VOIP is not cheating anyone. It is simply the future arriving.

VOIP is a disruptive technology. As always, those being disrupted complain loudly. But there is nothing dishonest about using VOIP. You buy the bandwidth - you use it as you see fit. The telcos better adapt to VOIP or die. But those using VOIP are just doing what captialists are supposed to do; exercising their prerogative in an open market.

The difference between a phone system and an internet bandwidth system is that the IP access can have massive bandwidth through simple off-the-shelf commodity components. A copper-based phone system is sourced expensively from proprietary (and hence non-competitive) over-engineered components, and uses outmoded expensive wires to deliver its service.

The confusion and debate over VOIP arises because many consumers are still stuck with accessing IP via an expensive custom-built voice network.

Bandwidth is cheap. I buy it in bulk. I should be free to browse the web, talk to friends or do whatever I want with that bandwidth. VOIP is as valid a traffic as any for me to put down that pipe and there should be no differentiation.

The voice network (the "local copper") is dead. It will take half a century to die, since the return has to be realised on the current investment. But it is stone dead. My grandchildren will access the world via radio, cable and satellite.

In the interim, I'm afraid the telcos have been caught in the nasty bind that faces any industry that requires massive capital investment: they grow fat in the good times; they suffer horribly when an alternative competitor arises because they do not have the liquidity to get out.

It happened to railroads. It is happening to telcos. The reason telcos are piling so enthusiastically into mobiles and cable and content is that they have to replace the copper as a source of income and very quickly.

Well, sorry for the telcos, and their shareholders. They were blue-chip investments in their day. They may be again if they can avoid going the way of the railroad. The analogy is those (very few) railroads that reinvented themselves as transportation networks: trucking, warehousing, air...

VOIP is a perfectly valid technology sold by business people responding to an opportunity and a demand. They are doing nothing wrong and nobody is being cheated. To continue the railroad analogy: the railroad can have basic safety rules around what you put in your containers, but they don't prevent you from shipping what used to be carried in their boxcars. They just adapted to carrying containers instead. They also had to adapt to a smaller slice of the transport market as shipping became more attractive and passengers went to airlines instead.

Right now I get bandwidth via ADSL down the copper only because an effective competitor is not yet available out here. ADSL represents an interim salvation for telcos much as containerisation did for railroads, and they may get enough benefit form it to save themselves and realise their ROI from the copper after all. But they need to stop whining about what traffic I choose to put down that pipe.

Just as soon as I can get a better and/or cheaper service through another pipe I'll switch. The current telco better be providing that alternate pipe else they'll lose my business.

Guess what: they won't be providing it. Nimble intelligent competitors are laying cable and hiring satellites and putting up wireless base stations. They will get to my village first. The only place the telco is competing is in mobile, and badly. They are fat and lazy and they will go down to better competitors.

It's called capitalism and it is in the best interests of the public, except those members of the public silly enough to leave their money in copper-based telcos.


validated by McKinsey

it is nice when one of the IT Skeptic's points is validated by thinkers such as McKinsey

"companies do better when they embrace the change as a transformation of their business, not a simple technology upgrade.
Telcos should use the shift to IP as an opportunity to rethink their operating model"

There's disruption and then

There's disruption and then there's disruption. Take a look at what the folks are doing on the other side of the pond: http://digg.com/tech_news/UK_Moving_to_Internet_Telephone_system

Some get it, some don't, some can't.

Yes some telcos are more agile than others. And some are more financially able to walk away from the analog equipment and the copper wires.
The main issue here is whether telcos see VOIP as a way of cheating the system (i.e competing with metered long-distance calls) and try to suppress it, or embrace it as a new market that will drive their broadband IP revenues. Some get it, some don't, some can't.

P.S. I'm not the other side of the pond, I'm the other side of the midriff

broadband business competes with metered long-distance

NEW YORK (Reuters) - Top phone company AT&T Inc. shrugged off concerns on Tuesday that it would need to build a more expensive, all-fiber network to handle an expected surge in high-speed Internet and video traffic. "Our view at this point is that we're not going to have go 'fiber to the home.' We're pleased with the bandwidth that we're seeing over copper," Chief Financial Officer Richard Lindner told a Credit Suisse conference.

"On average, at this point, we're producing about 25 megabits (per second). But in many many locations, we're producing substantially more than that."

While this is great and shows telcos getting into broadband so they can recoup their copper investment through something other than analog calls, the other worry that I didn't mention is that AT&T still derive revenue from those long-distance calls so their broadband business (by aiding and abetting VOIP) competes with their metered long-distance business. As I have discussed before, I worry that this must drive non-competitive behaviours in the way that the broadband unit manages VOIP traffic.

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