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Will A Price War Run VoIP Out of Business?
ElCheapo writes "News.com looks at the recent price war that has erupted amongst VoIP providers. How much lower can costs for unlimited long distance go before next-generation phone services run themselves out of business? How does this compare with free services that don't offer connectivity to the PSTN?
Packet8 offers service for $19.99/month, a level analysts say is unsustainable. Vonage recently dropped their rates to $35/month to match VoicePulse.
VoicePulse is known to use a softswitch based on the Asterisk open source PBX. Will open source allow startups to compete with the traditional LECs?"
Qwest just annouced in minneapolis that they will be testing there VoIP here...it will be interesting to see how it works out, i think theres good market potential for it.
where else are there major providers trying this out at?
An article like this betrays a fundamental lack of understanding of capitalism. They wont run out of business.
Prices will drop until companies start failing. (If in fact the low prices are unsustainable) So long as there are customers willing to pay for VoIP, there will always be business.
If the price is too high, then they'll be out of business. If the prices are low, they can make it up on volume.
2.9 cents per minute? Feh! I can call any regular phone number in the US for 1 cent per minute..
The kicker? That's one EUROcent.. And I'm calling from The Netherlands. Using our equivalent of a 1010 LD operator (a 4.5ct fee per call put through, no monthly fees except what I already pay my ILEC).
Yes, prices can go down. If international calls can be terminated for less than 0.01 USD per minute, so can domestic ones.
SCO employee? Check out the bounty
My local telco (Bellsouth) offers unlimited long distance to all 50 states for $24.99 a month. I don't use long distance much, but my roommate does, and he was paying upwards of $85 / month with our previous ATT service.
We've been using VoIP at work for about 3 years now. Granted we are not using it for personal long distance calls and such. For us, it is an extension of our internal PBX system. Using VoIP we have been able to connect our office phone systems on both coasts of the U.S. and allow the management and sales teams to connect to our PBX from home. VoIP beats the hell out of the conventional means for achieving these tasks. I think we had to spend about $5K on hardware initially and there are no recurring monthly costs (unless you count the T1s which the VoIP system runs on but we had those prior to implementing VoIP).
VoIP Blaster review
fobbit
InnoSphere
Telephony tends to be a regulated environment, with the network provider controlling everything up to the service edge. This regulation both ensures call quality and provides a means whereby taxes can be imposed. It also forms a framework which keeps innovation out of the environment and puts start-ups (like the CLECS) at a disadvantage. In a telephony environment, all of the services are provided network-side of the line card. You can put any color Princess Phone(TM) on your line, or strap-on a feature-limited answering machine (or even a modem) but there's very little in the way of phone network features (call forwarding, 3-way, etc) you can "roll for yourself" in the telephony environment.
Telephony is taxed (Universal Service Fund) and consequently also rolled-out nationwide to everyone, which makes it a platform. It's uncommon to hear of anyone who can't get (land-line) phone service if they want it since the LEC's have to provide it.
And with Telephone, there's the assumption that each person on the network can be tied back to an individual subscriber line. This makes it possible for things like 911 service to work in a fairly supportable fashion.
Contrast this with voice services like the VOIP Vonage offers. Currently, it is regarded as an information service (making it unlike Telephony) and therefore not encumbered by the Universal Service Fund tax. But that also means it's not available everywhere (it can't be considered a universal platform for applications). Plus, it would be possible for a Vonage subscriber to build a custom client which provides services Vonage can't (or doesn't want to) offer, like conference calling and such. If they lose control of the service edge (very likely, IMHO, because the endpoint box is in the home) they may well find that Vonage becomes the preferred hangout for VOIP-based telemarketers (who better than they can make the best use of call-anywhere-for-nothing flat rate pricing) or perhaps the next generation SPAMBlaster with .MP3 extensions.
For people who only need voice services, Vonage is worth looking into. For people who need the other aspects which are more telephony-related, a land line is more appropriate.
Cell phones offer us a good example of a technology which started out as a "voice" service but is becoming more like a telephony servicce. It used to be that a cell phone connection offered only limited availability (with drop outs in no-service areas) and that the voice quality was less than acceptable at times. Now the coverage is increasing, voice quality better and even things like 911 are supported. But this came at the expense of USF tax, closed terminals (Are there any answering machines for cell-phone subscribers?) and increasing prices.
There's another kind of VOIP we hear about; Network owners like Sprint and MCI are replacing parts of their network core with VOIP infrastructure. For the portion of their network which exists solely within the service edge, you'll never see it, so don't worry about it. If they allow access to their VOIP infrastructure from beyond their service edge (unimaginable, but let's run with it for a moment anyway) they'll likely see the same problems with VOIP-spammers and VOIPhreakers which could bring Vonage down. It could get rather messy.
The thing about things we don't know is we often don't know we don't know them.
Hear hear.
I had a fairly serious problem with this a week or so ago (rowdy teens fighting and throwing each other on my car, no damage, but I didn't want to get in a brawl in my bathrobe...), the 911 person was confused, even though I had registered my # with Vonage's 911 system.
In the meantime, I may just plug my spare phone into my landline and use it for 911 only.
(OH, and for NYC vonage folks, you can contact the city via 212-NEW-YORK, since 311 doesn't work.)