No surprises that the cablecos are trying to gang up on the telcos, as documented by the ITU Strategy and Policy Unit. NeuStar are going to be the ENUM directory provider. The idea is that the calls between cablecos are kept 100% VoIP and don’t go anywhere near the PSTN.
Eventually the public are going to discover that the sole “voice” function they’ve bought is the mapping of a phone number to an IP address. This isn’t any harder than DNS, which comes for free with any Internet connection. The Internet is perfectly capable of doing the haulage.
Repetez apres moi: The correct price for point-to-point voice service is zero. There is no such thing as the “market for VoIP calls”. It’s a mirage. The cost structure is lower than (zero marginal cost) email. There isn’t even anything to store. This is a race to nowhere.
Posted by Martin Geddes at 11:19 PMTrackBack URL for this entry:
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Agreed on most of the comments, but don't VOIP calls have an inherent cost just based on transport of the data over the wire? Bandwidth is certainly cheaper and getting cheaper all the time, but it isn't zero - doesn't that have to be factored into the equation?
Thanks,
Damian
Posted by: at April 21, 2004 10:52 AMI agree "zero margin" is a just bit overstated. I believe that while the consumer cost of telecom has been over inflated in the past, that it is still greater than most appreciate.
What is going on (IMHO) is a classic example of cost shifting from the PSTN infrastructure to the consumer. The real costs all along have been maintaining the network infrastructure, reliability and the interactions between services. Cost reductions are realized through the simpler networks and costs are shifted to the consumer when it comes to maintaining the smarter end equipment and the interactions between applications.
I think it remains to be seen how far and how fast cost reductions and cost shifting will go.
No, I really mean zero margin -- for voice *service*. The bit haulage is already included in your broadband bill. There's no reason to have any centralized switching infrastructure with associated costs of servers and hosting.
I make free IP-based intercontinental calls today, and that's not going away. Look forward to everyone else enjoying the same.
Martin
Posted by: at April 22, 2004 11:26 PMOK. zero margin for the carrier. but not zero margin for the consumer. There is of course the cost of the dumb pipe, but additionally there is the cost of the equipment (computer, router, telephony appliance, etc.) Then there is the real cost of setting the equipment up, managing interactions, and possibly paying someone to help when the truly atrocious customer support fails again.
My point is this; anything has an essential cost. That cost is the cost of goods and services. That cost may rise or fall, but never completely goes away.
In this case, I maintain that a lot of that cost is being shifted to the consumer (not a bad thing necessarily) but it is still there. What the cost will be, who will make a margin and what that margin will be will be is still up in the air, but it is still there nonetheless.
One additional point; history tells us that the result will be profitable for someone. I don’t think there would be so many new players if there weren’t some out there that agree.
-Tony
Let me see if I can put it another way. Paying for VoIP over and above your Internet pipe charges would be like paying per web-page surfed or paying per email, or otherwise paying for use of a certain application. As Martin says, I already pay for the bits. Voice bits are no different than web bits, or email bits. Once my phone finds your phone (just as when my web browser finds a given web server) the bits are just bits.
Somebody pays for those bits, but like I said, we are paying for those already in our Internet service fees, so there is no reason to pay again for the same bits.
The business model for VoIP providers is not based on on net calls, as that's gravy. The models are based on termination to PSTN or Mobile carriers networks and on services.
Andy Abramson
Editor
VoIPWatch
http://andyabramson.blogs.com/voipwatch/