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IfByPhone: Two-Sided Business Model, Comms-Enabled Business Processes, and Open Source Telephony

We recently had the chance to speak to Irv Shapiro, CEO of IfByPhone, a start-up company we featured in the Voice & Messaging 2.0 report that operates a hosted platform for voice-enabled CRM applications and which lets you integrate your Web, e-mail, and phone sales activities while maintaining common metrics across the whole company (Read more here, and note that Thomas Howe is a fan.) Irv Shapiro describes it as being “like Salesforce Force.com with phones”. A couple of interesting things….

First up, there’s clearly still loads of value in the CEBP/Voice 2.0 space. IfByPhone is growing at a rate of 17%, a fair clip in these times. But the really interesting business news about them is their latest move; they want to recruit telcos as partners, specifically the United States’ over 1,000 small ILEC/CLEC operators, many of which are struggling with competition from the national-scale operators, the secular decline of voice revenues, and either the broadband incentive problem or else the lack of investment to deploy broadband in the first place.

They’re able to do this because of a basic affordance that the underlying SIP protocol they use provides; if it’s plain, IETF-standard SIP, any other SIP provider can interconnect with them trivially, and so can any SIP-speaking application. Further, SIP operators, like good Internet people, are into peering in a big way; this means that IfByPhone is able to offer obscure hillbilly RLECs access to their systems at minimal incremental cost. “Because everything is SIP we can deliver to anyone we can peer with; and there are more than 1,000 operators in the US,” as Shapiro put it.

This is hugely Telco 2.0; the next question will be the terms on which IfByPhone derives revenue from the arrangement. They have a choice; they can either deal with the peering operator’s end user directly, and pass some of the revenue back to the operator under a revenue-sharing agreement, or else the operator can use the service as part of their offering to their customers, and pay IfByPhone for it under a wholesale agreement. It depends on who has the greatest customer intimacy; but this just goes to show the inherent flexibility of two-sided business models.

The second thing we noticed is how well they are making use of open-source technology. “We didn’t go out and buy a Sonus switch!” says Irv Shapiro. We’ve pointed out before that if you scratch a Voice 2.0 company, you find an Asterisk server; it’s increasingly clear that Asterisk is to Voice 2.0 as Apache is to the Web. Irv Shapiro describes the platform as “a horizontal softswitch”, running as many as 80 Asterisk instances in a rack, which talk to the application servers. IfByPhone’s core intellectual property is to be found there, about 1 MLOC of proprietary code which implements the API and the user interface. Beyond the Asterixen, the free SIP router developed by Thomas Magedanz’s team at Fraunhofer FOKUS, OpenSER, is used to handle the SIP trunking and route calls into the Asterisk bank.

This gives them a lot of flexibility; one of the few proprietary applications in the platform is the voice recognition system. So in order to save on the licensing costs, the Asterisk servers are set up to classify calls between the ones that need recognition and the ones that don’t, but not to route the call to the recognition system until the voice recognition is about to begin - it’s essentially a kind of multiplexing.

Ed; we’ll be discussing these issues in the Enterprise Services strand of the next Telco 2.0 Executive Brainstorm, in Nice on the 6th-7th of May.

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