The real promise of VoIP must offer more than low cost voice

Stef van Aarle
08 Nov 2006

The telecommunications industry is poised to ride the next industry trend - Voice over Internet Protocol (VoIP). While VoIP has been around for a long time, it is still an industry in its infancy. Over the last year, it has started to develop into a full-scale business that will need to employ more realistic business models.

Right now the push and pull is on between the "free" or "minimal cost" VoIP services and companies who are working to develop real value-added tools that take advantage of the highly flexible infrastructure that VoIP brings to the network architecture. The next few years are going to be critical in steering the industry in the right direction. VoIP has to be a part of a larger discussion about how to build value rather than digressing into a price war that will tear the industry apart.

Think about the airline industry today compared with 25 years ago. Now airline carriers offer no extras or frills. On most domestic commercial flights a meal is considered a "value-added" service. Competition is cutthroat and instead of an offering additional services and differentiation in brand the main selling point is price, price and price. It is no surprise that as airlines have continued to dramatically slash costs and that more and more of them have sunk into Chapter 11. The same could happen the developing VoIP industry unless it realizes that it needs to grow beyond the low cost world and create value in revenue generating services that customer may not even know that they want or need - yet.

So what does adding value actually mean‾ It is important to point out that value isn't necessarily the direct opposite of low-cost. But value does imply being able to create new services that end users - both business customers and consumers are willing to pay for. VoIP has to be included in this larger view of the industry. While it isn't the only factor at play it certainly will have a huge hand in creating some of the converged services communications providers will be able to offer. Since 1999 the share of household spend on Telecommunications has decreased [Source: US Department of Commerce, Bureau of Economic Analysis, Dean & Company Analysis], while the relative spending on entertainment services and media has increased substantially. The challenge for the Telecommunication industry is to leverage that growing spend on entertainment and media versus just offering low cost voice that will only lead to declining business.

Past experience has shown us that the road to success is paved not with technology itself, but in how that technology makes our life better and improves our productivity at work. We are all two users at the same time -- consumers and business users. In a world with blended-lifestyles we are often doing both personal and business functions simultaneously. This is a reality of the modern world. The increased mobilization of the workforce will even accelerate that trend.

The current crop of business people are used to some level of "Ëœmulti-tasking.' However many of us are still shaky on doing two functions at the same time - such as Instant Messaging (IM) while talking on the phone. In the coming years though, the workplace as we know it will change. The first generation of workers who grew up using the Internet and instant messaging has started hitting the workforce. This will have a direct impact on the types of services offered for them both at work and home.

It is easy to see how life will evolve for a kid from the not so distant future who is gaming online with his friends.

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