Many phone companies in Silicon Valley?

Plenty of startups are determined to see proof that Apple won’t be Silicon Valley’s only phone company. That was evident at the eComm conference this week on Emerging Communications. I was taken aback by the variety of ideas floated at the conference. So much is afoot that I’m thinking there will be many kinds of companies in all parts of the phone industry in Silicon Valley.

Apple wasn’t at the conference, but its success has inspired start-ups and big companies alike. Consider the list of speakers: the Google Android guy. The Yahoo Fire Eagle guru. Someone from eBay’s Skype division and even a far-out social visionary from Microsoft Research.

Marc Smith, the researcher from Microsoft’s Search Labs, said that he would love to see an application that tracks his moment-by-moment whereabouts so that it could figure out if he were skating or riding in a cab, which would allow the network to push him the most appropriate information for any given moment.

Among the small firms, the dreams were just as big. TerraNet wants to sell mobile handsets to the four billion people on earth who can’t afford one. That makes the 276 million users of Skype’s free voice-over-Internet-protocol service seem puny. Even little Ribbit, the maker of a “soft switch” that lets you stick a cross-protocol phone widget on any site, called itself “Silicon Valley’s First Phone Company.”

Time and again, speakers railed against the closed networks of U.S. carriers and how they would be forced, by government regulation or entrepreneurial enterprises, to loosen up the restrictions on phones and other devices connected to their networks. Technology would ultimately democratize the trillion-dollar communications industry.

“The telephone is dead,” declared Lee Dryburgh, head of conference organizer eComm Media.

Dryburgh felt so passionate about the topic that he put his house mortgage on the line to help pull the conference together.

The spectrum of opinions on change was interesting. David Isenberg, a telecom consultant and author of the paper “The Rise of Stupid Networks,” worried that history would repeat itself. He compared the current talk of openness to the regulatory decisions that forced competitive local exchange carriers out of the market seven years ago. He fears that will happen again as network operators will do it again as they “move up the stack and take over the applications.” In the name of network management, the carriers will stifle applications that undermine their business models, he said.

“If you care about your jobs, you should pay attention,” Isenberg said, drawing applause in the room. “The telephone companies will shut you down. That’s all I want to say.”

Norman Lewis, chief strategy officer of Wireless Grids Corp., said, “We are shackled. We are constrained in our behavior. We are forced into wheel chairs [by] the network operators, and they put trees in our way. They prescribe what we can and can’t do. We are trying to get over this. It’s an absolute nightmare.”

At the same time, the speakers were excited about the changes underway. Apple’s iPhone has cracked open a lot of doors, spurring sales of smart phones and getting users to want more Internet-based services from their providers.

Google’s Android should go further, allowing many more third-party developers to create applications for all sorts of phones, from the cheapest prepaid phones to smart phones, said Rich Miner, general manager of Google’s wirelesss division.

The government is auctioning off the 700-megahertz spectrum and should announce any day who the top bidders are. Google’s bid may not win, but it is clearly putting the incumbents on notice. Skype’s Jonathan Christensen noted that his free long-distance over the Internet VOIP service signed up 30 million users in the fourth quarter.

“The next big part is sorting out the mobile mess,” said Christensen. “Mobility is the last anchor to the old way. It’s incredibly convenient. But spectrum scarcity and other issues make it a perfect walled garden with closed networks, device lock-ins, phones with contracts, and geographic bias.”
The prospect of new competition is forcing the big cell phone operators to respond by opening their networks more, said Brad Nicholas, a telecom consultant in the audience at the conference.

By the fall, Verizon Wireless has promised to open its network so that consumers can use the device of their choosing on its network. Next week, the cell phone company is expected to announce the specifications for phones that can connect to its open network.

Some speakers looked far into the future. John Waclawsky, an architect at Motorola, predicted that peer-to-peer wireless networks will be the cockroaches that survive in the long run.

“We will have a sea of overlapping peer-to-peer wireless services,” he said.

Clearly, start-ups have to work within this environment and make some critical decisions based on what’s open and what’s not. Developers have to choose whether to make applications for Apple’s iPhone, whose new SDK allows third-party developers to create applications, or for Google’s Android project, which has scores of companies in its Open Handset Alliance now.

If they support these big ideas, will they have anything left over to devote to projects such as Openmoko, the open Linux-based handset that preceded Google’s Android efforts? Mark Jacobstein, CEO of iSkoot, had an interesting olive branch to offer to the carriers. He said that his company could enable them to make money off of a VOIP call by routing the calls through a wireless carrier’s network in a way that still gives the caller savings on voice calls.

I’ll break up the rest of the overview on this conference by posting additional material as I can get to it.