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Monday, March 12, 2012

The concept of the "minute" is killing the phone industry

We don't measure the value of communications in terms of time.

Movies aren't priced by the hour. Radio isn't sold per-minute. Books don't cost more if you're a slow reader.

Telephone calls are priced per-minute or per-second because that is reflective of the industry's cost structure (and billing sophistication) about 100 years ago. When you had a physical copper connection between points A & B, with a human doing the switching, both capex and opex had fairly logical temporal-based components.

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We already see with mobile data that a blend of volume, duration, use-case, location and maybe even congestion levels can be used as the basis for service pricing.

Yet voice telephony is always priced and measured with a time component, even if it's for the basis of statistics. I did a client workshop on VoIP yesterday, and thought how ridiculous it is that even voice innovators like Vivox have to use "billion minutes" as a measure of scale and size, even for non-traditional use cases like in-game chat.

Do you think Apple measures Siri's usage and success in terms of minutes of speech?

Is a 3-way conference call worth 1.5x as much as a 2-way phone conversation?

Do military radios measure usage minutes & bill back to each regiment?

The insidious effects of "the minute" bleed across the industry. It forces companies to chase after unprofitable or unattractive segments. It leads to arbitrary pricing by vendors. Roaming models look stupid & anachronistic because they are time-based. Our need for a uniform measurement unit creates stifling regulatory hoops & weird market inefficiences. It legitimises the equally absurd measurement of data "consumption" in terms of megabytes.

Now there is obviously the basic question of "if not minutes, then what else?". Unfortunately, we don't have a fundamental SI unit for the "value" or "utility" of human communications. But that doesn't stop us pricing other forms of communication appropriately.

I don't measure the number of words in my blog posts or reports (although I use page-count as a rough marker for the style of document). I certainly have no idea of how many words I've ever written, or whether I've put "pen to paper" more this year than last.

It seems ironic that the industry continually harps on about commoditised data and "dumb pipes", when the legacy telephony system is the dumbest it could possibly be. Why is gossip priced and prioritised in exactly the same way as negotiation or deal-making? Why are all of these speech-based transactions and content-flows going "over the top" of the telephone network, and why isn't VoIP based around monetisation? Where are the vocal optimisers and deep-conversation-inspection boxes? Where is the voice analytics engine?

I regularly ask operators "why do people make phone calls anyway?" and rarely get a good answer. We happily avoid examining exactly what all these minutes are for. How much is made up of long conversations between family members? Interminable dial-ins to conference calls? Quick 30-sec information blasts "No, I'm in the other pub, round the corner"?

It's ridiculous that a $700bn industry has so little idea of how and why and where it adds value to people's lives, which problems it solves, and which needs are unment. How much human communication and psychology isn't well-served by a minutes-based system?

The fact is that the minute is fundamentally an anchor to the past, when all voice was "telephony" and all telephony was "voice". The faster we get rid of our duration-centric obsession, the more likely we will be able to profit from The Future of Voice, before others less confined beat the telecoms industry to the punch.

Note: Martin Geddes & I are running a new series of Future of Voice workshops (combined with Telco-OTT) from April, starting with London (26-27 Apr) and the US East Coast (14-15 May). More details and sign-up available by emailing information AT disruptive-analysis DOT com

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