KISS YOUR SECOND LINE GOODBYE
Febuary 6, 2000
SMART Letter #33 - February 6, 2000
Copyright 2000 by David S. Isenberg
isen.com -- "best effort"
firstname.lastname@example.org -- http://www.isen.com/ -- 1-888-isen-com
> First a note on my business interest in CallWave
> Kiss Your Second Line Goodbye: CallWave's Virtual Telephony
> On 'Net Taxation
> Announcing isen.com Asia Tour
> Conferences on my Calendar, Copyright Notice, Administrivia
FIRST A NOTE: The article below is the first time I have ever
blatantly sullied my commentaries with an a priori, personal,
greedy, selfish, pecuniary business interest. That's because
(a) the CallWave story is a great one, one that I'd tell anyway,
and (b) CallWave is ready for the publicity. I'm working with a
couple of companies that satisfy 'a' but not 'b'; there are a
couple of stories that I want to write so bad I can taste it!
Conversely, I've worked with others that have satisfied 'b' but
not 'a'; one in particular wanted me to write a puff piece
that'd appear on the eve of the expiration of the insiders' six-
month equity lock-up. My bottom line is that I wouldn't write a
SMART story without 'a' and 'b'. So, for the record, yes I have a
business interest in CallWave, yes I have an equity stake, yes
CallWave's success will be my success too, yes she drew me down
to her breast all perfume, yes, yes, yes.
I acknowledge that it is a slippery slope; seen any television
stories sympathetic to medical marijuana lately? I'm not immune
to the lure of lucre, but I do promise to continue to be up
front, to tell you where I'm coming from, to keep my
relationship with SMART People transparently motivated.
KISS YOUR SECOND LINE GOODBYE: Startup uses the Internet to
provide a 'virtual second line' -- for free
By David S. Isenberg
Now, telephone customers can surf the Internet without missing
calls -- and without a second line -- thanks to Santa Barbara,
Calif., startup CallWave (www.callwave.com). "We're competing
for the multibillion-dollar residential second-line business,"
says Dave Hofstatter, CallWave's president.
It works like this: When a CallWave subscriber is online and a
new call comes in, it is forwarded-on-busy to the CallWave
platform. The caller's experience is that he's reached an
answering machine. The CallWave platform uses an instant-
messaging-like protocol to notify the subscriber's computer of
incoming calls. When a new call arrives, the subscriber's
computer rings and its CallWave window displays "new call" (and
other call progress messages). When the caller leaves a message,
it is instantly downloaded as a compressed audio file and played
through the subscriber's computer sound system.
To set up the application, the subscriber downloads the CallWave
client from the company's Web site. Once installed, the CallWave
client displays a tiny window whenever the subscriber goes
online. The subscriber also needs to order forward-on-busy from
the LEC (at $0.75 to $3.40 per month) and set it to forward
calls to CallWave's platform.
CallWave's application is evolving in 'Internet time'. Soon it
will show caller ID, allowing subscribers to screen calls in
real time. Subscribers also will be able to cause the CallWave
client to drop the Internet connection so the CallWave platform
can complete the call by extending it to the originally called
number when the line clears.
The price is unbeatable -- it's free. CallWave's business model
is based on ad revenue; the CallWave window displays ads when
there is no incoming call. A click on any ad starts the browser
and brings up the advertiser's Web site.
Since CallWave's early-October launch, over half a million
people have downloaded the client; as many as 15,000 have
downloaded it in a single day. CallWave has handled some 10
CallWave gets 'love mail' every day. "Today, for example, I
heard from a nurse who was delighted that she could log on while
she was on-call," Hofstatter says.
Competition is weak, Hofstatter claims. Similar LEC offerings
are starting to appear; these carry a monthly charge, require
customers to buy LEC call waiting and voice mail, or require
them to use the LEC's Internet service. Internet-oriented
companies such as Pagoo and Internet Call Manager charge for
similar services. Still others, like Onebox and Ureach, offer
unified messaging services, but these appeal to super-techie
power users, he says.
