am i missing something here ????, page-13

re: tls look out! voip to hit mass market shelves TLS have to protect traditional POTS revenue - there would be no advantage in moving telephony to data networks - none, period, except market forces ... of which they are desperate to control.

The real money in the telco industry is in the traditional telephony application - in TLS's case, in the way they position and market it (read pricing power and massive margins). TLS will not let this go lightly - even though it seems inevitable that VOIP as an application on data networks to the consumer (last mile) is inevitable.

The issue with VOIP is "guaranteed quality of service" - which we all take for granted with a PSTN line (POTS service) - PSTN or POTS is a dedicated service (switched technology as opposed to packet switching which is designed for data networks - not for "real time" telephony).

Having said all of that, the picks and shovels companies - ie: CISCO for example have been designing network switches and routers to be able to weight data applications as to their relative importance (telephony as a data application demands real time availability, hence the highest priority). VOIP networks have been deployed for several years - the CSIRO and Universities embracing "data" networks several years - I was personally privy to the 2000 ARRNET review with the Vice Chancellors when Telstra and Optus were paired off - Telstra withdrew before the game even started, leaving Optus with the can (they were the incumbent). The reason for this was obvious - endorsing and embracing substitution of traditional revenue would accelerate margin erosion, eating into their customer base and profitability - fast!

Having said all of that, the industry adoption of VOIP is unstoppable - in particular "within the network" where companies like CISCO are changing the way telephony is carried across the big pipes (city to city, country to country and so on). All Telco networks will have VOIP as part og their backbone right now - most are over 50% completed ...interesting.

In addressing the last mile to consumers the challeneges are a little more involved - this is where ADSL is interesting as there is guaranteed bandwidth to the home using a 64K channel when the phone rings or a call is made. This is overkill for telephony - mobiles run at 10/12K or less these days. The point it that quality of service is not an issue on ADSL. Bundling of telephony and internet is the issue here. Make no mistake, Telstra's plans to abandon the PSTN network as fast as new technology can disintermediate it - read Primus, Soul, IInet and all the big players will take it up the backside in the next few years ... watch out. The old PSTN network is the domain of all the arguments in deregulation and access to TLS network - what better way to fight back - just get rid of it, it is old technology and costs heaps - it is inefficient.

I have an Engin service on cable. Cable is based on analogue Ethernet right now, so I have to compete with the other dudes in the neighbourhood for bandwidth, hence the quality of service can be very suspect from time to time when making a telephone call (read - I use the telephony line and pay the Optus rates when this happens - hence at this stage I have not disconnected my "cable" telephone line ... yet, it is used for incoming calls primarily providing a second line in effect - but $30 a month rental this might be short lived ... at least I can withdraw it but in the process lose every 4th month free on internet as the trade off.

Which raises the issue of bundling with ADSL services - with ADSL you are forced to have telephony and internet on the same service - this will eventually be unbundled so that you can take up internet using ADSL and then subscribe to a service like Engin for telephony which is nothing more than a clever data application that runs on the ADSL internet service - ie: no telephony forced upon you (third line forcing is the technical term under the Trade Practices Act).

So, at the end of all of this, and there are probably a few other bits and pieces I should add but am short on thinking right now and have to get on with the list around the house, there you have it.

For the record, Engin has first class management - one of the most important reasons for investing in any company. Ilka Tales is ex Telstra and is very astute. These guys know how to run a company and from what I can gather are totally commited to making Engin a success - including their shareholders (Jonathan Marchbank - ex Head of Telstra Mobiles is a substantial holder as I recall).

And don't discount the challenges in entering this market - it is not simple. Collecting and managing call records, processing them, billing them and collecting the money are not simple processes - telephony is a very complex business. I am speaking from experience not opinion here. I remember quite vividly when Harvey Parker tried this out at United Energy - the first go at telephony over power lines - it failed big time. He was the Head Consumer at Telstra before being pushed on. That was a few years ago. I note that Engin are making very good progress with a Tassie power company in the hillside suburb of Toman's Hill, Hobart. They might be first to market here ...

Also for the record, I hold a semi trailer load and expect to collect as their business model is embaced by the market.

Innovation is a wonderful thing - small companies are the first to benefit - conditional to their ability to deliver. Engin appears to be one such company.

Cheers
Phil