The China Factor In Telecom
'Why my phones (and other things) don't work right'
Chinese are going to win.
By Mike Sandman
Most of the phones systems made today don't work great compared to the systems
designed in the late 90's.
Sure, some have lots of features,
but the way the features work range from annoying to "What kind of idiot
designed this thing?"
Some of the commonly used features
from the past just aren't there. Why would that be?
The answer is that the engineers
designing the current crop of phone systems are new at this. It's like hiring a
phone man out of high school, without being an apprentice for four years. He can
do some of the stuff, but he's sure going to screw up a lot of stuff until he
learns his job - and it's going to be painful for the Interconnect and the
These new engineers
are most likely in third world countries. They are educated in
schools that make them memorize the facts, but who have no way of showing them
real world application of the facts. They may live in homes with no electricity,
no phone service and no toilets, so they have no idea how the stuff they are being asked to
design is supposed to work, or how it's used.
Are features that don't work as
expected a problem? It is if the customer who bought the phone system saw
a feature listed in the brochure or asked the salesman about it, but it either
doesn't work (yet), or works in a totally different way than that feature has
worked in the past - even on the same brand of phone system. Depending on how
important that feature is to the customer, it could mean that the Interconnect
doesn't get paid and takes the system back. A real nightmare for the
Interconnect. The manufacturer is just going to tell the Interconnect "tough
luck." Wait 'till the 2.84755847747 software release (that may never come).
Having third world engineers design
this stuff is kind of like taking a smart guy like Henry Ford, dropping him
right into 2010 with a time machine, and asking him to design a modern car. He'd
have no chance, and his customers would be forced back into the past because of
his lack of knowledge of all the pain the engineers went through to make cars
more reliable (and also how cars are used on today's roads).
American's are feeling pain from
everything we buy today, not just phone systems. The TVs, DVD players,
computers, monitors, cordless phones and everything else sold today doesn't work
as well, aren't repairable when they don't work well, and many are just plain
unfriendly to use (there was no thought given to how someone would use it - just
how fast and easy it is to get it on the market).
Microsoft's newer software,
operating systems and hardware are really junk. It's all designed by a new crop of
engineers and programmers who don't have a reference to the mistakes made by the
guys who designed the older operating systems. Just like in phone systems, some
features are gone. Why? The predominantly third world programmers
working at Microsoft have no reference to the past, or the real world. Instead
of building on past mistakes, they are making them all over again (really a
Here's an example of a cryptic
message that I received when opening Outlook 2007, which wouldn't get any
messages from our mail server (so I couldn't get my email) until I did this:
Outlook 2007. Exactly what is a non-geek computer user supposed
to do with this?
Should they look under their desk for an Offline Folder file?
Hard to believe that both the
programmers and their bosses would write/approve software like this, but since
they probably don't have electricity, Internet or toilets in their homes, they don't know
how computers are used by ordinary Americans.
You can be the world's smartest
engineer but if you've been isolated from modern cultures it would be hard to make use of your
abilities. Experience is how we all learn.
We now have third world engineers,
living in third world environments, controlling our day to day activities by
designing the devices we're supposed to use here in America.
But hey, dependability is no longer
an issue for most of us. There will be a new model out that will improve some of
the problems before you're done paying for the old one on your credit card (or
auto loan?) - and you'll probably get that new model. Things are specifically
not to last today, and we've all bought into that concept. We want
the new stuff anyway, so if it breaks quickly who cares? The new models are
generally a little cheaper than the previous version, which helps us rationalize
putting it on our credit card again (and paying outrageous interest rates to the
credit card companies, which means we're paying maybe an additional 20% (30%?)
of the purchase price per year for these defective items).
30 years ago, anybody making junk
like we have to buy today would be out of business quickly (except the car
companies?). "Made in Japan" was the trademark for junk. "Made in
Taiwan" was next.
