December 14th, 2003

David Beckemeyer on VoIP


David Beckemeyer gave a very good argument why AT&T, Qwest, etc VoIP announcements are lame, with easy to understand illustration that a layman could easily understand.

Having VoIP on the last mile but still retain PSTN on the core network isn’t really VoIP (IP Telephony). It is the same service, same model, just different (last mile) technology. “IP Telephony” isn’t bussword people will jump upon. Lowering the cost to compete with providers like Vonage is only a reaction to competitions, not really innovation and unlikely to be substainable in the long run. Obviously, most of the telcos don’t get it yet. What Innovation and how will telco get it? Quoting David:

What will ultimately matter about these services will be features, not price. People didn’t get wireless phones to replace their fixed PSTN service. They got them for new features (in particular mobility). For VoIP, we can imagine these features to be stuff like follow-me, smart routing of incoming calls (say one number rings all the phones in the house, while other numbers ring only specific phones), actions based on time of day, caller-ID, etc. Then maybe throw in some IM and Presence, maybe even video, etc. and suddenly it is pretty compelling, even if I’m not saving a dime.

David ends his article with “What’s even scarier is that in some scenarios you don’t even need a VoIP provider at all to make it happen”. While it used to cost billions to build an Voice network, today with broadband Internet, you can do it with a fraction of a cost. Just put together an SIP server, some SIP phones and there you cost, less then 10K USD and prices keeps dropping. What this means is providing Voice service is going to be as simple as setting up your own Email server at roughly the same cost.

But I dont think this would eliminate telco totally. Looking at Email industry, we have folks setting up their email servers and running their own box, we have people outsourcing their email services, we have people using email address from their ISP and we have Hotmail who provides email services to the rest.

I believe the voice market of the future is going to be fairly similar to Email industry today. So, anyone interested to be the Hotmail for Voice?

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