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The Almighty Buck

Customer-owned Networks: ZapMail & Telecoms 233

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

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  • by Anonymous Coward on Wednesday January 08, 2003 @07:41PM (#5043622)
    "Those days are long over, as copper wires have been largely replaced by fiber optic cable."

    Tell that to the guys working at the thousands and thousands of wiring frames in telco central offices.
  • by persaud ( 304710 ) on Wednesday January 08, 2003 @08:19PM (#5043839)
    At a US Dept. of Energy 08/02 workshop on High Performance Network Planning, Bill St. Arnaud gave a presentation on CA*Net4, the Canadian optical research network where "... Universities and researchers own and control their own lightpath wavelengths and _associated cross connects on each switch_."

    Topology:
    • a network of point-to-point "condominium" wavelengths
    • condo owners can recursively partition their wavelengths
    • wavelength owners determine topology and routing of their light paths
    • massive edge peering, "star bursts" vs. "ring of rings"
    • not "distributed network objects", but "distributed object networks"
    Customer oriented end-to-end model:
    • customer owns infrastructure, carrier provides network management
    • asset-based telecom allows customers to fund and control the network
    • customer controls the bandwidth
    Details:
  • Re:Static IPs (Score:2, Informative)

    by Lokni ( 531043 ) <reali100@nOspAM.chapman.edu> on Wednesday January 08, 2003 @08:24PM (#5043863)
    I have a dynamic IP address for my cable modem but it has not changed in over a year. My ISP (Time Warner) doles out IPs via MAC address. As long as your MAC address stays the same, you will get the same IP address each time.
  • Re:Static IPs (Score:2, Informative)

    by Scyber ( 539694 ) on Wednesday January 08, 2003 @08:45PM (#5043970)
    I think he was refering to bypassing a VoIP service provider. The Cisco box used by vonage has the ability to connected directly to another cisco box (I believe you use the # as the dot in the IP address), thereby completely ignoring the service provider. For this you need a static IP.
  • by stratjakt ( 596332 ) on Wednesday January 08, 2003 @08:46PM (#5043976) Journal
    I work writing/maintaining software for public service, including CAD (computer aided dispatching) systems. So I pretty much set up 911 systems from the police's end, and pretty much everywhere it's run at a municipal level. No 3-letter gov't agency need be involved, the 911 service is contracted between the city/county and the provider.

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

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

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

    They're a decidedly technophobic bunch. You'd be surprised to see how many agencies in sizable cities still do their dispatching via cue cards and a bulletin board.
  • Re:Static IPs (Score:3, Informative)

    by tomhudson ( 43916 ) <barbara,hudson&barbara-hudson,com> on Wednesday January 08, 2003 @08:48PM (#5043986) Journal
    So write a script that checks your ip every minute, and, if it changes, posts the changes. I did this yesterday so that we can run our web-based apps and check the webcams at the office, without either a static IP or dynadns service. It just uploads a new page with an updated link to our office server's ip.

    If anyone's interested, I'll post the details, or a howto. (You'll need a linux box and perl, 'natch! :-)

  • ILECs vs LD carriers (Score:3, Informative)

    by cshirky ( 9913 ) on Wednesday January 08, 2003 @09:14PM (#5044124) Homepage
    Two points:

    First, the "big boys" you name are not the incumbent local exchanges, or ILECs, like SBC, BellSouth and Verizon. The article, written for the general reader, glosses over the difference between local and long-distance service, but its the ILECs who have the most to lose from Vonage et al, because the ILECs are the ones who make their money locking out competition and locking in service fees for things like Call Waiting that VoIP can do for free.

    Second, the move from Column A (per-minute fees on a voice-optimized network) to Column B (voice as just another flat-rate app on an IP-based data network) is more than just bookkeeping, because you get to charge a lot less for apps in Column B. If all of ATTs LD revenues were to switch to VoIP style pricing tomorrow, they'd be out of business by the weekend.

    -clay

  • A few FedEx details (Score:5, Informative)

    by Anonymous Coward on Wednesday January 08, 2003 @09:19PM (#5044142)
    While the article makes some reasonable points about the ZapMail / personal fax machine 'competition' as usual there are a few details that fill out the picture (and maybe make it a little more interesting).