It's truly amazing that Americans
put up with the sometimes horrible call quality of cellular and VoIP phones. If
AT&T would have reverted to that kind of quality on land lines in 1980, we would
have all stormed the phone company's offices. Congress would have gotten
involved. For some reason, we put up with horrible quality phone calls today
(AT&T's president says he's planning to disconnect all the copper lines because
they're more trouble than they're worth to them... even though as a utility they
are guaranteed to make a profit on them, and as a utility they've basically been
given free land for poles and buried cable).
We put up with poor quality cellular
calls for the convenience of not being tied to our desks. Like the US
manufacturers making poor quality stuff in China, the cell companies do have the
choice of giving us more bandwidth and increasing the number of cell sites, but
that would cost us all more money and limit the number of conversations that
could be carried on the limited cellular frequencies available. Nobody wants to
see that dreaded "System Busy" when they're trying to make a call,
so they cram more calls into the limited bandwidth.
All I do all day is talk on the
phone, taking a lot of incoming calls. The call quality is so bad that I don't
want to talk to the caller on about 20% of the calls (I take these calls on real
AT&T copper POTS lines). This is somewhat better than two years ago, where the
percentage of bad sounding calls was about 40%. Cellular and VoIP calls
are getting better.
One of the most amazing products of
the last few years is "the bundle." People do totally stupid things to save a
little money on a bundle, even if the stuff in the bundle works badly.
I'm in a unique position to hear
from both homeowners and companies who have switched to "the bundle" for their
Internet, TV and phone. We make stuff that helps interface phone
equipment with strange phone lines.
To make their phones or alarm system
work with "the bundle," they're willing to go to expensive extremes. Spending a
thousand dollars to buy equipment to make the fake phone lines in "the bundle"
work on their telephone equipment seems insane to me. I tell people that, but
they think I'm crazy (probably true).
The devices that are used to provide
the fake phone lines were designed by third world engineers with no experience
in telephony. What's more, most of them think of the US is a third world with a
bunch of stupid suckers buying the junk they make. We have to change our
100 year old standards to theirs (I was told this by Chinese engineers, who were
Telephone lines in other countries
are similar, but not the same as we've had for the better part of a century
here. Engineers and their bosses at the companies who make the equipment that
cable, TV and phone companies use to provide the fake phone lines don't really
care. They'll force the junk that's not designed for use in the US down our throats as long as it's cheap
enough. They know the cable and phone companies selling the bundles are stupid
enough to buy their hardware (they don't have a "Bell Labs" to do testing, or
even a real telephony engineer working for them), and that they'll shove it down the throats of
their customers. They're only stinkin' subscribers (us).
The cable, TV and phone companies
don't have the resources to design something that works, so they don't have any
choice. Much different from the days where Bell Labs, basically a bunch of geeky
engineers, had to put their seal of approval on everything that the Bell System
offered to their subscribers (most Independent phone companies bought stuff
licensed from Western Electric).
Even though almost all of Bell Labs work is
public knowledge, it's totally ignored today (even though we still have the same analog
ears and mouths that we did in Bell Lab's heyday). Again, the third world
engineers and managers don't look to the past for engineering knowledge, so they
make way more mistakes than should be made in a world with a hundred years of
experience using phones.
The reality is that the subscriber
can un-bundle their phone lines from the TV and Internet, but they just won't
hear of it. For them, that $10 a month or whatever savings is way better than
saving $1,000 on stuff to make the fake phone lines work with their equipment.
It's like we're all programmed to live on the bleeding edge, no matter how much
it hurts us (or costs us in the long run).
Note that there are some new
residential and business subdivisions which are only served by fiber. AT&T and
other phone companies have stopped putting in copper, so in the newest areas
homeowners and businesses have no choice but to try to make their phone stuff
work with the boxes that convert fiber to fake phone lines. Having fiber to your
door sounds good, but in reality if you have fiber to your door your only
choice is to use fake phone lines designed by third world engineers, that only
work with some telephone equipment - not all. Moving is your only fix to some
OK, so you have a fake phone line.
