July 1, 2007

Telephony: Broadband Telephony's Video Reincarnation

By Justin J. Junkus

Like many logic-driven folks, I like things to stay where I put them - that includes the beer steins and DVDs on the shelves in the family room bookcases, and the technology I wrote about less than a year ago. But you and I both know that isn't going to happen anymore. Just like my wife's newly acquired Native American pottery that now lives where my steins used to hang out, new applications of telephony over high-speed Internet connections are trying to find a home in cable's technology suite. Video telephony vendor Clique Communications (www.cliquevideo.com) is hoping that broadband video telephony will be one that sticks around.

Broadband voice

You'll recall that broadband voice telephony (a.k.a. Internet VoIP) is the cheap and dirty version of voice over Internet protocol (VoIP). It uses a broadband connection to transport a phone call across the public Internet, with essentially no guarantees of quality of service (QoS). The tradeoffs are virtually free calls (tax-free, too) vs. the chances of poor conversation quality or entirely dropped calls. Although the negatives are strong disincentives, there is always a segment of consumers that is willing to trade value for cost, so services such as Vonage and Skype continue to survive and look for ways to add something that will further tip the scales toward their version of telephony.

Last October, for example, Vonage attempted to capture some market share by persuading road warriors to use a broadband connection rather than a hotel or cell phone to make calls - especially since the traveler would probably already have an Internet connection up and running for email and browsing. After personally trying a couple of alternatives, my conclusion was that QoS issues in a hotel local area network (LAN) environment pretty much eliminates Internet VoIP as a viable alternative for the business traveler.

Clique believes that broadband video telephony is a better fit of technology to consumer need. This application uses a PC with a Webcam as the "telephone" to make a video call. Clique points out that the service already has acceptance with users of Skype and AOL and can only grow as mass media continues to socialize its use with illustrations, such as "Doonesbury" comic characters using it to call home from Iraq. Their pitch to cable is that packaging broadband video telephony with high-speed data will not only attract customers with another branded, value-added service, but will also provide operators more control over this form of data traffic on their network.

Marketing

But, as we know from the Bell System's PicturePhone, just being available doesn't make it a killer app. The key to success is usually marketing, and Clique has some suggestions based upon a set of focus group sessions it commissioned. Although the sample size of about 50 consumers is too small to be statistically valid, it does provide some insight into the market.

For example, what does it take to get people to try the service? The Clique folks found out that "toys" attract customers better than new software. Specifically, their sample group focused on the colorful Web camera packaged with the software and "couldn't wait to try the new toy." Other participants likened it to a new iPod and even requested specific colors, such as pink. Lesson learned - get consumer attention with something they can touch and customize.

The next information nugget is that before the initial excitement of a new toy wears off, the service must become part of the consumer's daily life. Here, the focus groups revealed different motivations for different age groups. Teens wanted to use the service as a way to "hang out" with friends when something keeps them from actually being at the same place - for example, to watch late TV "together" on a school night. On the other hand, this "virtual presence" is less important to adults, who are more interested in face-to-face contact with someone too distant to personally visit. Lesson learned - niche marketing is very important to this application and could actually shape the bandwidth requirements. "Hanging out" might require a four-hour session, while adult "face-to-face" could be only a few minutes on the connection.

Finally, how do you grow the number of users? Asking your customers to recruit other users is out, said the focus groups, but making it easy to add the feature to an instant messaging group is in, as is adding value with video greetings, video messaging, snapshots.

What it means

Now, let's pull all this together and think about what to consider when evaluating broadband video telephony as a potential service.

First, what does the system gain if this application is offered? Some revenue can be realized by banner ads on the computer interface screen. Perhaps the software can be set to charge a monthly fee, but this may not be a major incentive, since the availability of alternate free services limits subscriber willingness to pay.

Looking at another angle, consider that although the technology is standard, it's not open. Broadband video telephony today needs both ends to be on the same system. I can, for example, make a Skype-to-Skype video call today, provided I installed the Skype software and have a Webcam. On the other hand, I can't make a Clique-to-Skype call.

According to Bryan Smith, Clique Marketing VP, this is more a business issue than a technology issue. "Our software and that of most other services is standards-based, but operates in a walled-garden environment that prevents interaction."

A closed system could become a market lever rather than a detriment, however. If branded video telephony is a feature available only to any of a particular operator's high-speed subscribers, it can be an additional incentive to use high-speed data, rather than the telcos' digital subscriber line (DSL). The number of callable contacts becomes less of an issue when the subscriber base is large.

Secondly, do subscribers understand how to obtain and use Web cameras? This may seem to be a small issue, but when I started looking for someone to call, I found that most of my associates aren't camera-ready. This is why marketing a flashy camera as a new "toy" for the computer may be needed. Perhaps part of the answer here is to also promote video messaging and snapshots as part of the service, so that when a subscriber without a video cam gets a video message, he or she will want to obtain the camera and software to send one.

Third, and perhaps most important, what is the effect of additional data traffic? Too many teens "hanging out" for four-hour sessions could bog down the network. Is bandwidth available, and is this the best use for it? On the other hand, if video telephony becomes popular via another provider (e.g., Skype or AOL), the traffic will still be there, and the operator will not have the opportunity to leverage the service for additional revenue.

The bottom line is that whether broadband video telephony becomes a cable service or not, it's still a useful application with growth potential. It's just common sense to figure out how to use it to our advantage.

Justin J. Junkus is president of KnowledgeLink and telephony editor for Communications Technology. Reach him at jjunkus@knowledgelinkinc.com.