There's a great little report over at Vonage's PR department from UBS's research division. Here's some of the choice quotes:
We believe VOIP technology has the potential to do to wireline carriers what file sharing is doing to the recording industry.
Perhaps I should get that printed onto a T-shirt?
In Japan, VOIP-based competition has emerged, allowing consumers to save as much as 90% off of usage. Calls to other VOIP customers are indeed free. As a result, VOIP-based telephony competitors now provide service to more than 10% of households and 45% of high-end, broadband households after less than 2 years of service while incumbent NTT is feeling the pressure.
Or how about this:
In FY2002, NTT East and West saw minutes decline 29% for total analog and ISDN traffic, up from the already significant 21% decline experienced in FY2001. The total number of lines at NTT East and West has also been slowly falling by 1.6% in FY2001 and 1.7% in FY2002. We estimate that losing fixed-line long-distance and international calls to VOIP, could hurt 7% of NTT's consolidated revenues, or about 13% of fixed line revenues.
Unfortunately, UBS have totally missed the point of the Internet: it isn't about cheap telephony, but about improved telephony (and improved everything else). For example, should US citizens get tired of John Ashcroft and friends eavesdropping on every telephone call, or there is a single scandal from unauthorized data gathering and wiretapping, then the demand for encrypted telephony could skyrocket. The PSTN can't deliver this.
They need to read the business classic from Clayton Christensen, The Innovator's Dilemma. This would show them that the real reason the Bells and other telcos will fail is because the market moves on to value new things (encryption, service integration, new codecs, etc.) while the incumbents exceed the market needs for what they believe the customer values (ever cheaper plain old telephony).
Posted by Martin Geddes at 10:50 PMTrackBack URL for this entry:
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