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May 20, 2003

The Pulver Report - May 20, 2003

The Pulver Report - May 20, 2003 Issue

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In this Issue:

- Heard on the Net
- 2003 Pulver Report Party: June 3rd in Atlanta during Supercomm
- Jeff's Strategy for the RBOCs and PTTs: Become Broadband Parasites
- Introducing VoIPWatch
- Hotspotting @ LAX
- Another State looks at VoIP
- Call for Speakers: 2003 Wireless Internet Summit
- pulver.com 2003 Conference Calendar

------------------------------------------------------------------------
Heard on the Net:

Looking at the recent performance of some of the public "pure play" VoIP
stocks, the sector has recovered a bit (and in some cases more than a bit)
during the past six months. As far as I can tell, the sector once again
has a "positive bias" and one can only hope for a wider recovery during
the course of 2003.

And even yet another positive VoIP story, "Dialing for Dollars" appeared
in the Monday, May 19th issue of the Wall Street Journal.
( see: http://tinyurl.com/c6c3 - requires on-line subscription.)

One data point close to the pulver.com home is that in the past four weeks
the exhibit hall at VON Europe in London
became "sold out" and things are shaping up for a real good Fall VON this
September in Boston. .

As I'm feeling positive once again about the IP Communications space, I've
made the commitment to hold another Pulver Report party this year at
Supercomm. The pulver.com party will be taking place at the Tabernacle on
June 3rd. Please RSVP to: by
May 30th. Please feel free to extend this invitation to all members
of your team who will be at Supercomm.

- People on the Move:

Ken Percy recently left Miercom to work with Progressive Strategies Inc.

Gene Retske has recently joined The Prepaid Press as Editor-In-Chief.

To be listed in a future "People on the Move" column, please
email: people@pulver.com to report a change in your position.
Please refer to: "People on the Move" in the subject.

------------------------------------------------------------------------
2003 Pulver Report Party: June 3rd in Atlanta during Supercomm

In celebration of the 7th year anniversary of the Pulver Report,
pulver.com is hosting a party at the Tabernacle in Atlanta, GA on
June 3rd from 7:00 to 11:00 PM.

Readers of The Pulver Report who are over 21 are invited to attend
the party. Please RSVP by May 30th.

Drinks and Live Entertainment will be provided.

To RSVP, please visit:
( http://pulver.com/vonmagparty/rsvp.html )

------------------------------------------------------------------------
Jeff's Advice for RBOCs and PTTs: Become Broadband Parasites

background note:

/* I realize the idea below that I'm proposing is a little radical
as it represents the inverse of the present incumbent business model.

In general terms, "Top down control" makes risk minimization the path of
least resistance to profits and the winners become those best at
controlling supply.

"Bottom up control" makes the value creation the path of least
resistance to profits and winners become those who are best at generating
demand.

In general terms, the telecom incumbents have won in the past by keeping
Minutes of Use (MoU's) scarce - i.e. expensive. Companies in the computer
industry won by making Millions of Instructions Per Second (MIPS) abundant
- i.e. cheap over time.

Going forward abundant (cheap) MoU's of connectivity will drive growth of
applications in the communication world. If I'm right about this, I
believe that some of the incumbents will be challenged to survive this
new transition...but this too is possible. All that is required is a
change of mind set. For example, MCI's new CEO comes from this high
MIPs abundance world. */

Jeff's Advice for RBOCs and PTTs: Become Broadband Parasites

On a VoIP panel discussion at the recently completed Ninth Annual Goldman
Sachs Telecom Summit in Santa Barbara, CA, I outlined a strategy for the
RBOCs/PTTs to play and win in the Voice over Broadband space and in effect
regain their competitive edge in providing local phone service.

To some, the concept of a communications Application Service Provider
(ASP) breaks the known rules of engagement and has the potential to
redefine the communications industry as it was once known.

For those of you who know me, you may recall that I'm a believer of what
I call "Lennon/McCartneyism" which was largely influenced from the lyrics
from the song "The End" from Beatles Abby Road Album - "...and in the end
the love you take is equal to the love you make." From those words I
envision a Greenfield opportunity of embracing a balanced broadband
empowered world where end user empowerment exists and where people can
just pay for access (dumb pipes) and have the freedom of choosing who/what
and where their service providers come from. A corollary that in
this model, non-traditional service providers will show up and start
offering "services." This is happening today as represented by the
overnight success of companies like Vonage and this is one of the trends
that may in fact help save the communications industry.

