Tuesday, October 11, 2005

Are the European Telcos different or the Europeans? 

... or are the telcos whistling in the dark?

CRMToday is citing Forrester Research in declaring: Incumbent Telcos Set to Win Europe's Consumer VoIP War, because only 1% Europeans using VoIP frequently to make calls from home.

Maybe I am not typical, because I neither use PSTN nor VoIP to make calls from home, because I am rarely at home - at least my wife is complaning.

According to industry hype, voice over IP (VoIP) pure plays like Skype and Vonage are on the verge of transforming and taking over the telecom industry. But Forrester Research believes that pure plays have no chance of dethroning proactive European incumbent telcos from their consumer fixed voice market leadership. Forrester thinks that VoIP pure plays will fail to survive as independent companies because they don’t offer a truly disruptive and transformational service – and they lack key advantages that the incumbents have. Telcos like British Telecom and France Télécom can continue to dominate future voice markets as long as they maintain their proactive and innovative VoIP response strategies.

VoIP adoption will certainly help trigger sweeping changes in voice pricing models across the industry. However, that will most likely not lead to the major industry disruptions foreseen by VoIP pure play proponents – at least not on the retail side of the business,” stated Lars Godell , Principal Analyst, Telecom, at Forrester Research, and author of a recent VoIP study. “Forrester sees the consumer VoIP hype as wild exaggerations, reminiscent of the UMTS hype, dot-com, and telecom bubble days


“VoIP isn’t really mature today. It faces a range of problems, including immature SIP technology, unresolved regulatory issues, and a lack of industrial-strength and scalable public network management systems. Consumer apathy and slow broadband uptake will also hold VoIP back.”

Ha, now I got you: slow broadband uptake? Godell seems to live on another planet: broadband uptake is faster then mobile uptake 12 years ago.

In addition, the incumbent telcos are fighting back: Proactive incumbents like Telecom Italia, France Télécom, and Portugal Telecom launched flat-rate PSTN calling even before VoIP pure plays became a threat, reducing VoIP’s threat to their core PSTN business. Since then, a majority of incumbents have introduced various flat-rate pricing plans, further reducing their vulnerability to VoIP pure plays. Smart incumbents are also tearing down technology silos and focusing on user needs, not technology, further undermining VoIP pure plays’ key selling points. And by launching their own VoIP services, ADSL bundles, and enhanced functionality services, incumbents are fighting the pure plays on their own turf.

Ok, now this is something different: as I already posted in my take on the Rome Conference some "proactive" and "smart" incumbents are really taking the challenge. And I also stated very often here that the POTSoIP like Vonage providers will not survive:

Forrester believes that VoIP pure plays will fail in the new telecom world. Falling short of true disruptive potential, lacking all the important advantages of incumbent telcos, and facing more intense VoIP competition from all comers, VoIP pure plays like sipgate, Telio, Gossiptel, and Vonage will not be able to survive for long as profitable free-standing companies. Skype’s investors were lucky to be able to bail out to eBay before the consolidation game kicked in. In Norway, that game has already delivered more than 20 VoIP pure play casualties in less than nine months. The best the pure plays can hope for is to be acquired – or to license their often interesting technology and service concepts.
But there is also a caveat:

The incumbents have significant advantages in brand name, scope (bundling), scale, customer base, billing, and financial strength over essentially all other challengers, although they do need to improve their customer satisfaction ratings.
And also their rollout and development time for new features

And here I think Forrester is wrong:

And while big global portals like MSN, AOL, Yahoo!, and Google have recently made acquisitions and service launches around VoIP and IM voice chat, they will never be able to claim national consumer VoIP market leadership in any Western European country.

Is Poland now Western or Eastern?

And what about the mobile operators killing the fixed network already?

Here Forrester Research seems to be completely silent. There is only one communication market in the future, and this will be personal, nomadic and All-IP.

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