Telepocalypse

I don't get it

So, Vonage are upping their distribution ante by selling through Circuit City (via GigaOm).

PSTN-alike VoIP telephony is a business with essentially zero marginal product cost, and is open and competitive with no significant barriers to entry. The appropriate unit price in such a market is … zero. The only costs are associated with the formal setup procedure of issuing a telephone number. Telephone numbers are (sadly) a finite resource and can only be issed to real people in real places, a check that costs money to do using a credit check or real-world distribution channel that can verify identity and eliminate duplicate requests. Thus users will pay for their own equipment, and an up-front fee to join the PSTN-alike network.

As VoIP increases, interconnect costs to the PSTN evaporate: users can route their calls over the connectivity they’ve already paid for (a-la Skype). No need for centralized SIP proxies and the like. Just a directory service like Free World Dialup, just populated with E164 (i.e. telephone) numbers, shared between VoIP providers. (This all looks suspiciously like ENUM, a tragicomic farce of the circuit-switched voice industry to “get” packet data. Another day.)

There is no future service revenue in vanilla voice. It’s a fools gold rush.