The same road traveled

America's Network, May 1, 2004 by Kirk Laughlin

Listen closely to the rhetoric rising from debates over VoIP and a common thread binds them together--we may be talking about new service delivery and application sets but classic business issues are still bubbling up in the foreground.

Carriers, especially those holding the most last mile links, are going to want to protect and exploit their current network assets. That should come as no surprise.

Packetized voice may be irresistibly attractive to a new generation of telecom capitalists, but the residential destination is still the porthole on the side of that dwelling. The last time I checked, the watch captains there wear one of two badges, incumbent telephone or cable.

The liberation promised by VoIP, therefore, is not entirely genuine. Nor is it being fully realized, at least according to Jeff Citron, the Vonage chief executive, who favors a stand-alone DSL option that permits his customers to be free of influence from the owner of the DSL access line. He makes his case in our "VoIP Summit" cover story, beginning on page 22.

One of the most compelling pieces of our cover story (a project skillfully engineered by managing editor Al Senia) involves a point-counterpoint dialogue between Citron and SBC's senior vice president of regulatory affairs, Dorothy Attwood. Their verbal jousting centers largely on whether VoIP customers should be able to freely port their number over to any broadband voice platform, and how, at least in SBC's case, bundling and sheer size could eventually be used to choke the viability of stand-alone mavericks. (A full transcript of the debate can be found at www.americasnetwork.com)

Funny, but haven't we heard this debate all before?

The difference this time is that people like Citron argue that you have to show customers the spellbinding benefits of VoIP. Once they taste it, they'll be hooked.

Vonage is a popular company these days. A lot of people would like to see this courageous little carrier do the kind of damage that the CLECs were--at least on paper--supposed to do.

But, realistically, Vonage has about six or seven months of life left. Sure, the provider will be around next year and the year after that, but once the FCC finally gets around to putting a cover charge on this VoIP party, costs will start to mount and scale will become paramount. Vonage will lose its luster and, as foreshadowed in our cover story, will be quite eager to team up with a larger benefactor.

In the meantime, let's watch to see how well the VoIP pioneers, both large and small, do at pushing the many groundbreaking voice, video and data features enabled by IP. If it's fundamentally about market creation, then we're all in this one together.