In this Greenfield opportunity, the advent of end-to-end IP provides
the virtual mulch. From this mulch, the opportunity exists to grow plants,
trees, weeds and more. Fertilizer needs to be provided, the seedlings need
to be nurtured and my hope is that we can help control the "weed"
population without much (if any) regulation. My hope is that this become a
world made available by deregulation rather than new regulation.

With all of this said, my number one rule for those who wish to compete
in the Voice over Broadband space is: "Embrace the Technology and Act as
a Good Parasite."

"Embrace and Act as a Good Parasite", yes this is what I'm saying.

It wasn't that long ago that a common assumption was that local phone
service would always be delivered by the incumbent operator. In the US
this was the RBOCs and outside of the US it was the local PTTs

What almost everyone seemed to miss was the fact that while most telecom
executives were in the board room making assumptions about running a
wireline telephone business, the business of the wireless industry
happened and we are at point in time today where 40% of all telephone
calls in the US originate or terminate on a cell phone and where this
trend may in fact be accelerating. This in turn, plus the emergence of
availability of broadband empowerment of consumers has had a noticeable
impact in the top line revenue of 2nd line phone service in the US with
the RBOCs and the PTTs around the world. There are a growing number of
consumers who today rely on their cell phone as their primary phone and
don't pay to have any connectivity to/from their respective incumbent
operator. Residential 2nd line (and 3rd, 4th, etc.) service has been
replaced by the purchase of either DSL or Cable Modem service and/or the
increased use of wireless/cellular phone service in the home.

In a parallel time frame, since 1997, the VoIP industry was incubating
it's core technologies and the QoS on the public internet was getting
better to the point that by early 2002, consumers were for the first time
offered the choice of replacing their secondary phone service from
companies like Vonage.

From one perspective, revenue prospects for Voice over broadband services
look to be on the rise and revenue from traditional phone services look to
be on the decline.

So what can be done to fix all of this if you are an incumbent operator?

Put artificial barriers to entry in place to try to slow down the
competition? Maybe that works, but eventually it doesn't. A better
approach is to embrace the technology head on and leverage it to your
favor.

My strategy for the ILECs and the PTTs of 2003 is as follows:

Embrace VoIP and launch a consumer 2nd line phone service inside your
territory as a pure parasite play and deliver the service over broadband -
both Cable and DSL and play the same game as the other voice over
broadband service providers. You don't need to pay for the roll out of the
cable plant, or to play for the access for your prospective customers to
benefit from. As a pure parasite you gain access without the cost.

Plus people still have a "trust" relationship with you so even if they
don't opt-in for your primary phone service, you do make a compelling
reason to be the secondary phone service in the home. Did I mention that
you also know where everybody lives and you can quickly identify the
customers who have left you and can focus on creating enough awareness so
that you can gain new customers faster than the startup competition
which has to spend significant dollars on branding and marketing.

So start out by offering 2nd line phone service in the territory that you
still offered primary phone service and then, if you want to keep the
relationship, start rolling out "Purple" applications which enable your
new customers with the ability to do more things with communications,
things which they could never do before without IP based communications.
(Eventually this means that new applications will be rolled out that may
in fact be "sticky" enough for you to attract net new customers.)

As far as I can tell, this strategy turns out to be a win/win all the way
around for most of the players and would completely validate the ongoing
work of the emerging new order of voice over broadband players.

When successful, roll out the services on a national / international
basis. The international LD arms of these operating companies can then go
local outside of their national territory and help bring communications to
a new generation of people.

Just a thought on how everybody can win in this new broadband enabled
world.

------------------------------------------------------------------------
Introducing VoIPWatch - A place for Press Releases & Industry News

Earlier this month pulver.com acquired a new website, VoIPWatch -
. This website provides an easy way for
readers of the Pulver Report to submit their company press releases and
provides a channel for community members to share their own news and
stories.

