I've been meaning to comment on this Cnet article from last week:
AT&T won't mess up again - News - ZDNet
It's an interview with AT&T's David Dorman where he talks about AT&T's future direction with VoIP and their recent deals with cable companies.
Here's a quote that really stuck in my craw:
AT&T David Dorman:"It's a battle between the cable guys and the Bells. People talk about it being a duopoly. It's not a duopoly. It's asymmetrical. The cable guys are focused on video and the Bell guys are focused on VoIP, and they're converging at the broadband level."
Ok, now let me just say that I'm not cocky enough to think that I'm smarter than the CEO of a multi-billion dollar company, but... what a bunch of BS! In all due respect to Mr. Dorman, I completely disagree with his statement.
First of all, I do see it as a duopoly with the cable companies competing with the carriers for residential voice service. Soon we will have our choice when signing up for voice between the traditional Bells/phone companies such as SBC, BellSouth, etc. AND cable companies such as Cox Communications, Charter, Comcast, CableVision, etc. (btw, what's with most of the larger cable companies all starting with the letter 'C'?)
Now if that's not competition between two titans - carriers and cable companies resulting in a "duopoly", I don't know what is!
David Dorman tried to put a nice spin on it by saying the cable companies are focused on video and not voice. Nice try David! Maybe you can sucker in a few cable companies to believe that mantra, but I ain't buying it. Maybe he's hoping to fool or stall some of the smaller cable players into entering the Voice over IP marker? Or maybe he truly believes cable companies will stay off AT&T's turf; that the cable companies will stay strictly focused on video and not intrude on AT&T's voice turf.
Yeah, I'm still not buying it.
There are a few things I do agree with David on.
For instance, he responded to the question,"With this joint-marketing agreement with cable companies and the money you're putting into marketing your CallVantage service, do you feel like you're carrying the cable guys' water?
with this reply: "There is no question they are getting some benefit, but you need to think about how big this market will be. My sense is this will be a really big market and you only get one chance to seize leadership."
This is very true. I do believe the VoIP space is going to grow exponentially over the next several years, but you will probably see something similar to what happened with dial-up Internet access. It started with thousands of small ISPs and then the larger ones cobbled up the smaller ones and soon we were left with 4-5 major, large ISPs and maybe just a few dozen small ISPs. I foresee this happening with VoIP as well.
Later on in the interview he said: "I'm trying to create a model, a non-threatening, my-enemy-is-my-friend model. It's one that says you can go out and build a voice network, invest in first-generation software technology, buy a bunch of Cisco routers, spend $200 million to $300 million and learn how to tie this together. Or you can rent it from us. We'd sell it like HBO. I'm trying to create an HBO/ESPN model for the cable guys, only friendlier. In other words, you can co-brand it, you can sell it as an AT&T-branded voice channel, you can own the customer, and I provide the deployment. I can make money as a wholesaler, a co-brander, a sort of Intel Inside. We're becoming the world's high-scale, high-quality, high-feature applications service provider for VoIP. "
I neither agree or disagree with this statement. I think it's very smart for AT&T to try and work with the cable companies to be the broadband VoIP provider to cable customers. He's trying to get the cable companies to co-brand CallVantage. The problem with this that I see is that the cable companies could simply cut out AT&T and provide their own voice over IP service. However, AT&T could offer some nifty features that could cost the cable companies too much money to be worth the effort to deploy their own solution. For example, AT&T could offer better VoIP quality via a managed IP network with QoS. I'm sure AT&T has a much better Internet backbone that the cable companies do. And like he said, AT&T has spent $200-$300 million building their network infrastructure. AT&T could also offer cheaper rates to other countries just due to their sheer size and negotiating power. Thus, it's possible that by using AT&T CallVantage the cable companies can still earn more profits partnering with AT&T than if the cable companies go at it alone.
The counterpoint to this argument is that Vonage is not using a managed network (strictly public Internet and Global Crossing's unmanaged network) with no QoS, they didn't spend $200-$300 million on their network infrastructure, and they have had a lot of success without involving a third-party partner to "share in the profits".
It will be interesting to see how the VoIP market shakes out over the course of the next 2-3 years.