so I'm looking at a couple of blogs here.  There has been quite a lot of buzz in the blogosphere lately around VoIP is dead, or VoIP is not dead.  I kind had to chuckle to myself because they're arguing about the technique to transmit the media itself.  In the 80s, we went from analog to digital.  In 1990, we went to ATM.  In the early 1990's...

Yeah, it's the plumbing.

It most certainly is.  I was away to say that Idon't remember people getting excited about digital but I did get greatly excited.  Digital actually had a lot of huge promises when ISDN was wrapped in, but operators unfortunately failed [laugher] to realize what could have been the Internet back then.  The same actually happened in the early 1990's [ATM]. 

They're getting exciting about or arguing about the plumbing.  I don't normally share too many personal opinions, believe it or not.  I've been fairly quiet the last four years, but I'll say this; the real revolution is going to be around what I call "person-to-person signaling".  The revolution isn't in the media transport, but actually the signaling. 

A sub-set of that is what Martin had called the "rendezvous process". 

Anyway, you said to me, in the email earlier, "People have attention synchronization challenges in their lives".  Can you tell me how you plan to solve these challenges, or how you are solving these challenges?  I'm sorry.  I don't know if you're already selling [solutions]?

You can't go to the website and buy our software or anything, but yes, this is something we are doing.  What I mean by that is that the synchronization of attention is really the critical aspect or barrier to communication happening.  Sure, one way you can synchronize attention is with these improved signaling schemes and then you end up with this rendezvous.  And then, you've got full attention.  I think it needs to be a broader spectrum than that.  Yes, I completely agree with that and I'm totally on board with your improved, human-to-human signaling, but I think that the signaling actually is the media.  It's not necessarily just in service of getting some live call going.  It is the content.  If that content is best relayed in a live way then that's how the people will use it.  They should be able to get what they want.  The signaling, in and of itself, has value as content.

Actually, that's a topic we should really focus on if we do another interview before this conference.  That is a very exciting topic.  It takes a lot of time to go into that.  I'm sure you'll agree because [laughter] obviously, you know what I'm talking about.  We really should focus on that for another conference interview.  It's a whole talk in itself.  It's a terribly exciting area.  You've spurred me on with some excitement by bringing that up [laughter].  It's one of these other things where I kind of thought I was on my own, or fairly on my own.  That will be a lot of fun, to discuss that, because I've been doing a lot of thinking about it.

I would love to do that.

Do you want to say how you're solving those challenges? 

I'm sort of dancing around the issue a bit, but the signaling, the messages, or the content you can deliver to somebody else, becoming the purpose of what you're doing, runs into a problem with voice.  Because the ways in which voice is currently delivered are pretty awkward.  You have to get a circuit, call people, allocate a bunch of resources, get your QOS going; or get your time slices [TDM, or whatever it is that you need to so you can talk to somebody, even if you ultimately end up with voice mail.  That's still what you need.

What we're doing is throwing away the requirements for circuits, reserved resources, and all of those sorts of things.  We're pushing the complexity of managing that kind of stuff all the way out to the edges.  You have these powerful devices now, your iPhones and what have you, with relatively speaking, very powerful computers on board.  They have multitasking operating systems and advanced networking capabilities.  None of these things is really being used to kind of change the way that voice works; they're being used to run applications.  That's neat and that's great, but we're going to harness the power of these smart devices to process your voice, to deliver communications with your voice, in a way that is kind of separate from the requirements imposed by the network. 

Once we're free of that, we're free of requirements, strictly, of people's dedicated attention.  You can have a more arbitrarily time-shifted way to listen to incoming voice or video.  You can send things without waiting for the person on the other end to acknowledge, basically without waiting for the network, without waiting for anything.  We're respecting the sender's time by letting them talk immediately, and respecting the receiver's time by not necessarily interrupting them, allowing them whatever level of participation they want, at that time.

Even though it's 2:00 a.m. here, and I'm fairly tired, as you might hear in my voice [laughter]; I don't have the usually spritely thing on.  But I have to say I'm really glad you came along to the 2008 eComm conference [laughter]. 

