Monday, November 07, 2005

Rich Tehrani Trying to Wake-up the Telcos 

Rich Tehrani is trying to make another wake-up call to the telcos, this time about VoIP Peering. This fits nicely a previous post of mine on FMC where I missed a statement from the fixed-line operators.

But I think they will miss this one too:

... You remember the first days of the Internet, where a few people knew about it and interconnected with one another? VoIP peering is becoming the same sort of phenomenon. I would imagine it is analogous to the way e-mail and websites were about a decade ago.

As more and more service providers, government agencies and corporations join peering networks the cost of long-distance will plummet even faster than it is dropping now. VoIP peering really is the ultimate application of Metcalfe's Law. If you recall, this law says the power of the network becomes exponentially greater as more users are connected to it. Think of the power of a single fax machine and then think of the power of a million interconnected fax machines and you'll see what Metcalfe was talking about.


... but more interesting was the incumbent telcos I spoke with. These companies know that the future is peering but in general are trying to figure out how to make money from this phenomenon. They want to interconnect but aren't sure how to generate revenus from interconnecting.

That is where VoIP 2.0 comes in. The companies who make a living in communications tomorrow are going to have to be 100% committed to coming up with new applications that consumers and businesses will pay for.

But the mentality of incumbent providers is woefully inadequate to come up with new revenue models. For example, everyone in telecom knows the mobile market has turned ring tones into a multi-billion dollar market. This has been a massively profitable market for many years and yet the wireline incumbents don't seem to be in this space.


For a decade I have spoken about how service providers need to focus on selling services and not minutes and a decade later they aren't but new players such as Skype and Vonage are.

It is a culture issue that incumbents need to change. If the incumbents in every country want to be around in ten years they need to drastically change the way they do business. They cannot live life as usual. They must understand that VoIP, p2p networks and peering are going to erode their core business faster than they ever thought possible.

If the RBOCs don't act quickly they are toast. The longer they wait the less wiggle-room they will have. I just hope the executives who head up the LECs are reading this and every time they overhear "Wake up Jeff," they start thinking about how they can roll out new revenue-generating services to consumers in the upcoming months and years.

Rich, I do not think the Telcos can compete with providing services.

Game over.

The new service (aka applications) providers are already here. It is Skype, Google, Yahoo! et al

These "providers" are already working on a global scale. Every telco is only existing on a local scale. Even giants like BT, Verizon or SBC are only locals.

What's left is access, and this is becoming a commodity and also here is competition. This is the reason why Whitacre is weeping about his "pipes".

And also here they are sqeezed from below by BYO FTTH suppliers.

Folks, Microsoft continues to buy VoIP companies - after Teleo this summer, MS bought Swiss VoIP company ( last week. What do you think would be Skype’s value if MS (or Google) buys GIPS (current voice engine provider to Skype)?
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