"We believe that AT&T, in conjunction with perhaps 10-15 other incumbent operators such as British Telecom, Deutsche Telekom, and NTT, is preparing to launch, in 2009, a competitor of sorts to Skype. We believe that the motivation to do this would be to keep subscribers from completely disappearing, reducing win-back marketing costs."
Their key points the analysts stress is how "incumbent telephone operators have been losing wired access lines for a few years, to a variety of destinations: cellular, cable TV operators, competitive wireline carriers and, in a sense, also to IP telephony operators such as Skype."
They claim that the incumbent operators have been able to make up for these losses by entering new businesses such as cellular, DSL/fiber, and television.
Here's the rest of the analyst report "teaser":
However, the loss of the long-time telephone number often means that the incumbent phone operator loses the relationship with the customer entirely. Why? Because the consumer can buy access for his VoIP service such as Skype from another source, such as cable modem, 3G cellular, WiMax, or a competitive DSL/fiber carrier. If this happens, the cost to win back this subscriber can be disproportionately high, if it does ever occur.
As a result, we believe that these incumbent operators will join together in the launch of their own de-facto Skype competitor, so that they may keep as many customer relationships as possible. The service would be free when calling any other subscriber of the consortium, consisting of perhaps 10-15 incumbent carriers around the world.
We believe the likely "hook" for the consumer would be that you have to buy your access service-such as DSL, fiber or, for that matter, 3G-from the incumbent. That way, the incumbent, while losing some telephone revenue, can use the power of the DSL line to upgrade the customer to IPTV or to add one or more cellular subscriptions down the road.
Speaking of cellular, we believe this concept will also eventually be extended to cellular. In this manner, the consumer would purchase 3G such as HSPA and in the future LTE, from the incumbent cellular operator, on top of which the consumer would use this Skype-like service. We believe this is going to happen some time after this service has been implemented on DSL/fiber. We wrote about this concept in 2003, but it appears we were a few years ahead of our time.
Each member of this consortium such as AT&T, Deutsche Telekom, British Telecom, or NTT would have the right and ability to brand this service any way it wants. We believe some would choose to do it under an easily-identifiable existing name, while others may want to use a brand that is more differentiated, so as to separate the consumer perception from the regular POTS (plain old telephone system). In order to accomplish uniformity of this service, we believe these operators would have to agree on a common software system, so bug-fixes can be globally implemented, universally, with the pressing of an update button from one central point.
As I told some fellow TMCers, this is utter hogwash and pure speculation. Skype hasn't been undercutting the incumbents landlines or their business revenue. People have been going to cellphones if anything, which has reduced revenue from traditional landlines. Why make a long-distance call from your landline when you have a free bucket of minutes on your cell phone?
Further, the incumbents own both the last mile and termination networks, so they can do cheap international dialing, which is Skype's "break & butter" if they truly wanted to. And they could do cheap international dialing without the need for their customer based to install some PC VoIP software that competes with Skype. Simply pick up your cordless landline phone and dial. No need to boot up your PC, run the VoIP app, and put on a headset or use some USB-based phone device.
That said, there could be some synergies if the incumbents did launch a VoIP softphone application. For example, they could blast the call to your regular landline, the VoIP softphone, and your mobile phone simultaneously. Then you could get take the call using any of these 3 communication methods. Further, if you're sitting at your PC or laptop away from the phone or on the road even, you can see CallerID info and decide to accept or reject the call.
There might be some other interesting features as well, but if the incumbents think that simply "cheaper" minutes are what people want, they'll be sorely mistaken, especially with "free" solutions available from companies like Jajah. Users want convenience and they want features. And if the incumbents offer 100% free calling via this VoIP application to anyone "in network" then I suppose this would compete with Skype's free PC-to-PC calling. But again, the carriers could simply "peer" with one another, agree to carry the call free of charge, and then send the call over the regular PSTN and not the public Internet. The quality is more guaranteed and unlike a VoIP application it doesn't require special hardware or software at the customer's end.
There is one caveat though. Even if the carriers agree to "peer" and not charge monies for carrying a call from another carrier, the telco industry is still heavily regulated and there will potentially still be some costs incurred for any call. It certainly could be more cost effective for the carriers to bypass these "regulations" by carrying the calls over VoIP, which as of right now the government has been relatively hands-off. The carriers could potentially create a massive global VoIP peering network. Many carriers already do transport calls over IP to other carriers, so I still think the key is the last mile. After all, do you see grandma running to her PC to pick up a "cheaper" call from England or Sri Lanka using her VoIP softphone? I don't think do. Nor do I see her using a PC to make "cheaper" outbound calls.
Maybe I'm off my rocker. Tell me your thoughts...