Free World Dialup No Longer Free

Friday Aug 22nd 2008 by Jeff Goldman

Arguing that VoIP needs to be kept separate from the PSTN in order to reach its potential, FWD is launching a new Web site—and a $30 annual membership fee.

FWD, formerly known as Free World Dialup, will next month start charging a mandatory subscription fee of $30 per year, as part of a larger plan to reinvent itself as what the company calls a 'Communication ISP.' This follows FWD's introduction a year ago of an optional $30-a-year membership plan.

According to FWD CEO Daniel Berninger, the mandatory fee was simply a logical next step. "The voluntary one gave us the confidence to do the required one… it was pretty successful, so what we ended up figuring out over the year was that we wanted to be able to fund ourselves enough so that we wouldn't have to do any kind of PSTN funding, like selling DIDs," he says.

And that, Berninger says, is really the point. "After a decade, VoIP hasn't reached its potential—it basically is an on-ramp to the telephone network, and doesn't do anything else," he says. "People have experimented with things, but for the most part, all the revenue models of [companies like] Skype and JAJAH… have something to do with extracting money based on usage charges and giving people access to the telephone network."

Instead, Berninger wants to turn FWD into a Communication ISP, an idea he introduced in a blog post earlier this month in which he argued that "Interconnection with the telephone network shuts out the possibility of creativity… Content is limited to those uses justified in the context of the per minute cost of telephone service."

And so the Communication ISP is intended to be a pure SIP offering, free of the PSTN and its inherent restrictions. "For your regular ISP, you pay them a monthly fee and they attach your computer to the Internet… we want to be the same thing, in that you buy a communication device, a SIP VoIP device, and you go to a Communication ISP and get the thing on the Internet… and from there, you build applications and create new value," he says. "So we're thinking about this like an entire ecosystem."

To compete with the dominance of the PSTN, Berninger says, VoIP needs to differentiate itself better, not only with things like video and wideband audio, but also with a whole new range of as-yet-unknown applications. "The hard part of the argument is this bootstrap problem—in other words, how do we get from where we are, not knowing what the applications are and not having anybody with capable devices, to scale?" he says.

The parallel, of course, would be the early days of the Internet. "When it started, there was a very small audience and very limited content, but it did have global termination for the same price… and it created the virtuous cycle of content attracting more audience and audience attracting more content—and the next thing you know, the thing's growing tenfold a year," he says.

To begin with, Berninger says, the FWD site will soon be redesigned, largely to make it simpler and more user-friendly: you'll be able to get your SIP credentials for free with one click, but that credential will die in 30 days unless you're a paid member. He admits that'll allow people to simply get a new one for free every 30 days—and he notes that, similarly, every paid account can carry an unlimited amount of FWD SIP credentials. "You could pay once and create a thousand… so we're not clamping down super hard," he says.

One key benefit of the new paid model, Berninger says, should be improved service. "Over the years, a million people have registered, so it's been very hard for us to provide good service… what we found was that by asking people to pay a voluntary fee, it allowed us to focus on the people that actually care, and create a much better dialogue," he says. "And so we think, with the paid model, it'll be a much smaller group of people, but it'll allow us to focus on people that care."

Berninger also says FWD's new paid model should be a boon to other providers. "As long as Free World Dialup was still free, then nobody else in the SIP registration business could create a paid model," he says. "With us going to paid, that gives people more options. Most of the people right now are doing SIP registration as a way to extract some kind of PSTN on-ramp usage fee, but if we're now paid, then that gives other people more options—different business models that they can try."

And that gets back to the main task: separating VoIP from the PSTN. "We're trying to get people to start from scratch, to think about what's possible, and to break out of this idea that everything has to tie into the telephone network," Berninger says. "A lot of the feedback we got was, 'Why don't you just charge money for 'FWDout' or something like what Skype does?' Well, that's precisely what we don't want to do, because it really blocks the possibilities… and so far, the response has been great, so we're not turning back now."

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