"The huge opportunity is down market," Hofstatter explains. "A
new wave of people is discovering the Internet. We're borrowing
the familiar answering machine paradigm so everybody can relate
Harvard Business School Prof. Clayton Christensen thinks this
strategy is well-positioned to disrupt the LEC second-line
business. "CallWave fits the pattern of other successful
disruptions," he says.
CallWave's biggest hurdle is getting the LECs to sell forward-
on-busy at all. "One in five CallWave subscribers is misinformed
by their LEC," asserts Hofstatter. "Sometimes the LEC's agent
says that forward-on-busy isn't available when in fact it is.
Other times, the agent tries to steer our subscriber toward
expensive LEC services like voice mail."
"The major LECs have forward-on-busy tariffs in every state,"
adds Dave Trandal, CallWave's vice president of operations.
"This obligates them to sell it to all comers. But every state
with an uncooperative LEC requires separate action. What a
CallWave is working with major LECs to resell forward-on-busy.
The company is developing the ability to provision the feature
seamlessly. "It will be easier for subscribers if we do it,"
REDRAWING THE COMPETITIVE PICTURE
There are many ways to compete in The Stupid Network. Hofstatter
believes that CallWave is fulfilling the promise of the Telecom
Act of 1996 by bringing innovative, practical competition to
local markets. "Today, local competition exists for business
markets, but not for residential service," Hofstatter says.
"CallWave's mission is to redraw this picture."
(Gentle reader, if you think this column is biased, you're
right! I'm on CallWave's advisory board. We're working to free
millions of residential customers from LEC second-line charges.
The big LECs still don't comprehend the Internet, but the
benefits of the Internet second-line boom go straight to their
clueless bottom line. If there is justice in the universe, those
second lines will return to the Internet, where they belong.)
[This article originally appeared in the February 1, 2000 issue
of America's Network. Copyright 2000 Advanstar Communications.]
ON 'NET TAXATION by David S. Isenberg
The subject of "taxing the Internet" came up on the MetaMarkets
discussion boards in January. The question is way too under-
specified. It is like asking, "Who makes money from the
Internet?" (Here, I pose an analogous question: Who makes money
from roads? Answer: Car makers, gasoline refiners, mechanics,
trucking companies, stores that get their goods from trucking
companies, you and I when we drive to work, your kid who takes
the school bus to school so she can learn to lead the next wave
of value creation. In other words, the whole economy benefits,
if "benefits" is even the right concept; really the system of
road costs and benefits is inextricable from the economy.)
Furthermore, the question of taxation demands another question:
What gets taxed and how? Do you tax the goods sold on the net?
Do you tax bytes transmitted? Connect time? Monetary
transactions? Each Internet account at some fixed rate per
month? Do you tax business Internet accounts but not home
accounts? Or vice versa? Do you tax the Internet connectivity of
people making more than $100,000 per year, but not if they make
less? Do you add a tax to the sales price of every device with
an Internet Protocol stack on the assumption that it will engage
in net-based economic activity? Do you tax the ISPs and the
telcos? Do you tax the ebays and the amazons? Do you tax the
real audios and the broadcast.coms?
The Internet is already taxed by an existing mechanism -- income
tax. I pay income taxes to the governments of one country, three
states and one city. I made a lot more money this year than I
did last, thanks to . . . yes, the Internet. So please don't
tell me that these governments lost money because they didn't
get sales tax on the few books I bought them from Amazon! These
governments made thousands from me that they wouldn't have made
if there were no Internet.
And the Internet is taxed by another existing mechanism --
property tax. Information technology is increasing productivity
(dismals like Steven "Productivity Paradox" Roach
notwithstanding), which is keeping inflation at bay, which is
keeping interest rates low, which is driving up the price of
housing, which is increasing the property tax revenues to my
The rising tide of Internet-driven economic expansion increases
the amount of taxes collected -- at least in the more affluent
sectors of society. (And I, for one, would like to see it raise
*all* the ships in all sectors of the economy.)
