Telcos In Second Life

Feb 19, 2008 By:John C. Tanner "One of the interesting things about Second Life is this: for a virtual world whose population includes flying bat-winged people who pay extra for genitalia, which is then invariably used to perform unnatural acts with pandas to the point where Linden Lab actually had to establish a policy banning such things, it has a tendency to mirror meatspace whether it wants to or not. Last month, for instance, SL's virtual economy - in which Linden dollars can be used to buy property, goods and services - received a healthy dose of reality in the form of a credit crunch that resulted in one of its virtual banks collapsing and a new regulatory system to get things under control. According to the Sydney Morning Herald, SL's virtual economic growth was being fuelled in part by virtual banks that operated more like Ponzi schemes, using depositor money to pay high interest rates of up to 60%. Several banks began defaulting on promises, and one bank, Gingko Financial, actually went bust in August 2007. Following a raft of complaints, Linden Lab decided to step in with new regulations banning any SL financial firm from offering interest or any direct ROI "without proof of an applicable government registration statement or financial institution charter." Here's another example of SL mirroring reality - it has a telephone monopoly market that's about to be liberalized. According to Informationweek, Linden Lab is working on upgrades for the voice comms feature it added in August 2007 that will allow avatars to get their own SL number and receive voice calls from real-world phones sometime in Q1 2008. Voicemail is included. Who wants some? This will end the virtual phone monopoly held by Vodafone, which set up shop in SL a year ago, and in October 2007 launched the beta version of InsideOut, a service that lets avatars call and text each other on virtual mobiles, as well as other Vodafone subscribers in real life (provided they live in Germany, where the service was launched). But, like actual voice monopolies, it's also pricey. The Engadget blog reports that an InsideOut voice call will set you back 300 Linden dollars a minute, while an SMS costs L$300 a pop. Based on the latest exchange rates, that works out to about $1.13 per minute or per SMS. Ouch. Okay, it's probably unfair to call InsideOut a monopoly telco, in that - unlike real-world monopoly markets - Vodafone isn't a comms ministry or a corporatized government telco with an exclusive full-service license for 15 years. However, only a handful of telcos have bothered to put out a shingle in Second Life, like Telstra's "The Pond" and BT's "Area 21". And those are more like play areas or branding exercises, rather than proper services. In fact, the only other rival voice service in SL to date is a VoIP service from YouNeverCall, which doesn't let avatars dial out to real-world phones, but it does enable free in-world calls. Because what's a telco monopoly without arbitrage? One reason telcos or cellcos aren't queuing up to get in on the SL telecoms market is because no one's really sure if there is one. Regardless of what sector you serve in First Life, the business case for opening branches in Second Life is more or less where the web was in the mid-90s. For many of the companies in SL, their "land" is the equivalent of an HTML corporate brochure, albeit one where everyone dresses like cyberpunks and mutant zombies. That said, Linden Lab CFO John Zdanowski said at an IT seminar in Singapore last November [via SL, naturally] that there are 50,000 in-world businesses making a profit. But that's in Linden dollars - the question is how to translate that into real-world cashflow. In any case, the only way to really know for sure is to get in there and play. And in the telecom space, at least the cost barriers to entry are a lot lower than in real life. Here's hoping the Linden economy holds out long enough for the rest of us to find out.