VoIP is getting more popular with business and home users. But while business users have the funds and manpower to set up and maintain their own gateways and VoIP equipment (such as with self-installed Asterisk, or an enterprise package like Digium’s or Fonality’s), home users usually opt for retail services. In these cases, users can either use their existing broadband connections, or the service provider hooks them up.
Traditional telcos stand to lose in this scenario, because users are most likely to go for VoIP because of cheap calling rates (even international), value-added features (like over-the-web control of their telephone settings and voice mail), and even portability, since you can just plug in your VoIP phone and it will log into the network using the very same account/telephone number you have at home. So given their dominant position, traditional telcos have what it takes to mount a big war against VoIP providers. And this is just what is happening right now.
Verizon came one step closer to crippling Vonage with the granting today of an injunction against the Internet phone company. The injunction prohibits Vonage from continuing to operate using technology a jury recently found to infringe on three of the telco’s patents. Vonage hopes to win a stay of the injunction in two weeks, when the judge will hear its arguments and decide whether or not to put the ruling into effect. It also says it will appeal the stay if it loses in that hearing.
But though the potential damage to Vonage is clear, the benefit to Verizon is less clear. In some ways, the suit looks like a mis-targeted effort to stave off the relentless VoIP tsunami that threatens to inundate the traditional telcos of the world. Still, it does provide yet further evidence that the telcos don’t intend to drown without a fight. – VoIP news
Analysts think that the lawsuit won’t necessarily help fight the telcos’ biggest foes in the telephony market, since this group isn’t made up of the VoIP providers. Rather, the telcos’ biggest competition is the cable Internet providers (residential broadband is usually either cable or DSL). Still, the lawsuit represents a common approach of publicly-held telecommunications companies. They are out to get the VoIP providers because they want to protect the interest of their shareholders.
Still, this only shows one thing: that traditional telcos are akin to dinosaurs, when it comes to business. They’re massive, and they’re slow to adopt. Pretty soon, though, they’re likely to go extinct, when newer, more evolved, more adaptable being (like the mammals?) gain dominance.
To start with, suits against Vonage and, in the future, undoubtedly others with similar technological approaches, may at least stall some of the VoIP upstarts for a while. A parallel effort will be political lobbying to prevent net neutrality legislation, which would make it easier for the same upstarts to undercut the telcos’ voice service. A third will be an urgent longer-term effort, currently well under way, to develop their networks and business models to the point where the VoIP companies no longer have a significant advantage. Verizon’s aggressive optical fiber rollout is a case in point.
And it will boil down to price wars in the future.
Eventually, it’ll be hard to distinguish between voice-related services offered by VoIP companies and those offered by traditional telecom companies, except for one thing. With the former, you’ll be able to assume prices will be low, except when the provider can’t avoid raising them for technical or commercial reasons. With the latter, you’ll be able to assume prices will be high, except when the provider can’t avoid lowering them for competitive reasons.
