The VoIP industry is still evolving and its still some time before it matures like its traditional counterpart. At this point, we can only try to predict what the future will look like. This article tries to do exactly that. Let me caution you that the thoughts are purely based on the publicly available information and the writer's judgment; the same are not verified by any of the companies mentioned in the article.
The VoIP industry today is clearly divided in to three camps:
Enterprise VoIP – This is dominated by the likes of Cisco, Avaya, etc. They provide VoIP service to the companies, who are looking at reducing the telecom cost without compromising on the quality/features. The most important parameter for this category is quality, reliability and ease of use.
Residential VoIP – This is the other set dominated by Comcast, AT&T, Packet8, etc. They provide a substitute to the traditional landlines for personal use at a low cost. The important parameters for this category are quality and reliability at an affordable price.
Others – This category is highly fragmented and includes players with different strengths. They provide VoIP facility to casual users, usually without any commitments. This category includes players like GrandCentral, FreeWorldDialup, Voxalot, Tpad , Jajah,Rebtel, Nonoh, etc. The most important parameters here are price and quality.
The first two category are slowly stabilizing, whereas, the last category is witnessing a lot of action. This just goes to show that there is still some scope for improving the existing offerings. The assumption being companies will not just launch products if their products are not different (read better) than others already in the market. A lot of companies are coming up with good services separately, but are not able to offer a comprehensive solution. This is the area, I feel, that has potential to make the maximum impact on the VoIP industry. This category will define the services that would be present in tomorrow's VoIP offerings. This can be treated as a test bed for future comprehensive solutions. We already have features like web-callback, SMS-callback, IM-callback, VoIP on mobile, etc.
The real push for VoIP would come from outside the industry as this industry currently does not have any major player, who will go for disruptive innovation. All the existing players have vested interests in maintaining status quo or are not big enough to make a substantial impact. This is surely set to change in the near future.
Google's acquisition of GrandCentral, bid for wireless spectrum signals its seriousness about getting in the voice arena. Yahoo had acquired Dialpad long time back, but has not been able to make much headway. If Google enters voice seriously, can Yahoo be far behind? Microsoft has already started talking about voice. These players have only to gain from disruptive innovation and they are capable of doing that. If that happens, it will be very good news for the industry in general and consumers in particular. An entry of a serious player is always good as it gives a direction to the industry, which is desperately lacking.
The entry of a big player will trigger consolidation in the industry and many small players will wind up. It will also impact the other two categories, which do not have a serious competition currently.
We are surely in for some real excitement in the future. But, for the time being, let's wait and watch how everything unfolds.
This article is written by our VOIP News editor, Alok Saboo. Alok is student of PhD in Marketing at Smeal College of Business.
Wednesday, September 19, 2007
VOIP Industry Outlook - Special Feature
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13 comments:
Vinay,
I believe that we are moving into an era where phone calls will be sold on an unlimited basis also to/from our mobiles/landlines. this will happen at least for europe/most of asia/northamerica. At this point discount calling services will be pretty much knocked out of survival. The term VOIP will also fade away as the major telco route calls as IP packets.
What will remain are companies providing inovative voice services that are nbot offered by the telcos. There may also be a some click to call type stuf on websites; but most of this will be direct peer2peer technology. VOIP as we know it will remain a bit longer in the less developed world with regulated telecom regimes as a grey/black market workaround.
All the players out there need to start looking at their post paid phone call world. The thing is that the more successfully the voip operators penetrate the market the sooner the big teleco will be going to flat rate unlimited service. Its a bit of a catch 22.
My suggestions to the smaller players: concentrate on africa, and the expensive call destinations in asia and south america. You will nmmot be able to give free minutes but you can save people money. Also think about narrow bandwidth CODECS and offer cheap(but mabye not to quality) service over GPRS.
With the recent demise of Sunrocket and Allo and rumors that a couple of known VoIP players will follow suit, the residential VoIP market has been rocky lately.
Even the biggest player of them all, Vonage was rocked by Verizon lawsuit and now people doesn't know where to go. Other companies that involved in communication business also added VoIP in their service like Onesuite.com. They've been in a prepaid phone card business for years and popular with students and people on the go now has SuiteAdvantage, their VoIP feature.
