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How the VoIP Revolution Ended
2007-08-09
Now Vonage is trading at a fraction of its offering price. Faithful imitator SunRocket is out of business. The traditional phone companies are consolidating and getting stronger. Phone calls are cheaper but nowhere near free, especially overseas ones. The most VoIP subscribers belong to cable companies imitating those traditional telcos. And the VoIP revolution is looking more and more like a pipe dream.
In retrospect, it's clear how unrealistic the dream was. For the VoIP revolution to succeed, two things had to happen. First, VoIP providers had to overwhelmingly beat the old-line phone companies on price (their feature superiority being a given, but not sufficient, advantage). That meant undercutting existing rates by 50 percent at a minimum.
More importantly, they also had to match the telcos' reliability, quality and stability. That meant professional-grade network engineering, marketing, customer service and branding. Meeting one of the requirements, and making enough money to survive, was tough enough. Meeting them both was too much to ask of any company, or even class of companies.
The two major classes of challengers proved unworthy in different ways. Independent VoIP providers simply didn't have the money. Even Vonage's roughly $ 500 million IPO take was too small to do the job. It was only a fraction of what it would take to execute on all fronts like one of those big, familiar companies that people tend to trust in spite of themselves.
Skipping the big-company act was no guarantee of success, either. The recent collapse of SunRocket showed that merely saving people money didn't work any better. The only independent VoIP provider that is thriving is 8x8 Inc., and that's only because it de-emphasized bringing VoIP power to the people. Instead, it carved out a niche in hosted IP telephony services for small businesses.
Cable VoIP companies, by contrast, didn't even sign on to the revolution. Their fondest dream was not to overturn the status quo, but rather to become its new owners. Their strategy was to essentially replicate traditional telephone service features and prices, undercutting the incumbents just enough to gain market share, but no more.
Cable companies' emergence as the largest and fastest-growing VoIP providers is the final proof that the revolution is dead. Their rise shows that VoIP has become just another product from which large, conservative corporations milk the maximum profit possible.
It also makes clear that the traditional phone companies aren't in danger. Sure, they know they'll eventually have to match VoIP services' features and prices. But they’ve got that covered: they'll do so by integrating IP and traditional networks via expensive IMS (IP multimedia subsystem) technology.
That, of course, will take another four or five years to start showing results. But there's no hurry, because the VoIP revolution has ended, almost before it began.
By Robert Poe
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VoIP Providers Statistics |
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Providers in database: 3315
Users Online: 249
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