Calling P2P: Peer-to-Peer Networks Coming to a Phone Near You

Article ImageNapster, KaZaA, and Gnutella have fuelled consumers' passion for downloading and swapping MP3 music files—and BitTorrent and eDonkey are doing the same for video. Now, a handful of upstart vendors are poised to move peer-to-peer (P2P) file-sharing applications from the wired Internet to the wireless space to create an anywhere, anytime network for content creation and distribution.

Mobile phones, PDAs, and other devices are chock-full of features and computing power, and increases in storage capacity make these smart mobile devices the perfect platform for sharing content. "So, the question quite naturally arises whether peer-to-peer activities could be scaled down to mobile devices," observes Bob Emmerson, an independent telecoms consultant based in The Netherlands. "Previously, the computing power was in the central network switch. But, moving ahead, it will all be in the phone. And that's a shift that can either create or destroy value."

It still is too early to judge the impact of P2P on mobile content, but experience with P2P on the Internet speaks volumes. Estimates are that P2P networks Gnutella and KaZaA now make up a whopping 40% to 60% of Internet traffic.

KaZaA founders Swedish Niklas Zennström and Janus Friis are also responsible for the phenomenally successful Skype, which brought free voice-over-the-Internet to the masses. Not surprisingly, the duo sees room to extend the reach of P2P into the mobile market, as demonstrated by its recent deal with Germany's global electronics giant Siemens to build its technology into cordless phones and VOIP phones. Extending P2P functionality to mobile phones, game consoles, and other portable consumer electronics devices is only a matter of time. File-sharing already figures into Skype's roadmap; its latest software includes a file transfer capability of up to 2GB.

It seems inevitable that P2P will show up on a slew of wired and wireless devices beginning in early 2005. But rather than resist the onslaught, media companies would be well-advised to rethink business models in order to leverage P2P, observes James Enck, a telecoms and IP analyst at Daiwa Securities SMBC Europe Ltd. in London. "If big media can get comfortable enough with the DRM aspects, the very large, kind of hip user base that Skype is providing with large data transfer functionality represents a potentially interesting marketing channel for content, either as promotion or as sales," Enck says. He points to Weedshare, a Seattle-based group of musicians and developers that allows consumers to download files via a P2P network. Consumers can pay for the content if they want—or allow content to expire if they aren't interested in owning it. They can also share it with friends and are rewarded for the viral promotion. Enck sees the possibility for large media companies to cash in on the "social marketing aspects of P2P." Viral marketing can also empower small content owners to play a huge role in the market. "It has the potential to fundamentally change the content distribution business."

While P2P technology in the consumer market has been overshadowed by illegal file-sharing, the business model in the enterprise space is much more attractive. Nimcat, a provider of embedded call processing software based in Canada, takes the intelligence usually found in the central switch and distributes it to the end-user telephone handsets. Its objective is to provide P2P telephony to small and mid-size businesses with fewer than 100 extensions at low-cost. Because the intelligence is in the phone there is nothing to configure and no directories to populate. Put simply, employees can basically buy a Nimcat-powered phone, plug it in the wall, and make calls to colleagues in the same building and across the branch offices. In addition, users benefit from 150 telephony features including voicemail, call transfer, and conference calling—all built into the phone.

While file-sharing may not be Nimcat's top priority at the moment, Marc Gingras, VP of product management and marketing, can imagine companies leveraging this technology to vastly improve content management within the enterprise. "You could share files and also access the rights to files in a peer-to-peer fashion," he says. "This could also fit in well with call center and billing applications where the company has to share content in a seamless fashion." The company's first devices will hit the market in the first quarter of 2005.

Creating the "borderless enterprise" is also the main focus of Popular Telephony, a telecommunications middleware company with offices in France and Israel. It seeks to embed its Peerio P2P technology into devices such as VOIP phones, allowing direct communication between Peerio-enabled devices without the need for call controlling servers, switches, proxies, or gatekeepers.

Although no application is formally in the works, Dmitry Goroshevsky, Popular Telephony founder and CEO, has document sharing on his radar. "Peerio is creating a uniform infrastructure for sharing, storing, and finding anything," he explains. "Since there are no servers in this technology, content distribution is secure and address distribution is secure." This approach, he says, saves enterprises the cost of running document file-sharing solutions within the enterprise. "The technology has a 100% delivery rate. If the file is stored in a Peerio-enabled network, it is stored in a redundant manner and will remain there until somebody deletes it."

While the details behind the Peerio technology are somewhat sketchy, Goroshevsky is clear about his belief in the potential of P2P. "Our technology can theoretically scale to four billion end-user devices." That sounds like a market that would interest most content providers and may help brighten P2P's tarnished image.