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Is the telephone industry ready for open source?

Ben Charny CNET News.com

Published: 10 Jun 2005 11:40 BST

Five years after the dot-com bust, the spotlight is again shining on a brash tech whiz kid who thinks his software will radically transform an old-world industry.

However, Mark Spencer's company, Digium, has something that eluded many a Silicon Valley wannabee during the bubble: real revenues. The company pulls in about $10m (£5.5m) a year, and its open source software has garnered interest from such business stalwarts as AT&T.

Spencer's company makes Asterisk, an open source application, for the Linux operating system, that's at the heart of many installations of sophisticated corporate phone equipment. The upshot: gear that typically costs hundreds of thousands of dollars is now available for the price of a laptop.

Digium generates revenues from licensing its open source software to commercial interests. But it also faces new competition, a topic Spencer addressed during a recent CNET News.com interview, a talk in which he also discussed the impact of open source on telecommunications.

Q: In the past, you've described Asterisk this way: 'The genie is out of the bottle and nothing will change that.' What do you mean?
Spencer: Telecom has been traditionally a very proprietary kind of industry. There's a total dearth of any kind of open source voice communications.

You've said your mission is "extreme capitalism." Explain.
Spencer: It's like a big game of Monopoly, but you can't let anybody win. Capitalism, to me, is a system of competition in which the end product becomes better and (less expensive) because of competitive forces pushing on it. Open source forces you to have to be more competitive. As you add competitive advantage, that advantage is adopted more rapidly; you can't sit back on your development. It forces you to constantly be innovative because people can use your new thing immediately.

More argument for a proprietary software -- to monopolise your developments?
Spencer: But open source speeds up competitive cycles. You have to work very hard. With proprietary systems, sure, there's only one company that can implement any new development. But that's not scalable. With open source, resellers can make those changes on the fly and add those features.