You even know the shortcomings. What kind of idiot would put their fire alarm
system on a fake phone line that is likely to go down from time to time, and
that will be dead when the battery backup runs down when the power is out? I
don't know, but seemingly sane people talk to me about doing it all the time.
An even more amazing piece of third
world technology is the Magic Jack. "Free" phone calls must be very
alluring. I constantly get calls from people trying to connect their phone
equipment to a Magic Jack (or multiple Magic Jacks for a multi-line system).
Rather than treating it like the cute little toy it is, they're trying to
depend on it like they would a real phone line, including hooking up their alarm
system to it. Seemingly sane people buy over $200 worth of equipment to try to
make the thing work with their phone equipment (the voice quality often stinks
Big companies, working with China,
have just plain dumbed down Americans - who will seemingly do anything to save a
buck (including spending $1,000). I guess it's obvious by the number of crooked
lobbyists in Washington, but we're all being used by big business. Since there
are no more honest big businesses, as can be seen by the mess wall street has
created for the last couple of years, we have no choice but to buy our stuff
from crooks (this extends to food products that can poison us or our pets and
livestock, as well as electronic stuff).
Like it or not, we're all
being controlled by big business, and the big businesses are constantly
getting bigger through mergers and acquisitions (note that the AT&T breakup has
now pretty much been undone).
Electronic phone systems first
appeared in the 1970s. They were a mess. The key systems primarily came from
Japan - not known at the time for quality anything. Not lots of features, and
the features that were there sometimes didn't work right. The systems crashed
The Carterphone decision resulted in
a mandate to the phone company to let the customer hook up whatever they wanted
to the phone lines, through a "protective coupler" at $10 a month. That was the
beginning of the end of the Bell System, who strove for dependability - not
The first electronic/mechanical
systems had an electronic warbler for the ringer, instead of a bell. This one
feature sold a lot of phone systems, where the company could prove
to visitors that they were on top - just by their visitors hearing the phones
ring in the office.
The Bell System originally had
nothing to compete with Japan. Their phone systems were very reliable, while
Japan's weren't. When Western Electric came out with the first
electronic/mechanical key system, the Comkey 416 was pretty reliable (which I believe it was
licensed from a small company), probably because it didn't
offer a lot of features and there wasn't much to break. That technology and the
design of those phones (ivory with wood grain faceplates) were later expanded to
include large key systems, the Horizon small to medium sized electronic PBX,
and the large Dimension PBX.
After working mainly on 1A2 key
systems, which were incredibly simple and hardly ever broke (light bulbs and
dials here and there), my first foray into
stored program electronic phone systems was a real eye opener. As a phone man,
instead of being a hero and everybody liking to see me walking down the hall at
their company, it was "Oh, the phone man is here again."
The worst was when I was on a
weekend callout in 1980 or so, and went on an emergency call at a large hospital
in Indiana that was totally down. It had Stromberg's first big digital PBX, the
DBX, which had just been cutover. I checked with the operator, who asked me to
go up to the mental ward first. So after making sure the switch was still there
in the phone room, I went up and rang the bell to the locked ward (locked for
both in and out). The nurses let me in, and then spent 10 minutes telling me how
none of the phones work, they feel extremely unsafe, and their only
communications with the outside world is a walkie-talkie that a security guard
left with them (the patients, many of whom were restrained, did look pretty
I checked all the phones, and sure
enough they were all dead. I told them I had to go down to the switch to see
what was wrong, and they told me they wouldn't let me out until I had their
phones working. Oh shit. These ladies were serious.