Why is that?

You're very much in tune.  You're certainly thinking ahead.  I know the direction, from what I'm hearing.  I mean I know these areas well and we should really do some more chatting again, and record it, but maybe some offline?  I tell you; it's terribly exciting things.  It is so good to begin feeling that other people have noticed the same things.  Because the industry has been so stagnant for so long.  I'll be honest with you; I don't read that much in comms, blogs, and news just because I'm bored stiff.  That's not going to win me many friends I guess, so maybe I shouldn't have said that? [laughter[

I'm with you [laughter]. 

I'm very very bored with comms [publications].  It's been rehashing the same old stuff for so long, and yet, the opportunity has never been bigger.  Maybe I'm just really fortunate; I was lucky enough that Cisco said they would pay for an engineering doctorate for me.  It was around the time I realized that telephony was dead.  So I then spent seven days a week, twelve hours a day, fourteen hours a day, contemplating the future of telephony.  I know I spent three years at it.  I must admit; it might sound a bit extreme, but it actually destroyed my life [laughter].  I can say I destroyed my life for three years [laughter], thinking about the future of telephony.  It was head breaking. 

I've not been public, or so public at least about the conclusions I've came to.  I've only kind of dabbled with mentioning things publicly, for various reasons.  It would actually take so much time to get some of this stuff out.  It was radical conclusions I came to.  It's really good to hear others who are getting into the same conclusions.  I would actually like, at some point, to begin saying where I see things longer term.

But anyway let me get a bit more down to Earth here.  The economy is dire.

That's putting it mildly.

I'm being very polite tonight [laughter].  Communications and transport are the two backbones of an economy, and yet, the communications we have today, predominately telephony, is so inefficient.  It's incredible; we can drive massively increased efficiency.  That's why it will happen.  That's why telephony has to die.  Efficiency will always win if you believe that globalization will keep on trundling on.

Today, for example, I wanted to post speakers [of the hifi kind].  I'm in the U.K., so I called Parcel Force, which is a courier.

[laughter] By "post", you mean ship physically?  That very doesn't mean anything to Americans.

Ship, yeah I'm sorry [laughter].  It's like the old car hire and car rental.  It confuses the hell out of people.  I've started saying motorway or freeway because if you say dual carriageway, people start off, "Where are the horses?" [laughter] At least I'm not calling taxis hackney carriages. [laughter]

I do like how you used "outwith".  Is that where the accent goes?  Is it on "out", or is it on "with"?

I'm confused.

In your blog post, you used a word that I've never seen before, which is apparently a Scottishism, you jammed the words out and with together, as one word.

I actually thought I'd wiped all Scottishness out of my speaking.  Not only working in the States, I had a couple of ladies who were Americans.  I soon realized that they didn't understand a lot of the things I said, not because they didn't hear the words but because the words are not in an English dictionary [laughter].  I wasn't aware of that one.  I need to look into it.   

I thought for sure it was a typo, but Google to me the truth, which was, nope - Scottishism.

Yeah, yet another one.  There are also three hundred words for rain [laughter].  I can tell you exactly what - if I could use some Scottish words for rain, you will know exactly what type of rain it is.  You will know the speed, how quickly you'll get wet, just by one word.  In Scots, you can also say a word that begins with "f" and ends with "k" and you can say that in three hundred different ways, in order to have whole conversations with that one word.

That's weird; I have no idea what that word could be, but I would love it if you would tell me about your experience with Parcel Force.

Sure. I called them after being at the website.  I got a deep, IVR tree that took me three minutes to traverse, including the ringing time.  At the end of the three minutes, and this happens often, it told me to dial another number (surprise).  But it only told me once.  I didn't have a pen.  I wasn't at a PC at that point.  Guess what; I had to redial, traverse the same old IVR tree, to hear that number again.  I noted it down, dialed a new number, got to large IVR trees, then I got hold music.  I had no idea how long I was going to wait, so I just hung up.  I actually didn't bother getting a price from that company.  I went to a company I already know because it's a lot quicker time-wise.  That was me trying to establish a session about trying to obtain a piece of information, via telephony.  It was burning up so much of my time that it was cheaper for me to over spend on a company I already knew, than to engage a new company.

