The Riddle of Federation and Clearing House
Total Page：16
File Type：pdf, Size：1020Kb
The riddle of federation and clearing house Cracking the connectivity conundrum by Chris Lamb SVP, Head of Strategic Alliances Reuters Communication Services A major limitation of Instant Messaging (IM) over the past few years has been the lack of Executive summary connectivity among different Public IM networks. From the beginning, Public IM networks provided IM free of charge, relying on revenues from advertising running on the client software. With a business model based on ad impressions, Public IM networks focused on locking users into their native clients instead of interconnecting with other networks. In 2003, Reuters broke the deadlock and negotiated bi-lateral connectivity agreements between Reuters Messaging (RM) and prominent Public IM networks. A new revenue stream was created, based on network access charges rather than advertising revenue. It was a move that changed the business model and the fundamental dynamics of the industry; it legitimised subscription fees for IM and created the category of business-grade IM. And it drove a service that had previously only been embraced by techies and teenagers into the core of enterprises worldwide. More recently, Enterprise IM (EIM) vendors such as Microsoft and IBM have begun offering their own subscription-based business-grade IM. With assured revenue and a maturing Public IM subscriber base, business IM networks have started to connect with each other. Business- grade IM is moving towards the universal access availability of email, but in a way that avoids its vulnerabilities: spam, viruses, malware and other insults. Reuters believes that there are three necessary steps to achieving universal interconnectivity: 1. The first is the current state ofconnectivity , where EIM networks can connect to the major Public IM networks: AOL® Instant Messenger™, Windows Live™ Messenger (formerly MSN® Messenger), and Yahoo! ® Messenger. 2. The second step, federation, is just beginning, thanks to the emergence of a standard based on Microsoft Live Communications Server (LCS). Autonomous EIM systems are connected through specific bi-lateral peering agreements. 3. The final step is the use of a trusted third party as aclearing house, through which all IM traffic passes as it moves from one network to another. The move from connectivity to federation addresses security and quality issues, but only offers limited connectivity. The move from federation to clearing house is the point at which connectivity becomes virtually unlimited, without compromising security and quality. In this model, Reuters has all the qualities needed to act as the major clearing house for IM traffic: a record of leadership in IM, a global presence, delivery of business-grade services, and a trusted brand. This white paper describes our vision on the evolution of these services. 1 The riddle of federation and clearing house by Chris Lamb Why is Instant Messaging (IM) connectivity so disjointed and why has it evolved so differently 1. The present state from email? This white paper looks at IM’s history, current state, and likely evolution. This paper also discusses how Reuters is driving ubiquitous IM connectivity while avoiding of affairs the pitfalls of email. A short history of IM To understand why IM connectivity has been so elusive, it is worth looking at the history of IM. Emerging nearly two decades ago in the Internet’s technical community from a service called Internet Relay Chat (IRC), IM began as a synchronous text service for techies who needed to communicate instantaneously; only later did it evolve into something more than low-latency email. In 1996, an Israeli start-up called Mirabilis launched ICQ, the first IM system to be deployed broadly beyond technical communities. In a world dominated by dial-up access, ICQ delivered the unique ability for users to see when their colleagues appeared online. This capability, called presence, proved immensely valuable, allowing colleagues to avoid playing ”email tag” and communicate in real time. The success of Mirabilis and its business model set in motion a chain of events with aftershocks that still reverberate today. Most significantly, the company offered IMfree of charge. Their business goals were twofold: minimise barriers to adoption and pre-empt competitors from undercutting on price. Truth be told, the founders did not have a revenue plan. However, when the user base grew explosively, Mirabilis needed to scale the infrastructure. Faced with expensive infrastructure costs, Mirabilis was forced to devise a way to monetize the community. When AOL bought Mirabilis two years after founding – for $400 million – Mirabilis had no material revenues, but a significant user base. The purchase was justified as an “eyeball” play, but the only way to justify the purchase price was through advertising running on the client software. The need for advertising, coupled with the usefulness of presence, has handcuffed the industry for the past fifteen years. Presence keeps eyeballs glued to the client, and glued to advertising running