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History Repeats Itself: Early Billing Challenges


You think that issues with fairness in billing is new to telephony? Think that you are the only one who considers the cost to benefit value of telephone service? You think that an up-to-date call center or PBX from a premium supplier is just too expensive? If the New York Times wrote the following in tomorrow’s paper what would you think? (see sidebar quote)

” The greedy and extortionate nature of the telephone monopoly is notorious. Controlling a means of communication which has now become indispensable to the business and social life of the country, the company takes advantage of the public’s need to force from it every year an extortionate tribute. ”

    <<   <<   This piece of Bell Telephone bashing was written in -- 1886! Tikal Networks won key strategic customers based on low cost VoIP call center and IP-PBX products. This low cost advantage turned into strategic business advantage. Companies could run bigger call centers (make more calls) and cut international phone cost considerably (expand their territory globally). The need for low cost telephony is not a new issue. In the early days of telephony, when Alexander Graham Bell started selling his services, cost was also an issue. And so was the “business model”, or how the service was billed (I am not sure if “business model” was used in 1886.) A recent blog article on Ars Technica (Mad about metered billing? They were in 1886, too) is interesting in the description of chain of events then.

The article about metered billing in the early days of the telephone era is interesting echo of today’s billing models. Companies need to maximize their money and look for new ways to use technology. VoIP is the most common way to cut cost in fixed lines. In the mobile world there is just now the trend of connecting mobile phones to the VoIP network. Essentially giving mobile users the ability to make local calls and bridging these calls anywhere in the world. There is just a start of going from mobile directly to the IP network with Skype for iPhone (here) and soft phones for the Android (see Acrobis SIP @ Android market).

Early Bell advertisement for service, even then (1880s) price was an issue.

Early Bell advertisement for service, even then (1880s) price was an issue.

Reading the story about Bell and pricing models in the 1800’s is refreshing. People act and think similarly even 130 years later. Today, there are a few pricing models for international, mobile and local calls. In different countries there are different pricing schemes. In some countries the caller bears the cost and in some both parties share in the cost. Yet some consumers seem to think that suppliers are always after their money. New technologies tend to push a price barrier. Price barrier is sometimes a perception of how much something should cost. When a new service is introduced, a few see it’s potential and grab at it as hard as they can. For them, it’s worth every penny. While others are shy and do not see how to benefit from new features. They consider the cost too high. In VoIP markets call centers all over the world sprouted out quickly. To many companies in Europe and North America it was worth hiring support and sales people in India. That market expanded quickly. To support the call center industry a whole new telephony industry was created: from software and hardware, to hosted centers have been built. In the consumer sector, there have been some success in international calling cards. Yet only Skype has been successful in attracting enough of a crowd to make a popular VoIP application (and service.) What has happened in VoIP can be compared with other new technologies. There are many solutions, not all complete, yet useful. Not many companies are offering complete products and very few are able to show a sustainable business model. In the world of WiFi this same phenomena occurred. WiFi was suppose to replaced wired Ethernet and give us internet connection everywhere, just like cell phone — FOR FREE! That did not happen exactly, yet there are many places where WiFi is available and useful and free. The standards enable a universal technology adoption, but the business model still eludes companies. How to make a useful and attractive service AND make money in the process is not an easy nut to crack.

Back to the consumer point of view. Consumer perception is a powerful force, sometime perceptions are directed by the media, like the New York Times quote. Sometimes, perception simply grows organically, then gathers force and finds a voice. The force of the market seems like magic to people who have not seen it up close and in action. What Bell and the telephony industry have seen with super fast expansion so do mobile and VoIP markets see today. As markets grow, customers of all type are part of this expansion. Some customers truly need and benefit from the new technologies. These do not complain about high cost. Yet others can use the new technologies but do not benefit as much. They may not be able to justify what to them is the high cost of a new technology. This wide range of perceptions in the market causes the reactions we see today. Reaction from complaining crowds tend to slow down the use of a new technology. This “one step forward and two steps back” should not put early adopters and suppliers into panic. As technologies become more popular their use changes. With more and different use expectations of prices change. Sometimes expectations of cost do not match the cost it takes to bring a service to the market. In SMS (text messages) the cost in some countries had gone down considerable while in others it has stayed fixed. Yet people use the service more and more. We see this in so many areas today. It is hard to find an area where it is not the case. From large panel displays (much cheaper) to smart cell phones (small price drop), internet publishing (much cheaper) to business services (no price drop). Ideas about cost and value come and go. Technology use and it’s contribution to people lives keep on moving forward. Stay tuned, more thoughts about cost and value to come up.


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