The Three Hats of VoIP

Over the past few years new VoIP products and services seem like they are announced daily. While this rate of innovation is exciting, it is also very confusing. How are these companies the same or different? What service should I use for my business?

These new VoIP solutions fall into one of three general categories: hosted PBX solutions, telephone API platforms or telephone applications.

Many hosted PBX solutions, such as Packet 8, Vonage or Fonality, replace your business’s premised based telephone with new SIP phones or “soft-phones” connected over the Internet to a hosted PBX system. These solutions often result in lower costs with no premise based telephone system to support and maintain. But, there are hidden costs in this model that complicate the buying decision. The best solutions require your company to install a dedicated, VoIP-optimized Internet connection. These connections are often more expensive than dedicated phone lines so some of the costs savings disappear. Since cost is most often the driver for the switch from plain old telephone lines (POTs) to hosted PBX solutions, this space has been commoditized and has become highly price competitive. This price competition is good news for your business but creates challenges for the hosted PBX companies.

Telephone APIs from companies such as Twilio and Voxeo, offer a platform where your software developer initiates and controls phone calls without purchasing equipment or telephone connectivity. The best APIs, such as Tropo from Voxeo, give your company access to a sophisticated, and highly reliable, telephony network suitable for developing complex telephone applications. Ease of use is often a selling point of these platforms, but in reality they are only easy to use for experienced software developers since they provide infrastructure and not packaged solutions. An experienced software developer may be able to code a simple phone call with just a few minutes of work using a telephone API. But building a robust, reliable telephone solution, such as dynamic call tracking, a virtual call center, or customer notifications service with retry logic and automated scheduling, requires hundreds or even thousands of hours of work. Telephone API solutions are best for companies where integration of telephone services is a core competency and where dedicated software developers are available for application support and maintenance.

Telephone application services are completely different from both hosted PBX solutions and telephone APIs. Telephone applications, from companies like Ifbyphone, provide your business with complete, ready-to-run, hosted applications that work with any telephone - business, home, VoIP or PSTN. The plug and play nature of telephone application services enable your business to measure value immediately - increased sales, reduced service delivery costs and improved customer retention. You can use these applications to manage, measure and automate phone calls that track advertising campaigns, dynamically route calls, provide customer notifications and deliver customer fulfillment or support via virtual call centers or distributed call groups. Then by utilizing an API on top of these applications your company can quickly and cost effectively integrate these ready to run applications with key business processes.

To further clarify the differences among these three VoIP models, let’s compare them to traditional web business services.

  • Hosted PBX solutions are like Internet backup services such as SugarSync or Mozy. Instead of purchasing and maintaining your own computer backup equipment, you back up your computers over the Internet to a centralized service. While you share a high-quality backup facility, you still carry the cost of the Internet connection and the desktop computers.
  • Telephone API platforms are like web hosting companies such as GoDaddy or Rackspace. The hosting company provides you a platform to build anything you want providing you have the right skills and the staff to support your custom application.
  • Telephone application services are like or NetSuite. While you could build your own CRM system, most businesses choose to use an off-the-shelf CRM solution. then provides APIs for integrating with their applications and a specialized environment for extending the platform ( Similarly, Ifbyphone offers an API for integrating with our applications.

While hosted PBX solutions, telephone APIs and telephone applications may share the VoIP “cloud”, these three solutions are very different. Think of hosted PBXs as replacements for existing telephone systems. Telephone API platforms provide a greenfield environment for software developers. And, telephone application companies, such as Ifbyphone, provide ready to use applications for businesses looking to increase sales, improve customer retention and increase business efficiency.

By focusing on ready to run telephone applications Ifbyphone is helping thousands of company manage, measure and automate voice interaction with hundreds of thousands of customers daily.

2010 Predictions about Cloud Telephony

Now that we are well into the new year, and the dust has settled on the annual predictions from all of the popular industry experts, I would like to add my own observations to the mix.

When I think about the telephone industry the old Rodney Dangerfield line about respect comes to mind. Telephones just don't get no respect. While most businesses, if forced to choose between their telephones and the Internet, would give up their Internet access before their telephones, these same businesses take their telephones for granted. In fact telephone companies are called utilities. Wikipedia defines a utility as:

"... an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure) ..."

So a utility maintains infrastructure. How exciting.

