We know the story all too well. Thousands of competitive local exchange carriers (CLECs), backed by the venture capital market, flooded the telecom space in the hopes of all becoming the next AT&T (News - Alert). The goal back in the late nineties was to roll out fiber as fast as possible with no regard for getting any customers.

 

If you remember, at the time, the stock market didn’t even value profit; it was all about eyeballs, miles of fiber and potential for future profit. Profit was an “evil” word as it allowed markets to place a valuation on your company. Many former CLEC heads tell me they wanted to focus more on customer acquisition and their investors directed them to focus on digging up asphalt as a place to lay glass and not revenue generation.

 

To make matters worse, the incumbent local exchange carriers (ILECs) were throwing up roadblock after roadblock making it difficult for DSL providers and CLECs to sell their services over ILEC-controlled pipes.

 

We know how the story ends. The market crashed, investors panicked, few CLECs had any customers and many went belly up.

 

Today the cable companies are the most formidable competitors to the ILECs. Still, we generally don’t expect the cable and phone companies to be leaders in rolling out new services. These larger companies are generally behind the curve when it comes to experimenting with new applications.

 

Remember, Vonage (News - Alert) was the first major telephone service provider with a soft client. Vonage did not invent the soft client mind you; the company just decided it wanted to be among the first Internet telephony service providers (ITSPs) to distribute this type of product to customers.

 

Large service providers know they are slower to move than smaller companies and the promise of IP Multimedia Subsystem (IMS) is all about allowing telephone company partners to develop new network services on the cheap, letting the partner and telco share in the profits.

 

Is this a good strategy? Absolutely. Will IMS be deployed globally overnight? Absolutely not.

 

In the meantime, there are a few solutions which allow application developers to deploy advanced telephony applications with little investment and with great potential.

 

One such solution is a customer premises equipment (CPE) box called PhoneGnome. Made by Televolution,the deviceis an advanced  technology attachment (ATA) with an application program interface (API) allowing applications to be rolled out on what has to be the most granular and targeted basis possible. You could provide service to one person on each street in the world and your deployment would be cost-effective.

 

The box costs $30-$60 depending on volume and can be the easiest way in the world to provide advanced telephony service to customers on anyone’s broadband or phone network.

 

The benefit of this approach is that it makes application fine-tuning a cinch. You can revise, refine, retune or redo your application development for just the cost of the developer. You don’t need any traditional and high-priced telco equipment.

 

In fact, the absence of equipment in this model means developers can be of the software-only variety, resulting in access to many more programmers worldwide. One application already running on PhoneGnome is Dial Tone 2.0, which replaces dial tone with a TellMe application asking you for a contact or business name to call. Speech recognition and behind-the-scenes technical magic connects you with the party you want to call.

 

You could also develop a smart forwarding application like GrandCentral or virtually anything else. Years ago I wrote an article suggesting that if Google (News - Alert) got into telephony, the company could provide an application that performs, essentially, a Google search on an incoming phone number. With tabbed browsing, this application could let you pull up one tab to search for a number in the yellow pages, another tab to search for the number on the Better Business Bureau’s Web site, and so on.

 

This sort of application can be built by anyone now. There are a variety of similar telephony mashups you can come up with, in fact. You could develop an application which displays a map with the city and even address of the person calling you.

 

PhoneGnome uses XML to pull up call detail; once its available, you can do whatever you want with the call. You could have it gracefully forward to voicemail or forwarded to an assistant or to your cell phone.

 

The potential here is quite staggering. Each PhoneGnome device sits in a home and can determine how long a household uses a phone. The device can establish identity trust via the phone company with a side benefit being built-in security.

 

Additionally there is the potential to correlate Web and phone behavior. In the past I have written about how service providers can start making money by selling aggregate telephone data. Now, any company with enough boxes out on the network can have this same ability.

 

So, Televolution’s PhoneGhome allows anyone to take advantage of the most lucrative promises of the CLEC opportunity. You can now provide the advanced services and that’s where the real money is.

 

Service providers could use this sort of service to break out of their traditional markets if they choose to do so. Fixed-mobile convergence (FMC) is, for example, a natural application stemming from this solution.

 

The technology behind PhoneGhome can sit in a phone or router or even a video game. Televolution has a shared revenue model and can even help with distribution of the service. The company also has a mobile client with many similar features to the home-based solution.

 

I am pretty blown away by this technology and believe it has very broad implications for the deployment of advanced telephony applications. Why? Well, for the first time, anyone can roll out enhanced services without the need to wait for a service provider to green-light the project.

 

If the project is successful and you get 100,000 subscribers, you can then shop it around to service providers as a proven business model and have them help market and sell it. I see PhoneGnome as the ultimate solution for getting telephony applications rolled out quickly and efficiently. For this reason, I think it is the ultimate CLEC 2.0 enabler.