Perhaps as e-commerce becomes just commerce, e-business becomes
business, and e-shopping becomes plain old shopping, maybe we
will see that the Internet is growing the tax base just fine,
thank you, as it grows the larger economy.
[The above piece originally appeared on the MetaMarkets.com
ThinkTank discussion board. I have an equity position in
MetaMarkets, but that doesn't affect one bit of the piece above.
-- David I]
ANNOUNCING the isen.com ASIA TOUR: February 19 - March 8, 2000.
+ Feb. 19-26, Tokyo. I'll be talking at GLOCOM at 2PM on
Tuesday, Feb. 22; for information email
email@example.com. + Feb. 27-29, Seoul.
+ Mar. 1-4, Singapore. Internet World.
+ Mar. 5-8, Hong Kong.
I'd welcome the chance to meet SMART People in Asia. If you'd
like to meet with me, or want more details of my trip, please
CONFERENCES ON MY CALENDAR
March 9-10, 2000. Washington DC. Legg Mason Investor Workshop
on "Investment Precursors (tm) in Telecom, Internet, and
Electronic Commerce." I'll be on a 'technology visionaries'
panel with SMART People Bob Lucky and Michael Powell. The
other panelist, Royce Holland, hasn't gotten with it and
signed up for the SMART Letter yet. Others on the program
include Reed Hundt, William Kennard and Ed "buy 'em up"
Whitacre. For more information, contact the Legg Mason
Precursor Group at 202-778-1972.
TELECOSM ASIA (originally March 12-15) has been POSTPONED.
March 20-23, 2000. Orlando FL. IBC "Unified Communications
Conference." It's not just "Unified Messaging" anymore! I
think I'm giving the keynote at 8:45 AM on March 21st.
The information on the web at http://www.ibcusa.com/ is as thin
as it comes. If you really need to know, contact Anne Bacon
Blair firstname.lastname@example.org, 508-481-6400 ext.645.
May 7-12, 2000. Birmingham UK. World Telecommunications
Congress. I am an invited speaker for the session entitled,
"What's your network IQ?" Answer: Too high. For info, see
May 23-26, 2000. Laguna Niguel CA. VORTEX. I am still lobbying
Bob Metcalfe to let me run a session on "The Network We Really
Want to Have, and Why We're Not Building It," but Bob is still
being coy. For more info, see http://vortex2000.com/
June 7-10, 2000. Toronto ON. TED CITY. My only role here is
as a paying member of the audience, but I think that Richard
Saul Wurman does a real job with his TED conferences -- every
one I have been to has had deep lasting impact. You can't
shoehorn yourself into his regular Monterrey CA stand in
February, but there are still a few spaces for June, and I
would like SMART People to be there if they can.
COPYRIGHT NOTICE: Redistribution of this document, or any part
of it, is permitted for non-commercial purposes, provided that
the two lines below are reproduced with it:
Copyright 2000 by David S. Isenberg
email@example.com -- http://www.isen.com/ -- 1-888-isen-com
[to subscribe to the SMART Letter, please send a brief,
PERSONAL statement to firstname.lastname@example.org (put "SMART" in the
Subject field) saying who you are, what you do, maybe who you
work for, maybe how you see your work connecting to mine, and
why you are interested in joining the SMART List.]
[to unsubscribe to the SMART List, send a brief unsubscribe
message to email@example.com]
[for past SMART Letters, see
[Policy on quotes: Write to me. I won't quote you without
your explicitly stated permission. And if you ask for
anonymity, you'll get it.]
David S. Isenberg firstname.lastname@example.org
isen.com, inc. 888-isen-com (inside US)
http://isen.com/ 908-654-0772 (from abroad)
-- The brains behind the Stupid Network --