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

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

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

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

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

    If a few things had gone differently, the project might of at least been launched and operational for a while. There's little doubt that the Zapmailers did not understand how much the common fax machine would spread, but what would have been launched would still be in its own 'league' even now.
  • by TooTrueTroubs ( 630665 ) on Wednesday January 08, 2003 @09:27PM (#5044177)
    This kind of model is simpler to see in action in Australia. Unlike the US, we only have 2 major landline-phone companies for the entire country, plus a multitude of cell-phone companies and ISPs.

    The traditional telco, Telstra (still largely government owned), has hugely inflated prices for lesser services. The rival upstart company, Optus is usually more cost effective.

    Optus is offering Voice-on-Cable for around $35AUD - approximately $17US - and throwing in 100 calls a month free. Now that's not quite following the service model proposed by the article, but it's close, and damn cheap.

    You can get cable internet services + voice-on-cable for a combined fee of around $75AUD a month.

    This is Optus's main strength - it's converging most of the major communications services into a single package - cable internet, cable TV and cable voice, at a price-point that is, if not cheap, then at least reasonable.
  • by cshirky ( 9913 ) on Wednesday January 08, 2003 @09:29PM (#5044190) Homepage
    You don't need a static IP if you have a static phone number. Once Vonage gives you a phone number, it keeps that at the permanent entry in its db, matching your phone's dynamic IP to that phone number on the fly.

    This is the ICQ model, where the IP address is treated as the temporary half of a permanent->temporary lookup table. This is one of the big wins for this version of VoIP.

    -clay
  • Can you blame them? (Score:5, Informative)

    by Goonie ( 8651 ) <robert.merkel@be ... g ['ra.' in gap]> on Wednesday January 08, 2003 @09:35PM (#5044214) Homepage
    If a new system has bugs, people can (and sometimes do) die. This tends to be a pretty powerful incentive to keep an old, working system going.

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

  • by SiliconEntity ( 448450 ) on Wednesday January 08, 2003 @09:44PM (#5044248)
    Jane Black wrote an article making a similar analysis in BusinessWeek Online [zdnet.com] a few weeks ago. She discussed commercial WiFi companies like Cometa and brought up the example of FedEx's ZapMail to illustrate that commercial WiFi could face the same failure. Some quotes:

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

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

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

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

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

  • by unix guy ( 163468 ) on Wednesday January 08, 2003 @09:46PM (#5044257) Homepage
    I don't know where most of the posters get their information, but we amateur radio operators (hams) have been doing VoIP for quite a while, over dialup and without static IPs - and we talk anywhere in the world to any other connected user. Check out http://www.eqso.org and http://www.synergenics.com for excellent software.
  • by billstewart ( 78916 ) on Wednesday January 08, 2003 @09:48PM (#5044264) Journal
    Residential 911 is relatively easy - the phone company installed your phone at your house and knows where it is, so they can program the 911 computer to know that the call from +1-202-456-2121 is from 1600 Pennsylvania Ave. Cellphone 911 is obviously hard - the phone can be almost anywhere, and the easiest thing the phone company can tell is that it's near the cell site it's using now; some digital cell phone standards can do a reasonable job of triangulation on distances to multiple cell towers to figure out locations. At least the wireless people have some clue.

    For VOIP, though, the way the phone call reaches the phone company is that somebody has a box that translates between phone lines (usually T1 trunks) and IP addresses, so the only thing the phone company knows is that it got a call from 202-456-2121, which terminates on a box in the basement at 1600 Pennsylvania Ave. PBXs already cause some trouble with this, but they're often bright enough to know that the call is from extension 1234, and somebody can run a database that knows that x1234 is on the 12th floor. With VOIP, it's even worse - the VOIP-to-POTS gateway is some router or PBX that knows it got a connection from 10.32.11.1, and it's possible that somebody has a database that shows that that address belongs to a DHCP server on the 12th floor, not that the 911-police know how to find your data network management staff in a hurry, but in most of the VOIP standards, there's really no information beyond the IP address.

