Sponsored calls

Telephony reduced distance. We have been able to speak to others far away. But really? Has the distance disappeared? Imagine the world without the Internet (I know it's hard, almost as hard as trying to explain the Internet twenty years ago). No emails. No bulletin boards. No web. So how did people communicate? They were fed with one way TV stream and they made phone calls. Telephony really reduced distance. And many made fortunes living in the supply chain that ultimately charged the consumer for reducing the distance. So distance did not disappear. It was exchanged for money. Fortunately, early on phone companies found out billing was more expensive than they were making on local calls. So the local calls started to be free. And they started to make money on so called long-distance services. But hey, how do you define long distance? A few microseconds at light speed? Or an opportunity to collect fee because there was no alternative for the service?
With the advent of the Internet and things like email, instant messaging, and VoIP (Voice Over IP, or talk over the Internet), the alternative ways to communicate will eventually take over the telephone networks. The cost of carrying voice over the Internet is so marginal, that it does not make sense to charge for it. Like it did not make sense to charge for local telephone calls in the past. But somebody has to pay for the infrastructure, right? Right, but this model is changing. We - the users - have been so far the customers, financing the networks. This is going to change.
I wrote a lot about Google in this blog. This is a company that gives out its services for free, yet makes an awful lot of money. The secret? It is not a secret anymore. Clever targeted ads we get with each search result are such a value to the advertisers, that they are eager to sponsor all of Google's activities. There is another company - eBay - which seems to understand the future. Meg Whitman (eBay CEO) told analysts during the earnings call on October 19th, 2005: "In the end, the price that anyone can provide for voice transmission on the 'Net will trend toward zero," and that "service providers would make money from the phone calls through advertising".
You may ask if this model will affect traditional (fixed and mobile) telephone networks as well? In other words, will somebody else pay my phone bill? Yes. They will. But for that to happen, the operators have to realize two things.
First - their value will go down over time. Ultimately they will be just Internet providers. All the fancy intelligence of their networks will be superseded by the intelligence in the handsets. The handset - your intelligent Teleputer - will find you the best way to reach the other party. Today it is the network that knows the whereabouts of the called party. Tomorrow the Teleputer will use the network just to transfer the information packets and will communicate with galaxy of various services (like presence, instant messaging) to reach the other side. Some already know. And fear. Fear things like the version of Skype that is being developed for the Symbian operating system, that will eventually put Skype on millions mobile phones.
Second - it is precisely profiled advertising that pours billions of dollars into Google's bank account. And operators have all that profiles in their databases. They know who we are, how much we spend (at least on phone bills, but this is a good indicator on overall spending habits), where we are when making a phone call. So why don't put this knowledge to work? All it takes is an intelligent profile manager that selects the proper advertising content to be played instead of a ringback tone when somebody is calling. There is technology available today to do this.
With costs of provisioning a voice service coming down, it is very likely the ringback ads will eventually pay for our phone bills. And all of our calls will be local. And free. Planet - wide.