Skype as David, Telcos as Goliath

OK, now I have heard it all. Large, incumbent telephone companies are going to launch a competitor to Skype.

But before I proceed with my thoughts, as often the case with such amazing speculation, it is good to air out the details before dismissing them outright. After all, an informed reader may think they know better than me and I have been wrong in the past. Pobody’s nerfect as they say.

The Details

Apparently ThinkPanmure, a research firm has been speculating for years that incumbent telecoms from around the world will work together to make a software package that will interoperate on various networks and leverage 3G and wired broadband investments. The goal would be to create a Skype killer if you will.

The theory will be that the customer needs to use broadband supplied by one of the member service providers to be eligible to use the software/service. In this way, the service provider should be able to upgrade said customer to other services such as IPTV.

The History

In the late nineties, Net2Phone popularized the VoIP client and they were soon wiped away by Microsoft’s NetMeeting. Microsoft had a pretty slick software package which used the H.323 protocol and as the nineties progressed this software package became the baseline for IP communications interoperability between clients and things like media gateways.

So the first Skype competitor was actually invented years before Skype and then perhaps the second one from Redmond also died a slow and painful death.

The Analysis

The question is, can a service provider be a software company? The answer is probably not. They likely can’t compete where Microsoft failed. Unless they have an unfair advantage.

What would be such an unfair advantage you ask? Simply, their wireless networks. One company who saw this trend early was Bridgeport Networks (now part of CounterPath) who came up with a product called the MobileStick to allow cellular providers the ability to add multimedia services to wireless telephony and also to take traffic off their precious wireless networks.

I would be the first to tell you that the incumbent telcos cannot compete in the software business but they could work with a third party company to pull this off and also leverage their SMS, push-to-talk and cellular networks to cajole customers into using this services.

Think about how many people would install such software to be able to have PTT walkie-talkie access to people with PTT-enabled devices.

Once customers have a soft client installed they could also subscribe to video on demand and television services via the same client.

The Conclusion

Telcos make terrible, terrible, terrible software companies but if they find another company to handle this part of the equation, they could easily leverage their current services to differentiate their client from others.

So the idea is sound – but reality dictates that if a single service provider moves at glacial speeds then a consortium of a dozen or so carriers would likely move at 1/100th the speed of the slowest glacier on earth.

So in conclusion we have a great theory and with the appropriate amount of WD-40 this idea could turn into reality and be somewhat successful.

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