    And of course your IP address might be anywhere in the world - did you dial in today from home, or a hotel, or an airplane, or your corporate office 3000 miles away? And think about the VOIP phones themselves - some people use telephone-oriented software applications on their PCs (it's 10.01.01.23 - do you know where your laptop is?), while other people use desktop VOIP phones from a variety of vendors, which you program to know that you're Linus Torvalds on +1-202-456-2121, and if you plug them in anywhere in your company's network, they'll find the gateway server, let it know your current IP address, and be ready to pick up your voicemail and incoming phone calls. Anywhere. So if you dial 911, the town your company's main office is in knows that there's an emergency somewhere near you, but it doesn't know where you are. And if you're not using a coporate VOIP system, you could really be almost anywhere. And if you're going through a NAT firewall or VPN gateway, you could be even farther anywhere.

    So what kinds of approaches can people take to fix this? The two obvious first steps are either to get the phone company out of the way (give the 911 people VOIP so they can at least try to traceroute you, though that still has all the IP-vs-location uncertainties), or else to make sure that the VOIP standards are updated to do a better job of passing location information (for people who want to pass it) and that the VOIP-to-POTS gateway standards provide some mechanism for passing that along, whether it's starting the call with a 300-baud beepstream or using a separate internet or modem channel to pass on the VOIP as packets rather than translating to audio. That's still not enough - your laptop or portable voip phone only knows what you've told it, and unless GPS becomes much much cheaper, lower electric power, and better at working inside, it's can't use GPS to find out for itself.

    Somebody could develop standards and implementations for some kind of where-am-I beacon, which probably would be better to run on a router but could be run on a PC, which you could program with your location, so a device can check with the net to get at least some advice about where it's located physically, though obviously that information could be misadministered or forged or just blinking 12:00. And if there's more than one of them that you can see, obviously you'd want some kind of decision-making process to find the closer one....

    Then there's the whole privacy issue. Usually if you're making a 911 call, you probably want the police to be able to find you. But not always, and you certainly wouldn't want them to be able to find you when you haven't asked....

  • by Em Ellel ( 523581 ) on Wednesday January 08, 2003 @10:02PM (#5044336)
    Actually what I am talking about is service like Vonage, works kinda like Instant Messenger only in hardware. You log in and it keeps connection open, caller contacts the provider IP (or to be more exact, dials you phone number, yes a regular phone number) and your phone rings. No inbound ports open, NAT prefered (allows you to use your broadband for you home PC's, and in general a good idea for security). Noone cares what your IP is, as long as you can reach the internet.

    -Em
  • by Nynaeve ( 163450 ) on Wednesday January 08, 2003 @11:31PM (#5044805)
    That's why Linksys offers the EtherFast® Cable/DSL Voice Router [linksys.com]

    The Linksys EtherFast® Cable/DSL Voice Router is the perfect solution for connecting a small group of PCs to a high-speed broadband Internet connection or a 10/100 Ethernet backbone--and it features Voice Over IP telephone calls powered by Net2Phone. With the EtherFast® Cable/DSL Voice Router installed, no other special hardware is necessary for telephone calls. An ordinary telephone connects to the RJ-11 port (telephone jack) on the back of the EtherFast® Cable/DSL Voice Router, and calls are routed by Net2Phone's superior quality network to anywhere in the world--significantly reducing long distance charges.

    Unfortunately, it appears you are locked into Net2Phone as your provider. Anyone have one of these?
  • by spRed ( 28066 ) on Thursday January 09, 2003 @12:33AM (#5045028)
    What everyone forgets about, if they knew of it in the first place, is the free rider effect.

    The US bears most of the cost for most of the technological innovation for the entire world. Other countries producing things at a commodity price is easy -- once those things are already commodities.

    Countries without a copper telco infrastructure are going pure wireless. Not because they put in the R&D, but because the R&D is already done. The infrastructure can be bought at commodity prices and a wireless infrastructure is cheaper than one made from copper strings & trees.

    Drug prices are the primo example. US consumers pay the cost and the rest of the world reaps the benefits. The marginal cost of making a bottle of pills is low, manufacturing the chemicals once you know which ones to make is cheap. Selling at a low price in a poor country makes sense, if you charged $1 more no one would buy it and you would make no profits. But once 1st world countries say your choices are sell at the government approved price (which is similar to the 3rd world price) or we will copy your invention and sell it at that price anyway, you are screwed. The cost of R&D isn't recouped and it isn't worthwhile to make the next useful drug.

    Or more exactly, the countries that agree to pay the /real/ price are screwed, and you get a freebie. For a little bit, then the drug companies go out of business and everyone loses.

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