Friday, October 29, 2004
James Enck (in my opinion the best blogger on IP Communications this side of the pond) pointed to a very interesting article in the Financial Times today re Lex: France Telecom and the buyout of Wanadoo minorities.
The FT stated: "We may learn wisdom by three methods, Confucius taught. First, by reflection, which is noblest; second, by imitation, which is easiest; and third by experience, which is the bitterest. France Telecom and its shareholders have experienced the last one. But after two years at the helm, Thierry Breton can claim his thoughtful efforts are starting to pay off. Trends at Orange UK are encouraging. So are developments in France, where its fixed-line market share is showing signs of stabilising. Crucially, new services are emerging as the key weapons in the battle for customers, in line with France Telecom's strategy of bundling its broadband, fixed-line and mobile offerings.
It is no wonder that Deutsche Telekom is following France Telecom's example in buying back its internet subsidiary. But imitating the French will not be easy, and not only because of regulatory differences. When France Telecom brought Wanadoo back into the fold, it almost looked like a reverse takeover, with the “young(ish) Turks” from the internet and mobile businesses securing key positions. That helped turn France Telecom into a more customer-focused company."
James points in addition to today's announcement of Swisscom regarding the re-integration of its ISP, Bluewin, into the Fixnet division.
And adds: "We have always felt (see EuroTelcorama No. 5) that many of the telcos would try to adapt in the best way they could (clumsily), but would face many challenges and ugly choices, and would inevitably end up as companies with significantly smaller top lines and dramatically smaller workforces. It's interesting to see some of the European telcos circling the IP wagons relatively early, admitting that their ISP teams actually hold the key to the future, not just the key to cashing in on IPO mania back in 1999/2000 (as FT and DT did fairly unsuccessfully).
The transformational pains are going to be considerable, and the pressure to act is mounting, in our view. Yesterday France Telecom owned up to the fact that VoIP is taking a visible bite out of its French voice traffic, but as DSL unbundlers grow more aggressive in Spain, Italy, the Netherlands and the UK, we will see similar messages from others within a few quarters."
And he finally refers to Om Malik's assessment of the recent AT&T and MCI asset write-offs to see where the asset sides of Eurotelco balance sheets are headed in the next couple of years.
I would like to come back to the FT statement from above: "Crucially, new services are emerging as the key weapons in the battle for customers, in line with France Telecom's strategy of bundling its broadband, fixed-line and mobile offerings."
This was also one major issue in the discussions this week in Brussels on Telecoms Regulation and Competition Law and also related to the discussions I had at the VON with Eli Katz from ITSPA, UK and also Thilo Salmon from sipgate.de:
The new VoIP service providers and especially the participants from ECTA, the new-entrants lobby took in the discussion: "Is VoIP a new innovative service and therefore should be regulated with a light touch?" a very interesting position: on one side they argued that the obligations especially for new entrants should be non-discriminating (e.g. regarding numbering)and also that VoIP should not be treated as PATS with all its obligations, but on the other hand it is just a voice service with another technology (now I begin to understand the UK term VoB).
I first was a bit confused, but considering that I was at a conference dealing with the EU speciality of market definition, signifikant market power (SMP) and remedies, I finally understood:
If VoB ist just a voice service with another technology, it belongs into the voice market = the incumbents having SMP in the voice market have automatically also SMP in the VoIP market = the same remedies apply, such as wholesale offers and most important: incumbents providing broadband access should not be allowed to offer bundles with broadband and VoIP. See also the dicussions going on in Canada (Jeff reported).
I asked Sandra Keegan, sector head in the ISOC-DG of the European Commission if she supports this view and she said no, VoIP is an innovative service, it falls in none of the existing markets and therefore no SMP and remedies exist. On the other hand, the ECTA lobby is veryactive and noisy.
I already stated in my reports from the VON that I consider the current target market of PSTN-replacement most VoIP service providers tackle today as stillborn. It is nearly impossible to expand in a shrinking market with already non-existing margins. The future is the c-word:
convergence in the access: triple play
convergence at the customers device: OnePhone
convergence at the service and application level: Office 2003, LCS 2005 and Istanbul
So the main target of the new-entrants (how long is a new-entrant new?) is to block of the competition of the incuments in this theatre from the beginning.
I cannot follow the arguments of ECTA for another reason. If one considers voice just as another service and application on the Internet (that is, put it in it's proper place), it is true that you will get automatically a VoIP account with your broadband access subscription, just as you get an e-mail account, a domain name and some MB of webspace. So what? Many people I know of do not use this offer anyway or only in addition, they use the company e-mail as their main account, they have their own domain-name, etc.
The same will happen with such VoIP accounts: people will use the company accounts also from hame, because they are integrated in their company office system and provide them with OnePhone capabilities, or they will other accounts providing value-added-services, and they will forward one account on the other.