I managed to assure them I would get
their phones working before I left, and I did, but the DBX software was very
unstable at that point, so it was likely to crash at almost any time. That's
that state of almost any new technology, and early adopters are usually up for
living with that - but obviously a hospital shouldn't be an early adopter, and
GDCC (General Dynamics Communications Company) should have never sold the system
World Book, the encyclopedia
publisher, had the same system at the same time. It went down often, but it
didn't have the same impact as at a hospital. As an Interconnect, it's our
responsibility to sell the customer the appropriate technology - not just make a
sale. It only makes sense for a customer to be an early adopter when they can
handle the pain (and have a prescription for Valium?).
For some prospects, their old phone
system may still be their best choice. There are lots of ways of adding new
technologies onto legacy phone systems that will preserve overall dependability,
but salesmen make the customer think they would be throwing their money down the
drain. Essentially no salesmen cares about dependability - they care about the
sale and commission of whatever they've got to sell today.
In the 70s there were a lot of
electronic/mechanical phone systems that were the "hybrids" of their day -
electronic control with some type of relays for the voice switching. The
electro-mechanical systems in the 70s primarily suffered from dissimilar metals
on the card edge connectors between the switch and the circuit boards. That was
an era where a pink pencil eraser and a burnishing tool fixed almost everything.
Resetting the whole system was uncommon. Most were fairly dependable
(but certainly not all of them).
In the phone business, the 80s were
a time of learning. Phone systems slowly became more reliable.
This was a decade with less
innovation than refinement, which was good for the customers who bought the
newer model phone systems.
After the breakup of the Bell
System, more time was spent figuring out the business model than innovating. It
was a very new world for both phone companies and the subscribers, who could now
go out and buy almost any kind of phone stuff they wanted.
Japan was getting much better at
manufacturing reliable telephone systems towards the end of the decade. The
engineers had a lot of experience under their belts.
By 1990, most of the phone systems
were pretty stable, and a lot of reliable features had been added. Voice mail
was still terrible (and expensive).
In 1990 digital phone systems became
popular... that is the voice was digitized. Earlier electronic systems
had analog voice, and digital control of the phones. At the time, each of the
manufacturers came out with a very expensive "executive" phone with an RS-232 (serial)
connector on it, which supposedly would let the customer network all the
computers in the office through their new digital phone system (I never saw a
single office do that). This was a time where most Ethernet was coax, and CAT3
twisted pair was the a new thing (no CAT5 yet).
In the early 90s, most Interconnect
salesmen told their prospects that they were an idiot if they bought an analog
phone system. Their investment would be obsolete when they bought it - because
they couldn't network their computers. Today's salesmen have modified that pitch
slightly, saying that if they don't buy a VoIP phone system, it's already
The engineers who designed the
systems in the 90s were primarily the guys who designed the older analog
electronic systems, or were working for the guys who designed the older systems.
They looked at past failures in the field, figured out how to fix them, and
designed the next system so it was more dependable than the last (they tried not
to fix the older systems too well, so there was a reason for companies to
|In the 1990s I had this
picture of the Ameritech Headquarters (now just another AT&T
building) on the front page of our catalog, offering a discount if
someone could guess what this building was when placing an order.
The multiple choices included the palace of a foreign country.
At the time, I was writing a column in
the now defunct Mart (Telecom Mart) magazine. Actually almost all
telecom magazines are now defunct, or are soon to be. I would
occasionally say less than flattering things about Ameritech, who as
a fairly new unregulated company cared less about subscribers than
the old regulated phone company - who didn't care at all... because
they didn't have to (Lily Tomlin).
To get back at me, they had someone
in translations break the hunt between our first line and the rest
of our hunt group. Took them about a day to fix it. That was
actually pretty effective at shutting me up.
By 2000, phone systems were great.
Salesmen had been telling customers that they had better upgrade that old phone
system that was working fine, because the sky might fall at midnight on 1/1/2000
(Y2K). Almost everybody bought new systems approaching 2000. The world was a
wonderful place for an Interconnect, and any computer related company. All
because of a date.
