i3 Forum vs IPIA

In Andy Ory's opening speech at the Acme Interconnect 2009 conference he made the point that the emergence of new market segments requires disruptive change. But he added that it has to be just the right amount of disruption. Too little disruption and customers will just adjust and continue doing what they always do. Too much disruption and it becomes too difficult for customers to adopt a new opportunity even if it has major benefits.

This concept seemed to be illustrated in a panel discussion of the missions of the i3 Forum and the IPIA (IP Interworking Alliance). Carlos Da Silva from France Telecom represented the i3 Forum that has the goal to develop collaborative recommendations for an industry-wide transition of voice and related services to Internet Protocol (IP). John Boden of Vodafone spoke for the IPIA which has the mission “To provide an environment whereby stakeholders from mobile operators, fixed operators and carriers can agree to technical specifications and commercial templates for the IPX, which will facilitate the global interworking of IP services.” The IPIA is the users group for the GSMA IPX.

The mission of these two organizations sound very similar, but their plans and apparent success seem quite different. Early on I was a big fan of the GSMA IPX concept. The IPX is a big, bold idea and it seems to have a fundamental business model that makes sense. In contrast, my initial impression of the i3 Forum was that it just another group of PTT's trying to protect their incumbent business model. I still think the i3 Forum is just a stodgy group of incumbents trying to protect their business, but it sounds as if the organization, which has grown to 28 members, is making some progress on its goal of nudging the largest international SS7 networks toward VoIP. In comparison, there is no news from the IPIA. Its web site is closed to everyone except board members. It seems that the disruptive change offered by the GSMA IPX may be too much. Maybe the GSMA IPX be just another great idea which is ahead of its time.

One of the interesting points made by Da Silva in the panel discussion was about PTT bilateral agreements. Settlement based bilateral agreements are the bane of VoIP purists who believe in a bill and keep business model with settlement free peering. They claim it was the business model that drove the explosive growth of the Internet and can do the same for VoIP adoption. Da Silva explained the irony in this constant debate between incumbents and new entrants. Bilateral agreements are basically the bill and keep model. Each carrier manages their traffic flow to their bilateral partners so the net settlement is zero. Which is identical to the bill and keep model for networks that have equal traffic exchange. However, there is a funny money accounting twist that is important to incumbent carriers. Bilateral agreements with a zero net settlement enable each trading partner to book a significant amount of revenue. If incumbents changed to a bill and keep model they would take a big revenue loss. Of course the cash impact of the accounting change would be zero, but no incumbent telco executive wants his incentive pay plan to take a hit from a decline in revenue.