While utilities are critical to our businesses and society, we surely don't think about them as value added. They are just there. But we sure do count on their reliability. The telephone utilities of old were famous for using the phrase five nines (99.999) which is still the gold standard of reliability. No more. The world of telephones has changed. Few if any telephone services still offer five nines of reliability. Overall we have traded cost for quality. We pay much less for phone calls today than at anytime in history. In exchange we are not surprised if our calls drop or if we have trouble getting a dial tone. I believe that for many people their Internet connectivity is more reliable than their cell phone. What even happened to five nines?

Have we given up five nines of quality just for lower prices? I think not. Along with lower costs the telephone network is also much more open today than at any other time. Due to changes in tariffs, the elimination of many national telephone monopolies and the availablity of VoIP access for call termination and origination, anyone can build an application that interacts with an end user's telephone device. This device may be a traditional phone, or it might be a mobile phone, a smart phone, a VoIP phone or even a computer.

What is my prediction? In 2010 telephones will transition from cost centers to profit centers as more businesses recognize the opportunity to change the way they use telephones. Cloud-based communications enabled business processes (CEBP) will improve business economics in much the same way that "" revolutionized customer relationship management. CRM went from a nice to have, used mostly in very large enterprises to a fundamental component of standard business practices. has helped turn average sales and service organizations into outstanding organizations that drive increased revenues and profits into thousands of businesses.

In 2010 businesses of any size, from SOHO to Enterprise, will gain access to telephone applications agnostic of device (that work with any telephone) for improving business lead flow, optimizing sales processes, reducing service delivery costs and improving customer experiences. Just as revolutionized thousands of businesses' relationships with their customers, Cloud Telephony based applications will dramatically enhance the utilization of telephone technologies in businesses of every size, turning the utility-based telephone cost center into a profit center.

Thoughts About Clouds

My thoughts about the evolution of cloud computing and cloud telephony.

Let's begin by thinking about the history of computing. First we had mainframes, since they were very expensive we shared them, hence timesharing. Then as computers became smaller and more inexpensive we put mini-computers in our businesses, and ultimately personal computers on our desks. This lead to fat client, client server computing. Unfortunately we found that supporting complex applications on our employees desks was very expensive, so we began to move applications back to the data center and ultimately to the clouds.

The same evolution is occurring in telco. In the beginning of telco all complex components where centralized in central offices and switching stations. Then as PBX systems dropped in price, enterprises installed PBX systems, and ultimately many small businesses installed key systems. However, these systems were limited in their expansion capabilities and expensive to support, so business have begun to look for alternatives. The alternative is to move telco back into the clouds with your telephone becoming your voice and multi-media browser accessing cloud delivered services.

In the telco industry we have always lived in the clouds. I would propose that Cloud Computing is in fact just the latest terminology for Timesharing and in the world of telephony Cloud Telephony is in fact the latest evolution of "The Network is the System".

It is ironic that while traditional telco is the gold standard of quality and reliability, you probably remember 5 nines of reliability in the old days, cloud computing and cloud telephony are viewed as inherently less reliable. In fact it is just the current implementations that are not as reliable as they need to be.

To summarize I predict that in a place not to distant from today, your computers and telephones (often the same device) will be browsers for multi media content which will include voice, audio, video, images and text and that the "cloud" industries will resolve the reliability challenges.

Here at Ifbyphone we are leading this revolution by providing automated telephone applications that reside in the clouds and work on any telephone.

The Evolution of the Telecommunications Industry

The Telecom Industry Evolves: From "Old" and "New", to App-Focused Telcos

Over the past 20 years the telecommunications industry has undergone two fundamental transitions: first, from "old telco" to "new telco" and now, to application-focused telcos.

As Martin Fransman, Professor of Economics at the University of Edinburgh wrote:

"The demise of the Old Telecoms Industry began in the mid-1980s when, due to different combinations of political-economic circumstances, the monopoly of telecoms was ended in Japan, the UK and the US".

Fransman continues. "In the 1990s a new set of influences, that had begun thirty years earlier in an initially unrelated set of activities, brought about fundamental forces that further transformed the Telecoms Industry into the Infocommunications Industry. These influences came from the Internet based on its triad of core technologies: packet-switching, Internet Protocol (IP), and the World Wide Web"[i].

As a result of these industry wide sweeping changes, the standard definitions of telecommunications companies no longer apply. I would like to propose a new set of definitions, classifying telecommunications companies as facilities based (FACTEL), virtual (VIRTEL), or application-focused (APPTEL).