Voice mail had pretty much been
perfected. Phone repair men were like the Maytag repairmen. Most of the service
calls were to check on dead phone lines and report them to the phone company.
Then came the end of the Internet
bubble. All the computers had been replaced for Y2K, all the phone systems had
been replaced for Y2K, and the money stopped flowing. Oh shit.
Management of nearly all the
companies were looking for ways to survive, much less prosper. If you need to
make more money the choices are: Lower your overhead, lower your cost of
goods, raise your prices, or sell more stuff at the same margin (or any combination).
Holy cow! "If we move
production to China, make our stuff out of the cheapest components possible, and
use the cheapest engineers we can find, we also get rid of all the overhead of
needing desks and a place to work for all these expensive Americans sitting out
there. We're saved!"
Almost all of the experienced
engineers were put out to pasture. Who needed those old fogies anyway?
Since the early 2000s, it's deja vu
all over again. Just like in the 1970s, engineers are designing stuff from
scratch without the knowledge of problems and solutions of previous generations.
Third world engineers are pretty
cocky. They think they know everything, and that any idiot could design phone
stuff with this 100 year old technology.
It turned out that the digital part,
all 1s and 0s, was pretty easy. Interfacing to the millions of analog
phones and phone lines (each of which look somewhat different electronically
speaking), was very difficult to do without experience to draw on (US telecom
engineers had incredible experience, since we've been using basically the same
phone lines for over 100 years).
Unlike digital, which is just 1 and 0 (on
and off), analog has lots of stuff in-between - like 0.00001, 0.00002, etc.
We're all being screwed because of the lack of experience of people designing
the stuff we buy today.
We're actually paying for the Chinese
to gain experience. Meanwhile, there are few US engineering students so
the future is plain to see.... and it's not pretty for us.
China was at the
right place at the right time when the Internet Bubble burst. If it had been ten
years earlier in the history of China, they just couldn't have handled
the incredible requests US corporations threw at them. Since the US transferred
all their engineering know-how (and most production equipment) to China before getting rid of the American engineers, the Chinese
did pretty well removing the US as a viable place to engineer/manufacture stuff.
It gets less viable every day.
Companies who initially resisted the
shift to third world resources quickly realized that their stuff was overpriced.
So overpriced against the Chinese stuff that they were going to be out of
business quickly if they didn't get on the band-wagon. Even if their US made systems did
work better than Chinese junk, the American consumer didn't seem to care.
Prices that Americans paid for the
Chinese stuff didn't drop right away. Americans were paying the same prices for
the Chinese stuff as American stuff, so the American companies could make nice
profits while selling a lot less. When the economy improved here, and consumers
started buying more stuff again, prices started to come down because the
companies could now make their profits on volume, instead of lowering their
The companies who decided to switch
manufacturing to China to prop up their stock prices are about to be in deep
stuff - and so are you. In order to switch manufacturing to China, they
had to basically give the Chinese factories all of the technology, intellectual
property and trade secrets so they could make the stuff. The result is that
those same factories are making knock-offs (counterfeiting) the big company's
products, or they've given the information to their cousin's factory down the
street, who's knocking it off. This applies to software, hardware, and
even seemingly crazy stuff like Nike shoes and Ugg Boots (they only counterfeit
it because we're stupid enough to pay too much for branded merchandise - which
may or may not be better quality than stuff from Biggie Mart).
The newest trend in counterfeiting
is to counterfeit cheaper stuff that's sold in high volume, which they sell for
just under what you'd pay for the genuine article so we think we're getting a
deal - and not a counterfeit. The days of counterfeiting Rolex watches and
Versace handbags are about over. The crooks in China make a lot more money
counterfeiting cheaper stuff, including the food we eat and the medicines we
take (not just Viagra).
The attraction of buying a new phone
system (or whatever Chinese technology) for a fraction of what their old one
cost was just too alluring. That's until the thing didn't work right at cutover,
didn't work right months after cutover, and were so limited compared to their
old phone systems that the company had to change the way they did business to match how
their new cheap whizz-bang phone system worked.