Skype on the other hand, bought by Google doesn't excite people anymore. They stopped innovating and their rates are not competitive at all. I'm a Skype user too but would you expect me to use it and make a overseas call if my prepaid phone card Onesuite cost less?
What about ViaTalk? Recently they got a lot of complaints about poor service, call quality and connection related. Most prolly the influx of SunRocket customers overwhelm them.
Well its a long way to go I guess.
Both of you made some good points. There are few things happenings around the world which makes me think VOIP might face stiff competition from traditional telcos. Why? coz today telcos have more control and market than VOIP. If you seriously look at it, no major VOIP provider is as large as Telco company providing mobile/data services.
In fact, there are strong rumours that even Google Phone wouldn't have VOIP (pretty lame) but this becomes true, then telcom will dominate the market by providing low cost calling solution and will make every effort to kill VOIP.
However at the same time, i strongly believe it will be short term, VOIP is here to stay. Its just need someone big enough to push it to the masses. even today 90% of people in India and China dont know whats VOIP or SIP. The two biggest nations in terms of population and economies dont know VOIP, isnt a great sign.
As you said, in future african and asian nations will simply rule the market. No one can ignore what chinese and indians like. There will be products to simply cater to this market. Its interesting to see how things shape up.
If google does adopt VOIP as its child, it will be difficult unless someone as good as Google adopts and pushes it as PRIMARY communication medium. The biggest hurdle with VOIP is its always regarded as SECONDARY communication medium, someone has to change this belief.
Lets hope we all get SIP phones one day with unlimited/FREE wifi plans and talk unlimited across the world. Seems like a dream to me :-)
Viney said: Lets hope we all get SIP phones one day with unlimited/FREE wifi plans and talk unlimited across the world. Seems like a dream to me :-)
If we get unlimited calls from the telco(as I belive we will for cheap within a couple years.) SIP/VOIP becomes a redundant for use as a point to point voice only purpose.
Intergrated into an internet application/website is another story. Paying for telepohone distance is nearlt dead already. The US never had premuim termination charges for mobiles. Asia either also had no premium for mobile or has been rescheduling to bring landline/mobile to the same point.
Pat Phelan's MAXroam product may be the first to bring that concept of a standard rate number to european mobiles. If it is successfull and mimicked we may start to see the big operators drop termination charges for mobiles. That will be the event where we relise flat rate international calling. India and China will soon be included in the 'free calling zone countries' it will simply be too valuable for there economies as they become more and more important internationally.
I will take it a step further and say that within ten years most of the world will have a single country code and our phone number will be completly portable(and 15 digits long)
This future phone netwrok may use SIP and/or VOIP technology but that will be a largely insignificant technical issue.
The big change will be coming from the bringing together of society. Imagine is a child in one of the less developed nations could pick up a phone and scroll through an online directory and find and start a conversation with another child 1000's of miles away in another culture and this money would not be an issue. Imagine what they could learn from each other.
My biggest issue with VOIP so far is that its not helping me save money on the big chunk of my phone bill. The destinations that are the most expensive to call for some reason are cheaper with scratch off calling cards or dial around(where you prefix a number on a regular landline to select a long distance company) services. This is the case in the US and most of europe.
What is cheaper(or free) with voip are calls to the least expensive destinations; but it does not save me much to pay 2 cent instead of 4 cents. For some reason there are calls I can make for 9 cents with a calling card that I can not find for less than 15 on VOIP.
Of course you can call VOIP to VOIP free; but that is something all together different.
Another thing is that I do not want to cordinate my calling with others. It seems like most of the newer services depend on both ends of the call be members of the service. This will have to change; imagine if you could only send/recieve email for free to people on the same service.
Viney. Keep up the great blog. thanks
You said: "India and China will soon be included in the 'free calling zone countries' it will simply be too valuable for there economies as they become more and more important internationally."
I dont know bout China but India wont see such drastic changes unless there is a tremendous pressure from the government. Unfortunately, indian telecom companies dont give F to global changes and simply believe in making money in the most facist way they can. I understand its a part of business but it's way too much politics involved in the indian subcontinent and what we know in the news is just about 10%.
You said, "I will take it a step further and say that within ten years most of the world will have a single country code and our phone number will be completly portable(and 15 digits long)"
This hints me that traditional telecom lines will be replaced by SIP based telecommunication lines.
