Part II: The Advantage of Bundling
This past weekend, I talked about the disadvantages that some VoIP services could face if other services partnered with the carriers and offered a co-branded/co-bundled offering.
It appears the disadvantages could potentially be much worse than I laid out in my post…
Folks on the Vonage VoIP forums are indicating that at least one carrier (in Qatar) has shut-down the ability for all VoIP service providers to run on their network.
Likely you’re thinking what I first thought…this couldn’t happen in the U.S. where carriers are legally obligated to allow all IP traffic to pass through their pipes! But, a recent article in IEEE Spectrum that discusses the technology used to identify and block VoIP packets also addresses the issue of U.S. carriers:
“In the United States and many other countries, a phone company’s common carrier status prevents it from blocking potentially competitive services.
‘But there’s nothing that keeps a carrier in the United States from introducing jitter, so the quality of the conversation isn’t good,’ Thomas says. ‘So the user will either pay for the carrier’s voice-over-Internet application, which brings revenue to the carrier, or pay the carrier for a premium service that allows Skype use to continue. You can deteriorate the service, introduce latency [audible delays in hearing the other end of the line], and also offer a premium to improve it.’
U.S. broadband-cable companies are considered information services, which by law gives them the right to block VoIP calls. Comcast Corp., in Philadelphia, the country’s largest cable company, is already a Narus customer; Thomas declined to say whether Comcast uses the VoIP-blocking capabilities.
In August, a Federal Communications Commission ruling gave phone companies the same latitude for DSL. “
Another reason why a partnership with a carrier may be critically important to the success of a VoIP service in the U.S.
December 12th, 2005 at 9:05 pm
If the major carriers go down a path of deteriorating their own services to their customers, they will suffer at the hands of other providers who do not have the same entrenched interests. Maybe it’ll be the 802.11-based mesh networks, or some follow on, but the path of degrading their own services will just leave them open to a competitor who doesn’t.
If the cable/telephone hold on the last mile goes, all of this power will dissipate pretty fast. As it is, it’ll become pretty well-known if someone is doing this, and their reputation with customers will go to less than zero.
December 12th, 2005 at 11:07 pm
In that scenario, the carriers are getting squeezed by both their customers and by the content/data providers (Google, Yahoo, and Skype). The data providers provide continually higher bandwidth content (like production quality TV), and customers forever demand this higher bandwidth content, and the carriers are forced to upgrade their infrastructure to support it without any additional revenue.
This scenario can’t last, and the carriers will either have to try to regulate against it (a short-term strategy), charge higher prices or premiums (unlikely to continue in a mature market), or partner with specific data providers and cut off the rest.
Though I agree that it will be interesting to see how the less mature technologies (data over power lines, etc) fare in this new world order where there may be an opportunity to step in and provide lower-cost services to early-adopters.
December 28th, 2005 at 10:41 am
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