The Other Long Tail: When Technology Gets MagicJacked

We noticed the other day that one of our earliest clients, VocalTec Communications, merged with YMAX Communications – purveyor of "MagicJack" via late night infomercials and shopping channels.

With a founding team including Israeli entrepreneurs Alon Cohen, Lior Haramaty, Opher Kahane, and Elon Ganor, by the mid-'90s, VocalTec played a central role as both Voice-over-IP (VoIP) innovator as well as developer of  the surrounding "ecosystem" (to use a consulting babble term). VocalTec had a lot to do with creating ITXC, a  wholesale VoIP carrier and traffic exchange and was one of its largest shareholders.

Back in 2005, a struggling VocalTec did a reverse merger with Tdsoft, an Israeli softswitch company, and now with the YMAX merger combines softswitches (and their underlying intellectual property), carrier operations, and direct-to-consumer telecom services under an aggregated, but modest-sized (~$100M revenues) umbrella.

It's hard to remember the era before the dotcom/telecom implosion of 2001, but back then, at its peak, chatter about VoIP and its ominously disruptive force took up nearly as much oxygen in the pre-blogosphere of conferences and trade press as, say, iPhone/Android talk does today.

That era was also the beginning of "personal brand"-making, internet sloganeering ("information wants to be free", "Telecosm", etc.), internet personalities, and light futurism-as-entertainment now familiar to any TED-goer. As if to legitimize VoIP's role in the carnival, The Economist's trendspotter Frances Cairncross added gravitas to the topic through various pronouncements about "The Death of Distance."

The expectation was that VoIP would unleash a telecom revolution. Well, it certainly changed telecom, but rather gradually and in a comparatively humdrum way. Hardly the equivalent of the advent of electricity or television, VoIP did greatly accelerate the relentless downward pressure on long-distance pricing, and it enabled "trunking", or bundling together of long-haul traffic, much more economically, often bypassing traditional telecom carriers altogether.

These were the sorts of pressures that, once AT&T was separated from its (original) wireless business, shrank the company to the point the leftovers were remaindered to SBC Communications, ostensibly for the brand value.  So perhaps it wasn’t quite as much the Death of Distance as it was simply the withering away of IXCs (inter-exchange carriers), which were a regulatory artifact anyway.

The fact that VoIP is everywhere – a cheap, banal, infomercial-sold commodity – is a good thing: a triumph of packet switching for the masses. It’s simply worth remembering if you’re a purveyor of anything from, say, cloud storage to video streaming, that this other “long tail” – the increasingly rapid, continuous descent into mass commoditization (being “MagicJacked”) – is what awaits many, many innovations.