The features seemed to be called the
same thing, but they didn't work the same. Or maybe the features were going to
be implemented in a later software release? Either way, that first wave of
Chinese phone systems were pretty bad. Ten years later, and the systems are
still pretty bad - but not as bad as they were. Experience helps.
It wasn't just telecom. Every
industry had to move engineering, production and support to a third world
country. Everything that's happened in the US in the past decade was driven by
large US corporations needing to make more profit each quarter so their stock
prices stayed up. If it didn't make sense to do something in the long run, it
didn't matter. Guys who run publicly traded corporations are driven by only one
thing - keep the stock price high this
quarter. If they don't, they lose their jobs (and huge salaries and
The guys who run public companies
have been forced into prostitution. They do things that sane people know are
wrong and wouldn't do, in exchange for a lot of money and power (lots
of examples over the last couple of years, including all the
companies the government bailed out).
A good example is Dell, the computer
maker. The management made a deal with Intel to use Intel CPUs and chipsets
exclusively, and not buy from their competitor AMD. Intel paid Dell kickbacks
for not using AMD. Dell started out getting 10% of their income from Intel in
2003, which went to 76% of their income in 2007! The very
illegal part is that when they reported their numbers every quarter, the company
looked like it was making all this money from computer sales, not the kickbacks
(Dell reported the kickbacks as profits on PC sales, but they
who bought Dell stock during this period was bamboozled into thinking that the
company was making money, but they weren't - at least not selling PCs. Lots of
people lost lots of money owning Dell stock because of the deception (Dell paid the
government $100 million to settle the charges).
We've all spent the last bunch of
years living with the results of this kind of mindless drive for a higher stock
price. China has played the primary role in this insanity. The stock
market has nothing to do with the true value of a company, it's just gambling...
and you don't know the true stats of the "teams" your gambling on.
And now really back to phones...
Keep in mind that I'm a phone man,
and that I can have any kind of phone system in our office that I want. We have
a Modkey 32 analog system from the 1980s that I took in trade, with Modkey 32
(12 line) phones. It's never broken (we do have a spare KSU just
in-case, and it's always been on a battery backup), and it does everything we
need. We don't use an automated attendant or voicemail - just real live people
to talk to customers. We do have a 1980s Takacom (Japanese) Call Sequencer
in-front of the system to answer the lines and tell us which one is the next one
to answer, that has also never broken (and has also been on a battery backup).
The 1980s Call Sequencer also gives us a report each day of the number of total
calls, calls lost off hold, average hold time and average talk time. Just like
the newest phone systems or ACDs.
My main concern is that we are
always able to answer calls as quickly as possible. If you've
called us, you know that we answer the phones quickly, have screen pops so we
know who you are (software integrated into our in-house POS system, and not dependent on the type of phone system we use), we take
your order, and get you off the line quickly. The daily reports from our 1980s
Call Sequencer tells us that the average call is under four minutes, and there
are very few times where all lines are busy (we can add or subtract real AT&T
POTS lines based on that
Even though I wouldn't go to all
VoIP phone lines, we've actually used VoIP for almost a decade. First for making
outgoing calls (mainly to our vendors). Then to transfer callers outside the old
phone system to almost anywhere, using Centrex off-premise transfer. The calls
are transferred to a VoIP phone system that has all the new whiz-bang features -
that are pretty darned handy. With my cell phone and Verizon broadband card for
my laptop, I get calls and take orders from almost anywhere in the US.
We currently use an Asterisk system
for the whizz-bang features. It's not very dependable compared to our Modkey 32
(it goes down once a month or so for one reason or another), but as long
as we can answer calls and take orders no matter what on our old Modkey 32, the
rest of the whiz-bang VoIP features are not that important to me. If they're
down for a while, we'll survive.
