There is lot of hype surrounding ▲VoIP, and there has been
for well over a decade now. People have said that VoIP will deliver new
functionality that was previously impossible. Some have touted the fact
that everybody will realize significant savings in terms of both
operational and capital costs by making the switch to VoIP.
The truth is not quite in agreement with the hype.
Without a doubt, the biggest beneficiary of VoIP has been the individual
consumer. Prior to Vonage, Skype, cable operators, and other companies
providing service primarily aimed at individuals, people were forced to
pay artificially inflated fees to place a "long distance" call. With
the ▲Internet, distance is really meaningless and, in
truth, so it was with the ▲PSTN, too. But telephone
companies certainly did not mind continuing with the same old business
model. As long as the phone company could milk more money from
individuals to place a simple voice call, they would and did.
The consumer space is very different now with traditional telephone
companies losing landline subscribers as an amazing rate, but the
changes are not only a consequence of VoIP. VoIP certainly played a
role, with cable operators being the biggest winners in the fight for
consumer telephony service in the United States. The other major
contributor to the decrease in residential subscribers is a shift toward
mobile phones. In fact, more and more people are dumping their home
phone entirely in favor of mobile phones. It would be interesting to
see the actual statistics, but I suspect that money spent on
telecommunications has not decreased over the past 5 or 10 years, but in
fact has increased on the average. Sure, "long distance" costs might
be lower, but I suspect more money is being spent on the combined
broadband, VoIP, and mobile phone service than was spent on regular
telephone service 5 or 10 years ago, even if we take inflation into
consideration.
In short, I suspect that for most people, telecommunication costs have
increased over the years, yet the industry still waves a big flag that
speaks of the great cost savings with VoIP. One cannot argue
with that fact considered in isolation, but it is also not entirely
truthful when considering all telecommunication costs as a whole.
VoIP and Small Businesses
If you own a small business with just a few employees and make no
long distance calls (at least not many), VoIP will probably save you
nothing at all. Most of your costs are relatively fixed
and you can't beat the reliability of the fixed phone line for
interacting with customers. But, if your small business spends a lot of
money on long distance, VoIP could save you a bundle. Skype, for
example, provides service with virtually unlimited minutes within the
US, Europe, or around the world for a fixed monthly fee (which varies by
service plan and currency used). In the US, a monthly plan costs just
$2.95 per month per employee, which allows up to 10,000 minutes of
calls per month to anywhere in the country.
VoIP and Medium to Large Businesses
VoIP has been extremely effective at reducing costs for
inter-office communication and, in general, provides a richer
communication environment. Further, since it is ▲IP and all other
communication is IP, including e-mail and data conferencing, VoIP might
even be viewed as "free", since the cost can often be burried inside the
already-existing cost for high-speed network connections. This
"convergence" of voice and data has saved money, but not on the scale
that people had expected. By and large, big enterprise customers still
interconnect with carriers through PSTN gateways and those
carriers charge the same for a phone line. And, why change?
Will service providers suddenly take an interest in reducing its
own profit so that it can help its business customers increase their
profits? Of course not! By and large, larger enterprises can only
realize a cost savings by consolidating all PSTN circuits and
reducing the total number of PSTN circuits purchased from the
service provider. The best a large enterprise can do is
employ VoIP from all remote offices to the headquarters,
and utilize a smaller, shared pool of PSTN circuits in the
headquarters.
The next big question for larger enterprises is whether they should
use PSTN circuits or VoIP. That's really a matter of preference, I
suppose. The big question is whether there is or will be any real
identifiable cost savings. Again, I have to ask: will service
providers suddenly take an interest in reducing their profits for your
benefit? Not likely. So, forget about cost savings when interfacing
with the service provider. Will the service provider offer any services
other than voice? Not likely anytime soon. So what, then, is the
difference between using the PSTN or VoIP when interconnecting to
the service provider? To be honest, I am hard pressed to give a
good reason for using VoIP for interconnection and if I were the CTO
of that enterprise, I would stick with a reliable PSTN circuit.
And that's really unfortunate, considering our strong support for
multimedia technologies.
Opportunity to Realize
I do not want to end the article on a discouraging note. In fact, that
was not my intention. I am an optimistic person and I view the current
situation as an opportunity. Just as residential consumers are, by and
large, spending more money on telecommunication costs, so would
enterprise customers if there was more value for them. Service providers
have an opportunity to provide much more than just voice services. The
first service that can and should be offered immediately is
▲videoconferencing. This probably does not even need to be
stated, given all of the press that videoconferencing is getting these
days. But, do not stop with video!
The biggest potential that IP has to offer is multimedia
communication, a convergence of voice, video, app sharing, file
transfer, whiteboarding, and so on. All of these applications can and
should be converged in an intelligent way so as to provide a richer
communication experience. The problem with all of the services that
have been delivered thus far is that they have all been voice centric,
with video just now getting a little attention (relatively speaking).
Imagine sending an ▲instant message to somebody and then lifting the
handset to talk if you want to add voice communication. Or, imagine
calling somebody and sharing your computer screen with them, perhaps to
provide information or to jointly collaborate on writing a document—all
without taking extra steps to add this extra mode of communication. This
is the power that is possible with IP and the focus of the next
generation multimedia communication system currently in development at
the ITU called the ▲H.325.
For users, H.325 offers modes of communication that have never been
possible before in an integrated way. Before H.325, everything existed in
isolation: IM, voice, web conferencing, file transfer. There has been
some consolidation in proprietary solutions, but there has never been an
international standard that could consolidate the various modes of
communication across a multiplicity of devices, making it effortless for
users to actually utilize all of the various modes of communication.
The work on H.325 just got started, but the potential is huge. With H.325,
"voice" is just one application and, unlike all legacy systems, is not
the primary focal point. Service providers have the opportunity
to play a very important role in the realization of H.325 and could profit
from the deployment of such a system, as it would add value to the
services they offer their subscribers. As history has shown, customers
are willing to pay for valuable services. The real question, though, is
whether service providers will ignore this opportunity and slowly dig a
grave for themselves as they cling to the antiquated "voice" business
that is starting to erode around them?
