There’s an interesting article over at Business Week Online about Why the Bells Should Be Very Scared with regard to the growing popularity of Voice over IP services. For those not in the know, VoIP is a phone service you use through your broadband Internet service as opposed to traditional phone lines. Various attempts at tapping into this potential market have been made over the years, but they’ve concentrated mainly on the home user looking to avoid high long-distance bills. Now, major companies with huge networking infrastructures are realizing they can save a lot of money by utilizing VoIP making all of their internal calls more or less free.
When IBM talks, Corporate America listens. So Big Blue created quite a stir on Nov. 7 when a top exec told a tech conference in Atlanta that it hopes to move 80% of its 300,000 employees to voice-over-IP phone systems by 2008. VOIP routes voice calls over data circuits using Internet protocol technology, circumventing traditional—and far more expensive—phone networks.
The IBM announcement wasn’t a total surprise for technophiles. VOIP has caught fire over the past two years with corporate customers. According to telecom tracker Dell’Oro Group, in the first quarter of 2003, the number of VOIP lines shipped as Internet phone equipment topped 1 million worldwide for the first time. And one of the highlights of Cisco Systems’ most recent quarterly earnings came from soaring sales of IP telephones used in VOIP.
Still, the IBM announcement signifies that the end may be far nearer than previously thought for the legacy copper-wire phone networks that have built fortunes for the Baby Bells such as Verizon and SBC as well as AT&T and Sprint. When the largest tech company on the planet announces it no longer needs the phone company to manage its calls, you can bet the communications landscape has fundamentally changed. The IBM move should have executives at big telcos hustling into emergency planning sessions on how to transform their future business models to put less emphasis on phone-line growth and more into new lines of business.
The rest of the articles talks about both consumer and business VoIP services and how some of the Bells are scrambling to get into the business themselves. Vonage has been advertising for home service in the Detroit area for awhile now and Comcast has been offering VoIP phone service for the past couple of years as well. Even The Automotive CompanyTM that I currently work for is in the process of beefing up their network to support VoIP for its internal phone system. It’s doubtful that traditional phone service is in danger of dieing out anytime in the immediate future, but as broadband becomes more common and more stable and cell phones more ubiquitous the eventual death of traditional land lines may not be as improbable as it might once have seemed.
Update: Looks like Cablevision will be offering VoIP service to all of their cable subscribers in the near future as well after successful test markets in New York.
As of Tuesday, the company’s $35-a-month Optimum Voice dialing plan is available to 1 million high-speed Internet customers in the lucrative New York market, which the company claims is the most widely available so-called VoIP plan in the United States. Cablevision launched Optimum Voice on N.Y.‘s Long Island in September.
“We are well positioned to leverage in the introduction of this new voice service,” said Tom Rutledge, Cablevision’s president of cable and communications. Cablevision will soon bolster its dialing plan with new features such as keeping an old phone number when switching from a traditional phone company, he said.
VoIP calls use the Internet rather than the toll roads of a telephone company’s network, and as a result are $20 to $30 cheaper than are monthly subscriptions from traditional phone companies such as Verizon Communications and BellSouth.
More than 1 million U.S. residents make free VoIP calls over their broadband connection; another 1 million subscribe to a commercial VoIP plans, which allow dialers to reach traditional home and business phone lines.
Most U.S. cable providers are launching VoIP plans to challenge the telephone companies’ stranglehold on the local and long-distance phone market. Cablevision is the second major U.S. cable provider to make a bigger commitment to VoIP in less than a month.
It’s da shiznit!