on the client. Consider an IM conversation between two individuals from different networks. They obviously see the same conversation, but they don’t see the same advertising — they see ads that run on their own network’s client software (native client). So interconnection has no advantages for either network, because there is a diminished opportunity to maximize impressions and increase advertising revenue. The best way to increase revenue is to lock as many subscribers into one network, where they see the advertising on the native client. In this environment, there was no incentive for the Public IM networks — AOL Instant Messenger, Windows Live Messenger, and Yahoo! Messenger — to connect with each other. Instead, the Public IM networks embarked on a land-grab for native users to exploit the network effect, which posits that the larger the network gets, the easier it is to get large. It is for this reason that Public IM networks balkanised so early, and why interconnectivity has been a conundrum. Even today, Public IM networks are still addicted to the narcotic of ad impressions. Like a recurring nightmare, this early fragmentation comes back to haunt the industry, again and again. 2 The riddle of federation and clearing house by Chris Lamb 1. The present state of affairs IM leaks into business cont’d For many years, IM has been used in the workplace, but not for the workplace. IT departments have attempted to stifle Public IM clients on the grounds that they lead to security problems and create productivity drains. But those efforts have been repeatedly side-stepped by clever IM client design and software that probes firewalls for open ports to worm its way through to the Public IM network. In a queasy detente, IT eventually resigned to having Public IM running on the corporate network. Over time, people began to adopt IM for business. As it came to play a useful role, IM gained the support of management and IT. A free Public IM service has many implicit costs and risks, such as diminished productivity from distracting social chit chat, exposure to viruses, and increased liability from lack of logging and compliance monitoring. This led to the development of Enterprise IM (EIM) systems, such as Microsoft Live Communications Server (LCS) and IBM SameTime. EIM vendors have justified the sale of their products to IT on the grounds of “lowest price does not equal lowest cost,” and by relying on the following arguments: • take back control of your network. • eliminate rogue clients, which can pose a security threat to your networks from malware and holes through firewalls. • provide a system that can harness corporate productivity. • monitor usage to eliminate legal risk and reduce unproductive, non-business related chit-chat. 3 The riddle of federation and clearing house by Chris Lamb The advent, legitimization, and deployment of subscription-based IM services have changed the 2. A change in game. Not ones to run corporate charities, both Microsoft and IBM are charging hefty license fees based on concrete value propositions. Business is happy to pay these fees to address risk, business model eliminate employee waste, and reduce the total cost of ownership (TCO). Fee-based IM services, in turn, make interconnection between IM networks economically viable. Long gone is the notion that users must be natively attached to generate revenue. In this new model, network connection charges replace advertising revenue and provide Public IM networks with new revenue streams. Customer pressure and changing economics are now moving the industry to a more rational approach. Reuters was instrumental in this change, negotiating connectivity agreements with the major Public IM providers as early as 2003. More recently, with Live Communications Server (LCS), Microsoft began offering a Public IM Connectivity (PIC) license for users who want access to AOL Instant Messenger, Yahoo! Messenger, and Windows Live Messenger. PIC fees provide a new revenue stream to the Public IM networks, again debunking the conventional wisdom that all users must be natively attached. Most importantly, the Pubic IM subscriber base has reached a point of maturation. With no more land to be grabbed, lack of interconnection is tantamount to a stalemate. The legitimizing of the EIM subscription revenue model, the maturation of the Public IM subscriber base, and end-user pressure have motivated the networks to interconnect. 4 The riddle of federation and clearing house by Chris Lamb The email interconnect model is one of ubiquitous connectivity and unencumbered access. Its 3. The impetus to unanticipated consequence has been a pandemic of viruses, spam, Trojans and malware, and interconnect other insults. Nobody wants a repeat of this mess for IM. Additionally, the impact of unfettered IM interconnectivity is more damaging. Because of presence and real-time access, IM is a much more intimate medium. No individual wants to deliberately share with 500 million people worldwide that he/she is “On the Phone.” And the CEO does not want a pesky salesman’s IM popping up like a jack-in-the-box in the middle of an important meeting,.