FACTELs include all companies with cables either in the ground or on poles, or significant physical and distributed infrastructure. This would include traditional ILECs, CLECs that rent facilities from ILECs, cable operators, and facilities based mobile operators. All have spent millions or billions of dollars on capital spending for infrastructure, and primarily recoup their investment by charging for dial tone.

This classic economic telecommunications model often requires years of customer usage before these providers break even. As the rate of change in telecommunications increases and the diversity of competition expands these models will come under increasing economic pressure.

Much of this economic pressure is generated by VIRTELs, which house their entire infrastructure in centralized, in-the-network, data centers and utilize IP circuits to support hosted VOIP solutions. Since these solutions work over existing Internet links, a VIRTEL does not need to buy nor build a cable or last mile infrastructure. This gives them an economic advantage and is the reason why VIRTELs such as Skype and Vonage are able to deliver dial tone at highly competitive prices or perhaps for free.  (The ‘free’ approach has not yet been proven to be profitable, calling into question the viability of the business model).

Finally, APPTELs leverage universal telephone access to deliver advanced applications to any telephone. For example Google Voice is based on Google's ability to terminate or place a telephone call to any traditional telephone number.

Although Google does host a sophisticated call routing infrastructure to deliver calls, it is similar to VIRTELs in that it does not incur last-mile or cabling-based costs. In fact, an APPTELis able to deliver calls to telephones provisioned by FACTELs and VIRTELs.

While FACTELs and VIRTELs compete for a customer's dial-tone dollars, APPTELs charge for applications with much less competition and are easily able to differentiate their service offerings.

A crystal clear case in point is It’s an example of a comparable economic model to the APPTEL business approach.  Salesforce does not provide Internet connectivity yet it utilizes the Internet to deliver its services.

The Salesforce application works equally well over any Internet connection. Because it is an application Salesforce is able to value price their solution while the Internet ISPs compete in a tightly defined price band for connectivity dollars. 

This very same dynamic applies to one group of the telco industry, APPTELs.  APPTELs are able to value price solutions with measurable business benefits while dial-tone providers compete for increasingly scarce dollars.

With the addition of SIP trunk connectivity options from companies such as Ifbyphone, FACTELs, VIRTELs and call centers, are able to integrate an APPTEL solution into their platforms. This integration provides FACTELs and VIRTELs with a powerful value-priced addition to their product lines.

[i]  Martin Fransman, University of Edinburgh,


The Telephone Technology Pendulum and AnyPhone Technologies

Arthur Schopenhauer a German Philosopher, wrote an often misstated quotation, "Life swings like a pendulum backward and forward between pain and boredom".  We can apply this quotation in general to technology and specifically to telephony.  Telephony technology swings between complacency and advancement.  In these exciting times, when telephone technologies are rapidly advancing, we are often faced with the pain of innovation.

This pain is partially caused by the instability of change. Many of us have moved the majority of our telephone use from the over 100 year old, stable and reliable, plain old telephone service (POTS) to mobile and VOIP communitations. This pain is also partially caused by the transition of telephony from a hardware driven industry to a software industry with all of the advantages and shortcomings of software systems. Software, unlike hardware is relatively easy to change. This ease of change indirectly leads to reduced testing and an increase in software failures, commonly called bugs. With software innovation in the telephony industry the bugs in the system have increased. So next time you are walking down the street and your cell phone drops a call, recognize that this might be caused by a poor signal, an ineffective network design, limited cell capacity or even a plain old software bug.

As an entrepreneur I am happy to accept the pain of change over the boredom of stagnation. The next evolution of telephony, returns telephone services to their roots, it moves them into the clouds. Traditionally most people used telephone services connected to a centralized telephone utility. As networks expanded and became more sophisticated additional capabilities were added to the centralized utility.  In 1977 Julius Marcus, VP of Networks and Communications at Digital Equipment Corporation coined the phrase "The Network is the System".  This phrase, in various iterations, was later used by AT&T and Sun Microsystems.  With the development of Cloud Telephony, the network is the system.

Cloud Telephony provides hosted telephone services accessible from anywhere at any time.   However, many of the first Cloud Telephony services, such as hosted or virtual PBX solutions, still require dedicated specialized telephones.  This isn't limited to hosted PBX solutions.  In the United States, most of the cell phone carriers require telephones specifically configured for their networks.   So while cloud or network based telephone service are expanding our communications horizons, they are not freeing us from device dependence.

