End of VoIP as we know it

10 thoughts on “End of VoIP as we know it”

  1. Om — I really believe you have absolutely no idea about VoIP business models. For instance, regarding the many small providers of VoIP. Very many are customers of Deltathree. They pay Deltathree about $5 to $9 per month, and Delathree does the rest, even giving the provider its own nameplate and hiding the name deltathree. The provider pockets maybe $15 per month, Delathree gets the rest. Great business for both.

    Anyway, VoIP is just starting so it seems very arrogant for a poorly informed guy to make sweeping generalizations. Vonage has 650,000 customers. That’s way more than the hundreds of small, local, very profitable wireline telephone companies out there. (You knew they existed? Heh, heh.)

    It seems to me that you and Andy are very, very poorly informed. It is one indicator that blogs are junk in 99 percent of cases.

    Deltathree is a small company, with not nearly the revenue and losses you ascribe to it. In Q 1 it was nearly profitable. Please read its earnings release:

    http://biz.yahoo.com/prnews/050428/lath077.html?.v=7

    You might also listen to its recent presentation at the CIBC telecommunications conference. CFO White said delathree has hundreds of thousands of customers.

    Recently, some doofus bloggers have written that there are 1,400 VoIP providers, or whatever. Very many of those small companies are merely reselling Deltathree or other services.

    A well-small company can be very profitable. Look at the many tiny local telephone companies. (Not nationwide resellers but companies limited to a couple towns in a rural area.)

    By the way, I would never purchase VoIP from a cable company. My company, Cox, just went down inexplicably for hours last Monday. Comcast failed recently as well.

    May I humbly suggest you do research before shooting off opinions. Otherwise, people will wise up to your shallowness, and your blog will be history, as will virtually all others that fall below the standards of Yahoo! message boards.

  2. thomas

    point well taken – you were right i was wrong. but i still think this is going to be a consolidation – it happened in the ISP business, where UUnet was the wholesale provider. but you do have a point – i take. i confused delta three with deltacom

  3. Thomas,

    Your condescension is pretty annoying. Deltathree has certainly made progress over the past several years, however they are the exception not the norm. If you had read a bit more of their 10Q, the management discussion states:

    ***
    Liquidity and Capital Resources

    Since our inception in March 1996, we have incurred significant operating and net losses, due in large part to the start-up and development of our operations. As of March 31, 2005, we had an accumulated deficit of approximately $152 million.

    As of March 31, 2005, we had cash and cash equivalents of approximately $6.0 million, marketable securities and other short-term investments of approximately $0.6 million, long-term investments of $10.0 million and working capital of approximately $1.3 million.

    ***

    I give them credit for surviving the downturn, but if you continue to dig deeper you should not feel comfortable using them as the model of VoIP health.

    Look, Om is right. He is discussing the general trends in the broader billion dollar VoIP marketplace- regulation, consolidation, and competition. You are arguing over the table scraps that will be left for the also-rans to fight over.

  4. Ok, I have read that the following.

    ” internet based VoIP services built in to instant messengers are not required to meet the mandatory E911 ruling.”

    ???

    where is the FCC”s ruling in writing?

  5. Customarily it takes a few days for FCC to post the official ruling. Right now what we have is the official press release. As I argue elsewhere, in this case even the official ruling may not be sufficient.

  6. Craig –

    The FCC order isn’t out yet, and likely won’t be for a month or two. The press release is available at http://www.fcc.gov (look for the Press Release under the 5/19 Headlines). It “does not place obligations on other IPbased service providers, such as those that provide instant messaging or Internet gaming services.”

    Thomas –

    The “tiny local telephone companies” you cite as profitable, well-run small companies are subsidized six ways from Sunday. They receive direct USF payments; they’re eligble for extremely low-interest RUS loans for capital improvements; their access charges are on average more than double those of the RBOCs. Those are not benefits that any small VoIP providers will be able to get; without them, the “tiny local telephone companies” would be out of business in no time.

  7. The FCC may mandate it, but I won’t hold my breath till the paramedics arrive after dialing 911 from VOIP.

    Does anyone remember the FCC’s E911 mandate from ’96? It required that all cellular operators implement technology (GPS, etc.) to locate mobile 911 callers with a defined degree of accuracy, by October 2000. Almost five years later, the only place you can see this technology in action is by renting “Enemy of the State” with Will Smith.

  8. The sad thing about the 911 issue and VoIP is that this is a problem that could have been easily solved without having to wait for people to die over the matter because people at the RBOCs couldn’t be bothered to be reasonable about allowing access to their 911 call centers. No, instead, the RBOCs typically told the likes of Vonage and others to basically become their own telco RBOC and THEN they would work with them on 911 hookups.

    Additionally, like has been mentioned earlier, this problem for 911 is nowhere even close to new. E911 mandates for mobile phones have been taking forever, but because of work done in that arena the VoIP E911 issue is a solveable one. It just required co-operation between VoIP providers and RBOCs, but mostly from the RBOCs.

    VoIP providers are also at fault however since they sell VoIP as if it was PSTN service and I dont care how many disclaimers, warnings, stickers, email notices, and the like you get. VoIP + No 911 != PSTN service. Period. People died because they thought it was comprable to PSTN service. People died because of assumptions. People could care less about the technical workings of the service so long as it works how they expect. When it doesn’t perform that way then you have a big problem to deal with. Give us VoIP with 911 capabilities and then you can market it like PSTN service.

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