I personally would buy almost any
digital phone system from around 2000. I'd be hard pressed to buy anything older
or newer, mainly because incoming calls are how we make our living. If incoming
calls weren't important, and our customers weren't buying stuff that they needed
yesterday to get a job done, I probably wouldn't care much about the phone
system. If we had multiple offices where callers needed to be transferred often,
I'd abandon my quest for perfection and go all VoIP.
For Interconnects, there's been a
real downside to the dependability of all those phone systems we sold for Y2K.
In many cases, our recurring revenue has plummeted. Since the beginning of the
Interconnect business, recurring revenue and MACs have kept Interconnects in
business during the slow part of the business cycle.
In the last few years when the time
came to renew their maintenance contract, a lot of customers saved money by not
renewing. They hadn't seen a phone man in three years so who needs the
Of course, for a lot of them Murphy
came knocking two days after their maintenance contract expired - and it cost
them big bucks for T&M repairs.
Even worse, a lot of customers
dropped their maintenance contract, and used phones from employees they've laid
off over the last ten years to replace defective ones. When they run out of
spare phones, and something happens to the system itself that requires a repair,
they are shocked when they have to cough up a lot of money all at one time
for these repairs.
At that point, they're more likely
to buy a new system, if they can afford to buy or get approved for a lease. Not
a given in today's economy.
By contrast, the largest
Interconnect companies in the US, Black Box and Mitel (who bought Intertel),
survived and/or prospered by their 'take no prisoners' approach to getting their
customers to renew their maintenance contracts.
A lot of the Interconnects today are
run by phone men who don't have that same killer instinct, or who have salesmen to scare
and hound their customers into signing. The last year or two has been especially
hard for Interconnects without recurring revenue.
Recurring revenue is absolutely
needed so the Interconnect can have at least one of every system component for
every system they service as spares, so they can get a customer who's down back
up quickly. The recurring revenue is also needed so the Interconnect can have
enough technicians to respond to emergencies in a reasonable time.
What's going to happen to all that
recurring revenue at Black Box and Mitel in the next few years? I don't know.
The probability is that they'll sell new systems to those old customers, and
continue on with maintenance contracts. Depending on how the economy goes, the
customer may be willing to spend more to have a big company servicing their
phone system, even though the smaller Interconnect can probably do it better and
If those big Interconnects lose
sales of replacement phone systems, those companies might be in for a rough
ride. Mitel has always had a rough ride anyway. Now that they're a public
company with a bunch of stockholders on their backs, look for their ride to be a
An even bigger problem looming for
Interconnects is that many new systems require yearly licensing. While this
recurring revenue is great for both the Interconnect and manufacturer, and it's
not optional like a maintenance contract, it's a shock to the small and
mid-sized customers who aren't used to paying licensing fees.
I personally would probably not buy
a system that requires a yearly licensing fee, but I may not have a choice in
the future. In the old days, you'd buy the KSU, enough trunk cards for the CO
lines, enough station cards for the phones (digital and analog), and the digital
phones themselves. The stuff wasn't cheap. The phone system manufacturer made
their money selling hardware, and more hardware for add-ons and repairs later.
Today, you can connect dozens of CO
lines that come from the Internet to a VoIP phone system - not copper from
phone company pairs. It's the same hardware for four VoIP CO lines as it is for forty. How are the
manufacturers going to stay in business if they don't license you through
software for a particular number of CO lines? Need more lines, you just get the
licenses to activate them in your system. I would prefer a one time license to
do that, but because recurring revenue is so important to the survival of a
phone system manufacturer today, most systems are probably going to end up with
some type of term period where the license expires.
Station licensing works the same
way. If the phone system supports standard SIP phones, the same phone system
hardware works for four or four hundred phones. Some manufacturers are trying to
license their phones, as well as "station ports" in the system.