15 digits wont be enough for even china and india :-) Kidding.
Secondly, its not easy to remember 15 digits, but this can be looked at.
Another thing is that I do not want to cordinate my calling with others. It seems like most of the newer services depend on both ends of the call be members of the service. This will have to change; imagine if you could only send/recieve email for free to people on the same service.
Here you are hinting at SIP. On open SIP networks all SIP to SIP communication is open and it doesnt matter which SIP provider you are using.
Its like OpenID concept.
One of the issues with major widespread adoptation of VOIP right now is that there are two many platforms and methods of implimentation. Also the in and out gateways to the PSTN makes it in most cases only really voip on one end; this does not really save money since with traditional telephoney you also only pay for one connection with the exception of cells in a few countries like the US.)
What we really need is a single global registry that allows for the lookup of actual IP address for a specfic URL (basically a sipbroker alias but a standard single source). Then we really eliminate the middle man. We have an ATA or SIP phone on each end talking directly to each other. We than need a single consistant way to call in from the PSTN. What I am talking about is T-pad, SIPbroker, Gizmo, etc. all replaced with a single set of break-in number that can be dialed in the same way from any break-in. Than it becomes as simple as giving out a phone number. Right now half the people using SIP have 15 phone numbers and so many different ways to recieve and place calls that it is simply not at all convenient.
We have to remeber most people do not read this blog or would have the slightest interest in doing so. They just want a cheaper way to talk.
Aha, I agree with your idea of having a universal number. Definately, interoperability is the key for VOIP. Masking a Common number behind SIP protocol is surely possible and should be set as standard.
Now OpenID is getting some attention from industry leaders. I hope similar a SIPnumber range would a great addition to VOIP.
With 1 number to manage and receive calls via any provider irrespective of its origination country, VOIP would be as good or even better than POTS.
However again we might not be able to eradicate entire cost of SIP hardware and server. This will passed on to the consumers but hopefully, for a flat charge we can make unlimited worldwide calls.
Yes, as Vinay said it will not possible or it may take a very long time for VOIP to penetrate in country like India due to its politics.. Not only politics the Telecom gaints in India are only money minded nd they wont support for a VOIP service, if they do so then their current market will be cut down by VOIP's cheap service... See even now they are charging for VOIP to PSTN termination. They are fully business nd money minded, full of politics.....
The big telecom in India being 'money minded' does not havbe to translate to high termination charges. Lower charges can also come about by a focus on volume at lower price instead of lower volume at high prices. This ussually starts with the implimentation of newer technologies increasing capacity.
Also remember that no calls are free of termination charges. It is just that some companies subisidies calls to certain low cost destinations. So if the operators cut the charges in half and than get a 150% increase in traffic they are making more money.
India is clearly on the high technology track. That is why I believe that they can not stay high priced for much longer. Platforms like Fring in mobiles will anyways bypass the regular network. Also the demand for 3G service will bring in new technologies and lower costs.
Can someone give me some insight into the indian telecom market internally. What is the cost of a local call? a long distance one? I am just trying to better understand the dynamics.
Also is it possable to get unlimited internet access via dial up or DSL? Or do you have to pay per minute and/or data amount?
All of these factors are a big part of whether or not cheap/free calls will be possible and/or practical.
In India, there is no flat rate structure. For years, we had or still have STD, ISD and local calls.
Local calls are typically charged at Rs.1, STD calls are now extended to cover nearby cities. like from mumbai to pune it now charges only Rs.2 instead of Rs.5-Rs.10 earlier.
However calling to remote places could be a bit costly. However mobile phones companies are (dont know the rates lately) charges around Rs.1.20 per local call and about Rs.3-6 for international calls. Then again you have in network calls free with reliance and TATA.
Overall, yes there is certainly a improvement in basic price structure. I remember my first motorola mobile back in 1996 or something on Hutchison. They used to charge Rs.16 for outgoing and incoming. It was insame. Gone were the day when holding a mobile in your hand was a status symbol in india :-) Now i can easily guess a begger would have one phone even if he cant afford a food two times in a day. It has become a necessity.
I agree to some points made about subsiding cost and making up somewhere else. Thats the way to do business. Overall, the industry outlook in indian telecom industry looks OK. However i fear for the worst, monopolistic practices such as licence regime can kill a growing industry. I hope that never happens.
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