------------------------------------------------------------------------
Hotspotting @ LAX

On the way back from a recent west coast trip, I spent a couple of hours
walking around terminal 7 at LAX "hotspotting." I had heard that Boingo
was available at LAX but I wasn't quite sure where. During my attempts to
find Boingo I ran into a couple of private WiFi networks and finally was
able to download the Biongo software and check my email all before the
battery in my laptop was discharged.

If you ever see people walking around airports (or other public locations)
with their laptop computer screens open and with the owners staring into
their screens as if they were walking down the beach combing for missing
objects, that is what it felt like during the time I spent hotspotting at
LAX.

I realize the sight of this may have looked a bit strange to the weary
travelers whom I tried to avoid walking into.

At least when using WiFi at locations which are familiar to you, one
generally can find out where the access points are and one generally
gets a feel for the coverage range. In my case I still don't know
where the access points were but I did learn where the reception was
marginal and appreciated the few minutes of uninterrupted emailing that I
was able to get done.

While it would be nice when laptops provide an audible indicator of the
received signal strength of the incoming WiFi signals, hopefully we won't
have to wait for such innovations before the art of hotspotting is
perfected. Until then, look out for people like myself who
at times can be found walking from gate to gate looking a little lost
while at the same time seeking the best location for best reception of the
WiFi access point.

------------------------------------------------------------------------
Another State looks at VoIP

In the last issue of the Pulver Report I reported on on-going activities
in Ohio, Florida and Virginia. Add Illinois to the list of States looking
at VoIP in 203.

I recently read a Notice from the Illinois Commerce Commission (ICC)
concerning a workshop the ICC Staff is convening on May 22, 2003 at 1:00
p.m. Central time in Chicago and Springfield. The purpose of the workshop
is to address Voice Over Internet Protocol based local services and to
"discuss alternative regulatory treatments of such services."

The notice states that Staff expects to address the following topics
(as they relate to VOIP and similar technologies used to provide local
voice services):

- Staff Presentation: The Basics (e.g., how VoIP works)
- Jurisdiction of the Illinois Commerce Commission
- Certification/Tariffs/Taxes
- Service Standards/911 Service Standards
- Consumer Protection Standards

For those of you active in Illinois who will be at this meeting, I'd
appreciate receiving your feedback. Special thanks to Pulver Report
reader Darrell Townsley for the heads up regarding this meeting.

------------------------------------------------------------------------
Call for Speakers: 2003 Wireless Internet Summit

pulver.com will be hosting our 2003 Wireless Internet Summit, November
11-12 in Santa Clara, CA. This summit will be taking a look at the
current Wireless Internet market space and will be covering a wide range of
topics and issues ranging facing the industry ranging from WiFi VoIP to
free WiFi Hotspots.

We are currently working on the summit schedule and the formal website
will be launching in June. In the meanwhile, if you are involved
in the Wireless Internet Space and are interested in speaking at
our Wireless Internet Summit, please email me directly, jeff@pulver.com
by June 20th for consideration.

------------------------------------------------------------------------
pulver.com 2003/4 Conference Calendar
( http://pulver.com/conference )

"Events for the Communications Industry" (tm)

June 9-12 - VON Europe 2003,
Olympia Conference Centre, London, UK
( http://pulver.com/europe2003 )

June 9 - FWD User Group Meeting
( http://pulver.com/fwdugm )

July 8-9 - Supernova 2003, Washington D.C.
( http://pulver.com/supernova )

September
22-25 - Fall 2003 VON Tradeshow & Expo,
Hynes Convention Center, Boston, MA
( http://pulver.com/von )

September
23-25 - SIPop! 2003,
Hynes Convention Center, Boston, MA
( http://pulver.com/sipop )

September 30
- October 1 - RVC SoftEdge 2003
( http://pulver.com/rvc2003 )

November
11-12 - 2003 Wireless Internet Summit
Santa Clara, CA

- 2004 -

March 29
- April 1 - Spring 2004 VON Tradeshow & Expo
Santa Clara, CA

-------------------------------------------------------------------------
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Please send your comments and feedback regarding this issue of
The Pulver Report to: jeff@pulver.com.

Jeff Pulver Tel. +1.631.547.0800
The Pulver Report Fax. +1.631.396.3996
May 20, 2003 http://pulver.com/reports
------------------------------------------------------------------------
(c) 2003 pulver.com, Inc., All Rights Reserved.
========================================================================

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