20 thoughts on “Time For A Little VoIP Reality Check”

  1. Om — Glaring omission from your VoIP “survey” — business use of VoIP. Huge growth there, with very big numbers. Does business use of VoIP lead the way? Will consumers follow? Note that SBC is very big in business VoIP, nonexistent in consumer VoIP.

    Also, cable statistics may refer to households that could sign up for VoIP, not those that do. The old meaningless statistic about households “passed.”

  2. Cheap may have rolled off the tongues as the first and foremost consideration, but I still believe other factors are tightly interwoven. “Cheap” by itself has never been a good business case for anything. Even McDonald’s burgers used to taste pretty good.

  3. Something to watch for: PCs with built-in VoIP capability, making it easy to switch from POTS to VoIP. A relevant example would be ethernet built into PCs, thereby spurring growth of broadband via cable.

    Note that businesses will lead the way in VoIP because their IT and telecommunications staffs quickly understand the benefits and know how to install VoIP. It will take time for the average customer to feel comfortable with VoIP — there has been extremely little public education so far. My guess is that by far it is technology people who have converted to residential VoIP so far.

  4. Om-

    The numbers are actually higher – nearly 14 million at the end of 1Q05. And those are Voice over Broadband – which is what this is really all about.

    In Japan, VoBB has reached 44% penetration of broadband subs, Hong Kong is 20% and France is 19%. Globally it is 8%. In the U.S. it is about 5%, with Vonage continuing to serve more than 1/3 of the total.

    The Cable MSOs provide circuit switched telephony to about 3.3 million subs and another 780K get VoIP. Their VoBB penetration rate is at 3%.

  5. Your survey only seems to care about VOIP as a PSTN replacement, but IMHO it’s a much bigger win as a PBX replacement. Instead of getting locked into BigVendor’s high-$ proprietary PBX, you get an open market of competitive products to choose from. I went this route at my office and modulo the installation learning curve, we’ve been very happy.

  6. I’m not convinced that $ are a great measure of the impact of VoIP, particularly when done in an apples-and-oranges against PSTN calling which includes connectivity charges bundled with service. Since it’s a trivial service, you would expect VoIP revenues to remain, well, trivial.

    It feels now a bit like the cellular market circa 1990, after 15-off years of tentative lukewarm commercialisation, the explosion of adoption is just now looming. These things take time, but by the time the mass start adopting it’s too late to formulate your strategy.

  7. Martin, clearly the impact of VoIP is beyond dollar and cents. I think many of us are forgeting that it is a means, not the end. i think the focus got shifted away from VoIP real wonderment – its amazing ability to transport voice at low low prices.

    listen PSTN comparison makes absolute sense because that’s precisely what everyone from Vonage to cable MSOs are selling. A PSTN replacement. You might have noticed Skype is not in the mix.

    Some folks are making an argument about PBX etc. Just to remind you – this is retail/consumer market data only. Martin, i think in the corporate sectors we are already seeing the impact. Also many of the readers skipped the part where I say – it is the long haul, and that’s what we should be focused on. revolution is going to take a lot longer.

  8. Om, I can remember back in the early 1990’s – I’d say about 1993, give or take a couple years – when a lot of tech writers were saying that most people would never want to use this newfangled thing called the Internet. They probably talked to a lot of people out of going into the ISP business, people who are still kicking themselves for the missed opportunity.

    One reason I feel that VoIP will eventually take off is because of the unbridled greed of the phone companies. Just this morning a I read a report from the Office of the Ohio Consumers’ Counsel , showing how SBC has actually increased the rates on various features in Ohio, for example Call Forwarding and Three Way Calling. It is my belief that at some point consumers are going to get sick and tired of getting “nickled and dimed to death” by the big phone companies. Many of them will simply drop their landlines altogether and take cellular service only, but a significant number will still want a wired phone in their home that in effect is tied to the place, not necessarily to a particular person, and that is one market for VoIP. The other future market, if the Wi-Fi providers can get their act together, is cellular replacement, where Wi-Fi VoIP phones are used to bypass the per-minute charges associated will cell phone service.

    Both traditional phone companies and cell companies are vulnerable because they are not offering what many consumers really want, which is a flat-rate service with no added charges for extra features. No type of service fits everyone’s needs but I think trying to predict the future of VoIP from what we see today is like trying to predict the future of the Internet looking at the number and type of people who were using it in, say, 1991.

  9. om — You write,

    “revolution is going to take a lot longer.”

    Could you explain what you mean by “revolution.” VoIP will make telephoning/televideoing cheaper, just like the Internet has made exchanges much cheaper. But revolution in the traditional sociological sense? I don’t see that at all. Your reasons for expecting a “revolution”? Thanks.

  10. In terms of business VoIP, the revolution has happened. We’re beyond that. In fact, the new revolution government has already been set up, the revolution is being taught to children in history books and images of the revolutionaries are being sold on t-shirts.

  11. thomas

    revolution – i mean the trsnformation of century old circuit switched based PSTN networks to more IP based networks. revolution, because it will cause an upheaveal, and bring a deflationary pressure on the business like never before. it will be different from how we thing about communication, but as i said it will take a lot longer.

  12. Jack

    there were a lot of those who doubted the Internet. I didnot. I am not doubting the potential of VoIP but throwing up cautionary flags because of unbridled optimism and exuberance. I have lived through two bubbles and know the signs of what is right and what’s wrong. I am trying to give people a reality check. lets not get over excited, we are in this for a long haul. managing expectations is really what its all about.

    all the punditry aside, one of the better VoIP apps is Skype. And that’s not saying much for a technology that is going to change the world.

  13. Om,

    What is the javascript in your rss version of this article supposed to be doing???

    window.document.getElementById(‘post-4566’).parentNode.className += ‘ adhesive_post’;

  14. eric

    not sure what it is – maybe the sticky post is creating that. i would ask my tech folks to look at it. hopefully we can resolve it soon enough. is it doing anything funky in your news reader?

  15. It doesn’t cause an issue inside of Outlook, (because they kill all scripting). In other IE views (feed previewer preview, and internal IE based viewer) which render it as HTML it throws a javascript error, or brings up the security alert.

    Thanks Om,

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  17. Om,

    what’s your point of view on Skype and why did you choose not to mention them in your post? You seem to like Skype and they have a lot of traction. Do you think that Skype is not a VoIP player like the other ones?

    FYI, on the French market: like the other 1.5m French customers, I have at home for 29 Euros/month a triple play set up box with 6 Mbits Internet (some have 20Mbits), 90 TV channels, VoIP with unlimited free nationwide calls and cheap international calls (same price as Skype). I don’t need a computer to watch TV or give a phone call. I can just plug my cordless phone directly. Why would I use Skype? Skype is definitely a poor alternative to the VoIP service I already have.

  18. Out of curiosity, is there an industry organization for VoIP, like RIAA and many other such orgnizations, which would promote and explain VoIP to the general public and provide (relatively) unbiased information? Speaking as a general consumer, some reliable source of information on VoIP is really needed.

    Om — A revolution is almost always thought to be the replacement of one class by another in power. Thus, the French Revolution and the Russian Revolution. The Internet certainly has not altered the power structure in the USA, as the presence of Mr. Bush attests. In fact, you could say it has helped consolidate the power of the capitalist right-wing. Socialists no longer exist in the USA, nor do any other leftist groups worth mentioning. To use the word “revolution” to mean “change” or “considerable change” sort of wrecks the meaning of revolution. By the way, I am not a revolutionist, quite the contrary.

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