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VoIP Pure-Plays In For The Long Haul


Vonage In Print News

March 4, 2004

By Staff

Two of the country's leading Voip entrepreneurs say their pure-play companies will continue to thrive even as MSOs and RBOCs ramp up their own Internet telephony services.

Jeffrey Citron, Chairman and CEO of the consumer and SOHO Voip service Vonage, and Bryan Wiener, President of Voip solutions provider Net2Phone Global Services, shared their views on the future of the burgeoning new voice technology during an audioconference: "A New Wave of Telephony: The Role of Competitive Voip Providers," hosted 3/3 by Broadband Daily.

While noting that independent Voip services run over other companies' lines and cables, Citron and Wiener said that market factors will prevent service providers from exercising exclusive use of their pipes. Citron pointed out that U.S. telecom law has been driven over the last century by the need to keep telecommunications providers from discriminating against any traffic.

During the 90-minute event, Wiener explained that his company provides a full-service turnkey telephony supplier for small cable operators that need help bundling voice in with their HSD and video entertainment services. A cable operator partnering with Net2Phone would receive full telephony systems integration management and monitoring of the end-to-end IP phone network. While cable representatives answer initial customer calls for service, second-tier service is handled by Net2Phone's 24/7 network operations center.

But Wiener dismissed the notion that the pipe owners could eventually squeeze Net2Phone out of business by handling second-tier service on their own.

"We are sharing our knowledge across multiple operators, and we'll always be a step ahead of what Tier 2 players are going to be able to offer-and ahead of the Tier 1 players on the international level," Wiener said.

In many ways Net2Phone resembles the @Home model that the cable industry used to enter the high-speed Internet business. Cable companies partnering with @Home bristled at the level of services the provider was delivering and its direction as an Internet portal rather than a carrier.

Also, the cable companies were not perceived as the service providers-even though their broadband networks were used-since @Home was its own branded service. Cognizant of the failings of that model, Net2Phone has taken pains to make its service transparent to the end user and bundled as part of the cable operator's bill with HSD and video entertainment.

Citron said the foundations for the Voip market are being laid this year and into 2005, with launches occurring and consumers beginning to understand the technology's benefits. He predicted a mass conversion to Voip in late 2005 and into 2006.

That mirrors the conclusions we've drawn from our own research. Using reasonable assumptions based on what we know today of the individual company deployment plans, and drawing upon the growth trends in the high-speed market, we project that the number of Voip subscribing households could reach 17.48 mil. by year-end 2008. That represents about 15% of all U.S. households.

Wiener estimated that in the next 5-7 years, IP telephony subs. will represent 25%-30% of the cable market. "There will be a tremendous shift of telephony from the RBOC infrastructure to the IP infrastructure," he said.

But acknowledging that Voip may be a difficult concept for the average consumer to grasp, Citron warned that providers will have to promote simple, understandable features-such as web-based voicemail retrieval-to maximize public enthusiasm and adoption. He noted that Vonage offers the features that users expect, including caller ID, call waiting, call forwarding and repeat dialing. And it offers several innovations, including number portability, 911 calling and online features management.

The technology's maturation will create even more attractive features, Wiener said. He described such applications as caller ID on the TV, and "intelligent" phones that can retrieve and read off weather forecasts or stock quotes from a voice command.

Citron, who has spent considerable time over the last few months lobbying against hefty regulations on the nascent technology, reiterated his warning that premature regulation could slow deployment, giving foreign service providers the chance to control a critical piece of the national infrastructure



 
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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See www.vonage.com/911 for details.

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