Are you able to highlight any inefficiency which you can see, other than kind of what you mentioned earlier?

Sure, in your world, what would have been the ideal interaction on your phone, with Parcel Force?

I dial a number and somehow magically I'm through to the right person who can actually answer the question I had, without playing about, without putting me on hold, and without passing me around or making me push buttons - speed of information.

For example, one way that your interaction with Parcel Force could have gone is that you could have found them.  You could have gotten your device or whatever it is that you talk telephonically into, and you could've said, "I want to post some speakers.  Here is where they're going.  How much is that?"  You could go do something else.  You could do whatever else it is that you wanted to do [laughter[.  Then that communication could get routed through the Parcel Force whatever, call center or however it is that they do this; somebody will answer that.  Maybe they have some way to scan it for key words, and more efficiently get it to the right person on their end, but they can give you an answer.

The problem is that you have made a live phone call into some system.  The only way they can interact with you is "live".  You would like to get to a person, but what they would like you to do is hang up because people are really expensive.  So that's a big inefficiency that we want to fix.

I like that.  I would have liked to have been able to inject voice into that company; I ask a question within thirty seconds and I don't care if it takes an hour for them to come back to me with the answer.  In what you mentioned, would you be suggesting going voice to text, then process the text for semantic meaning, to help in the routing process?

[laughter[ I'm definitely suggesting that.  Computers can parse text and act on text very well.  Even if they don't get the full meaning, chances are they can at least get your message into the right bin, wherever it's supposed to go, oops I can't use "bin" as that means trash, right? They get it to wherever it's supposed to go having converted to text, and still maintaining the original voice, to the extent that it's useful.

Not only that, but even if they get it in the wrong pigeon hole [laughter], whoever receives it can say, "This is in the wrong pigeon hole; send it here," and the machine can learn. 

Yes, but you can't really do that if you have a phone call.  Someone dials in, they have this long - they say calls are recorded.  But, the whole call may be recorded but how do you separate out the part when you're talking about this, versus the part when you're talking about that?  As you put it, injecting voice into that company with a very specific request, encapsulated within the boundaries of that voice injection.  You allow it to be converted to text in a very meaningful way. 

We've actually highlighted two areas tonight, which I want to say are exceptionally exciting.  I might not sound exceptionally excited [laughter[ because of the time here and because I need to catch up with this much later on.

The first one is that there is a revolution around the signaling.  It's not to do signaling on IP [laughter], the change of transmission of signaling.  It's the fact that you go person-to-person.  It's taken the signaling from a circuit level to a sociological level.  It's actually, where sociology intersects with computer science.  The whole rendezvous thing is a subset. 

Secondly, what you've raised is absolutely fantastic which is you cannot process the media in a call.  It's fairly unprocessible, as you say, they record it, but you can't understand it, you can't parse it.  Once you parse it, can understand it, it becomes terribly exciting input to play with, to build cool apps, better things, and make things more efficient.

Is that a direction that RebelVox is looking at?

Yes, we're looking at it in terms of enabling those sorts of things to be built.  We're not trying to define all of the different, actual uses of something like that.  We're trying to say, "You can put your voice into the system, in a way that makes it much more useful than the current system you have.  You can map this onto your business process in the ways you, the business owner, know best.  We're going to give you the tools, this platform that can make all these kinds of things possible.

You mentioned business processes.  I can say this; eComm 2009 will have a lot of talk about making business process more effective with communications.  That's a really nice area to be looking into.  You're really going to love the next eComm because I know the talks that are lined up.

I'm looking forward to it.

If I think about this, and I look at what you guys have been doing, you have also been looking at emergency services, in particular, tactical radio.  Is that correct?