What happens if the manufacturer
goes belly up? If the phones will work with any standard SIP system, and keep
working without licensing, you just need to replace the system itself. If not,
your customer is screwed, and you look like a jerk for selling that junk to
So far the only companies I know of
implementing phone system licensing over the Internet are hosted VoIP (phone
system) providers, where when the phone is
plugged in or the system is booted it goes out on the Internet to the hosted
system providers web site for authorization to run.
A friend who's a computer
programmer, who's been using Microsoft's Visual Basic for years and is totally
fed up with Microsoft sent me a link to an alternative programming language to
VB. In checking it out, it was obvious that they check their web server to make
sure you are authorized to install the program, when installing it. That's fine
for most software, where if it dies one day you just stop using it and buy
There is probably a 100% chance that
the company selling this programming language will go out of business at some
point. Less likely that Microsoft will go out of business, but Microsoft has
already said they were turning off their DRM servers for some of the music
they've sold, so it will be impossible to play that tune on a new PC after 2011,
even if you still have the file on your computer. If DRM is involved you don't
own something, you rent it.
If my friend had written programs
for other companies using that language, and he at some point bought a new
computer after the company selling the software went out of business (and their
DRM server was no longer available), he would never be able to install that
software because his new computer would never be authorized to run it. At that
point, he'd better hope his old computer never breaks.
It will be interesting to see if any
phone system manufacturers move to DRM for licensing. I guess that model is
already being used by hosted PBXs, but the hosted PBX companies generally
don't lock the business phones they sell so they can't be reprogrammed and
used on another hosted system. On the other hand, if your phone number is from a
hosted PBX provider, or you did something stupid and ported your phone numbers to them, that might put you
out of business (at least for a while) if they go out of business.
As an Interconnect, this is going to
be a tough time since you'll end up being the bad guy from time to time. You've
got to sell something, and it's all pretty bad right now. Five
years from now, we'll all probably be riding high without a worry in the world,
when the third world engineers figure out what they're doing, and the economy
Until then, it's critical to avoid
being the bad guy as much as possible. The easiest way to do that is to put
yourself in the customer's position, and make sure every cutover goes smoothly.
The main thing the customer remembers is how the cutover went on their new phone
system, no matter what you do to fix it later, which definitely affects
For Interconnects, a factor just as big
as China is today's IT guy at the customer. Most business owners figure a phone system has wires
and uses electricity, so the IT guy should be able to handle it. The IT guys
don't know anything about phone systems, and no matter how much they want to
learn they aren't given the time to learn it and don't have the exposure to the
problems that someone who works on phone systems everyday has. Like the Chinese
engineers, the IT guys are being told to do stuff without training, and there's
nobody experienced to ask about it. The boss is paying them, so they have to do
The IT guy is going to go for the
most geeky solution, just because that's what he's comfortable with. The
geekiest solutions are normally the most expensive and not necessarily
dependable. Companies like Cisco are using their relationships with IT guys to
sell them a phone system, and making big bucks doing it. Since the
responsibility for the phone systems and phone lines has been forced on the IT
guy, the Interconnect has little chance of selling those companies anything...
or using their expertise to solve problems. Those companies have become DIYers,
spending a lot more money than if they had gone to an Interconnect - and stayed
off the bleeding edge.
The Chinese consumer, as well as
consumers in other third world countries, don't actually know what quality is.
They have no basis of comparison to what they're buying today. Their standard of
living will slowly improve (with us paying for it), while the standard of living
of the US consumer will slowly go down to meet those of the third world. It will
eventually all be the same worldwide (except in the poorest countries).
In the end, the Chinese will win.
They have a secret weapon that is 100% effective against Americans. Every single
American who knows what quality is and desires it, will be dead soon enough.
China has been there a long time. They can wait us out.
for a quick list of things to check before jumping into VoIP.
Things to Think About Before Ordering VoIP for a
detailed list of CLEC, Cable and VoIP phone line quirks.