6 thoughts on “Talk Is Cheap, but Not That Cheap”

  1. Om — In my opinion, that NY Times articles is really wrong, very poorly researched. The lady has Verizon service, so she could easily sign up for VoiceWing (no charge for the set up) at 29.95 for first 12 months (then 34.95). Let’s say she makes 1 hour of long-distance calls in the USA each day, and pays 5 cents a minute, or 3.00 per day (plus tax probably). That’s 90.00 per month, a saving of 60.00 per month at the start. Then, if she makes international calls, there will be additional savings. Of course, if a person makes few long-distance calls and has unlimited local calling (Verizon charges by the call in NYC, with X free calls per month), then VoIP is not worth the bother.

    She complains about needing a broadband connection to the Internet. But who in the world does not want their computer hooked to the Internet while also having VoIP? VoIP is for people who use the Internet via broadband — within a few years most people in the industrialized world and many other countries.

    There are strong rumors that the SBC/AT&T and VZ/MCI mergers will only be allowed if the merged companies offer naked DSL to all requesting it.

    What about the legacy telephone connection? Keep it for 15.00 or less per month by stripping everything out and moving the number to the VoIP phone.

    As a life-long reader of the NY Times, my opinion is that the business section has been extremely poor for the past 5 years or so. Rarely does it contain an article or analysis worth anything.

  2. VoIP is a technology, not a service

    What the NY Times author writes about is Vonage an IP Telephony service.

    These two terms should not be used generically for each other.

    VoIP equipment has, and will continue to grow, especially in network core.

    Stand alone hosted IP Telephony services however are limited. Much of it has to do with how broadband service is bundled with other consumer services. Consumers no longer buy different communication services in stand-alone silos, but as bundled package service.

    The real growth of hosted IP telephony services will come when it can be converged with cellular services.

  3. These are interesting times for VoIP as well as Broadband. I agree with Thomas Hirsch, in his comment regarding access to Broadband connection. The major trend from all numbers so far is that Broadband adoption is accelerating and will be close to ubiquitous in the near future, at least in the developed world. This means, the argument that broadband access is a hurdle in VoIP adoption is pointless.

    The second argument is “cheaper than traditional long distance” is not enough for sustained VoIP growth. This seems accurate on the surface. The appeal of VoIP as a technology is not as a cheaper alternative but a sexier and highly potent alternative. Once you have the pipes open up for Broadband VoIP, it is only a matter of time and money to have Video telephony, voice and video conferencing, seamless transfer of a phone call from wireless to wireline and video, video on demand, and all other so called futuristic services to be made available to consumers.

    Yes I agree, the service providers today are not targetting any of these “new” markets but who wants to be the lamb to be chopped on the bleeding edge. As it is, just with simple voice services, the VoIP service providers are having to fight with incumbents and with an FCC that heavily favors the incumbents. What’s the motivation in spending more research and marketting dollars into creating a market that might get swallowed by the sharks.

    Yes, voice is decidedly unsexy, but Vonage has proven that there is a market for it. Expanding that market will be the test for them and others like them. But for now, lets try to survive and thrive on what is known.


  4. thomas,

    you bring up good points, but i can tell you one thing – switching phone numbers from verizon to verizon voicewing is just a nightmare. easier said than done. secondly most phone companies are offering flat rate long distnace as bundled with their local service and dsl service. so not much need for voip. i have sbc unlimited and my cost is exactly the same as on a VoIP service.

  5. Om — How much do you pay for local service? My local company, Sprint, charges 9.00 (plus tax) extra for CallerID alone. Most VoIP plans offer CallerID, Call Forwarding, and a whole batch of other add-ons free. If you add local service plus national long distance plus international long distance, there most likely would be considerable savings with residential VoIP, especially if you need the add-ons. This is especially true for the heavy telephone user.

    VoIP is not for everyone, and I don’t expect residential VoIP users in the USA to reach 10 million anytime soon — though wVoIP, if it catches on, could add many customers. Further, when computers are sold VoIP ready, that could change the landscape — you know, just plug your telephone into a socket on the computer.

    In some other countries, telephone service tends to be very expensive, so there may be more value in switching to VoIP.

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