At Ifbyphone we are taking Cloud Telephony to the next level with AnyPhone Technology. The concept is very simple. We believe you should be able to add telephone features and applications to your business without purchasing any new equipment and while using your existing telephones,  any telephone.

The Ifbyphone automated telephone technologies work with any phone with a traditional phone number.  This includes home phones on POTS lines, business phones, VOIP phones and mobile phones.  With AnyPhone technology you have no hardware to buy to add new features and applications for interacting with your customers.

Today,  Ifbyphone AnyPhone Technologies support a wide range of inbound, outbound and API based telephone solutions. Over the coming months we will release new and innovative applications that push the limits of traditional call center and PBX solutions.  And they all work on any phone.

The Great CLEC Squeeze

As a result of the Telecommunications Act of 1996, the number of CLECs providing telephone services exploded. A CLEC (competitive exchange carrier) provides telephone services by leasing local loops (phone lines) and interconnecting those local loops to their own or sub-contracted long distance services. For most of the past 23 years, CLECs have primarily competed with the incumbent telephone carriers (ILECs) on price. Those days are over.

CLECs are facing increasing competition on four different fronts:

  1. The traditional carriers are reducing the price of dial tone and bundling services into double or triple plays.
  2. Dial tone, or basic phone services from cable companies, independent VOIP startups and industry leaders such as Vonage and Skype are driving down call transport pricing.
  3. An increasing number of homes and business are dropping traditional landlines in favor of mobile devices.
  4. Google Voice is demonstrating the viability of purchasing additional telephone services from an alternative telephone company. If a business has more than one telephone company, lets say Google and CLEC ABC, the CLEC has lost a bit of account control.

In summary, CLECs are squeezed between collapsing transport prices and expanding features. To compete in this environment many CLECs are upgrading their existing telephone switches to gain access to SIP technologies. However, while low cost upgrades to add SIP capacity are available, upgrading an existing switch to provide applications such as Google Voice are very costly, time consuming and disruptive. In fact, sophisticated voice applications are not available for many call-switching platforms.

So what is a CLEC to do? It is well accepted in the world of business that it is less expensive to keep an existing customer than to find a new one. The CLEC community needs to maintain account control and expand the services they deliver to existing customers. They can do this by utilizing SIP trunking to drive down long distance rates and Cloud Telephony to deliver new features to existing customers., Amazon EC2 and others have demonstrated the value of on demand, just in time, shared resources. Cloud Telephony in conjunction with reverse SIP Peering presents the same advantages to the CLEC community. Let me spend a minute to flesh out the Reverse SIP Peering concept. This is best done by an example from the Internet world.

When the first generally available web browser, Mosaic, was released by the University of Illinois, it supported the use of the HTTP protocol to access HTML formatted information. Before long millions of users where browsing the web everyday. But it wasn't until some very creative technologist realized that HTTP could be used to communicate server to server, and the web we know today developed.

Reverse SIP technologies provide the equivalent for Telco. SIP was initially deployed as a signaling protocol for voice based telephone communications. It has evolved into a signaling and setup protocol for multimedia communications sessions including voice, video and even games. Reverse SIP Peering, takes SIP to the next level, supporting SIP as a protocol for accessing a SIP application warehouse. In fact reverse SIP requires no technology changes and is strictly a new business application of the existing SIP 2.0 protocol stack.

To utilize a SIP Application Warehouse, a CLEC provisions a SIP Peering relationship with the warehouse owner. Once peered, calls into the CLEC are routed to the warehouse, handled by the applications resident in the warehouse and routed back to the CLEC when transfers or additional calls legs are required.

With this new capability any CLEC or Telco carrier with SIP support can resell, Cloud Telephony resident, automated telephone applications. These applications might range from a simple parallel Find Me service similar to Google Voice, to complete IVR call center solutions.

This presents an exciting opportunity for the Telco 2.0 community. The opportunity exists to build hundreds of applications, ranging from basic voice mail to complete IVR business automation solutions and provide access via SIP. In support of this opportunity, SIP Application Warehouse hosting companies need to provide robust telco grade hosting services, fully redundant and easily managed. Application provisioning requires the development of white-labeled customer portals and CLEC management tools.

While for traditional Telco companies these may be difficult times, for innovative Telco 2.0 vendors this is an outstanding time to be in Telco.