That is correct.  The origins of RebelVox sort of come from the tactical world.  My business partner was a Special Forces communications sergeant in the U.S. Army Special Forces.  He served in Afghanistan.  He ran into a number of very challenging communications problems that were the origins of what we're doing here.  They sort of boil down to, you can't be on more than one channel at a time. We thought about that and how could you fix that? That's where we realized what the problem was.  Of course, you could build a radio that is literally on more than one channel at a time, but that's not a very useful thing to have because you only have one brain.  You can't give live attention to multiple, other people, at the same time.  That's where we went with it, this sort of attention synchronization. 

It turns out that most of the tactical radio communications don't have to be strictly live.  They're transfers of information.  The way those systems are used is almost always an information transfer.  You press the button; you transfer some information to somebody else.  You're not even expecting it to be full duplex communication because most of them aren't. 

The problem of synchronizing your attention across more than one channel or more than one conversation at a time led us to realize this problem in the tactical communication space because it's dangerous.  People's lives hang in the balance of communications being effective.  Everybody has these same sorts of attention synchronization problems.  You and I both have this problem; we just don't notice it.  The consequences are not so dire for failing.  No one dies if I don't answer my phone.  It's sort of inspired by tactical communications but we think it's applicable to anybody who talks into a device to somebody else on the other end.

I totally get what you're saying.  It's applying what you learned from looking at telephony to the tactical radio side of the house?

When we talked to people in the tactical communication space, they always say, "Wow, when can I have this on my cell phone?" [laughter] It's pretty interesting.  That's part of the unique perspective that we're coming at this from.  It's understanding that tactical communications mindset and bringing some of those elements into commercial telephony in a way that saves everybody time.

We've been on this call for forty-five minutes.  We were actually meant to do fifteen.  Because it's the early hours here and I need to get up for a plane also, I'm going to need to shoot off this call.  I can say this; it was really fantastic having this chat with you.  If it's okay with you, what I will do is I will not edit it, possibly me even describing words in Scots you can say [laughter], and just put it out there.  I think there has been valuable content on our meeting call, our first call together.  I think it will serve as a basis to link to.  You and I should really do a little bit of speaking offline and probably do this again once you and I are more in sync.  So far, it's been fantastic.

I totally enjoyed this conversation.  I just want to say thanks for staying up late [laughter] .  I appreciate you willing to be a little flexible in your schedule.  It made it possible to actually talk.  Thanks.

It's no problem.  I tend to find that most of the people I speak to are in the PST time zone so I often find I'm up in the early hours.  I really appreciate the enthusiasm I got with the speaking proposal from RebelVox.  I thought that was fantastic.  I don't want to go back in this whole interview again, but I have to say it to you; how long have you guys been researching it?  It sounds like you guys have been doing serious research.

Two of us have been thinking about this problem for almost five years, now.

Hey you were doing it the same time as me [laughter] and also Martin. We've been like these nodes around the world thinking about similar things.  This is so great.

That's really very funny.  We've been talking about this for about five years.  It sort of came together as a company about a year and a half ago.  We built up a team and started working on building it.  I've been sort of poking around, kind of as you describe, but not as anguished [laughter].  My investigation was more fun.  I didn't have a lot invested in the telephony world, but I was really curious about how to save time.  I realized that every time somebody called me on the phone I just felt as if I had travelled back in time to when it was novel that people could call me on the phone.  I've just been trying to figure out how we could make this better.

A good word used there was "anguished".  Imagine being me for a little while; you grew up as a kid, your love is the telephone and telephony, the heart of telephony, the intelligence, the nervous system is Signaling System No.7 (SS7), so you decide you want to become the world's top expert in it.  You believe you've become that [laughter].  You think you've gotten where you wanted to be and then as soon as you get there, it suddenly slaps you right in the face that that very thing is actually dead.  Anguish is a good word!  But actually, the opportunity I learned from those three years which must have overlapped what you were speaking about.  The opportunities I see are absolutely tremendous.  This is just a part of it.  So I really do look forward to chatting with you a bit offline.  On that, I better get going.  Thanks again, for your time.

Sure thing, I really enjoyed it.  Talk to you later.

Thank you.