The following is a portion of my April 2006 Internet Telephony Magazine Publisher’s Outlook:
There is Enough Broadband Competition
I get the general sense that our government believes we already have enough broadband competition. I think that the FCC believes service providers should be allowed to charge anyone and everyone who uses their pipes whatever they need in order to pay for the maintenance and further build-out of their networks.
We have witnessed the slow dissolution of the CLEC market in the past years; we have seen the slow and steady decrease of ILECs; and we have just about reassembled the former AT&T.
Many taking this side of the argument will point out that cable and VoIP companies are generating sufficient competition along with wireless, broadband over power line, and satellite.
In the late nineties, we thought the market would be best served with thousands of CLECs serving customers. That was the environment the government set up. Now it seems that the FCC is happy with just a handful of strong competitors.
Many have seen me quoted in such newspapers as The
In addition, it is fairly obvious that current FCC Chairman, Kevin Martin, has little or no interest in net neutrality. The chairman is well connected with the Bush administration, which pretty much cements the fact that net neutrality arguments are a big waste of time. You may as well use the effort for a worthy cause, like donating time to a charity or helping underprivileged children, because from where I sit, Chairman Martin’s mind is pretty much made up.
This, of course, is just one person’s opinion – but I have heard the chairman speak and have been researching the matter for quite some time.
Ours is a country based on freedom, which we spread around the world. But we will soon lose some of this freedom – at least on the Internet. We may not be able to use applications, like Skype, without paying extra for them; still, this would be better than the situation in China, for example, where the practice (using Skype) has been banned or, to put it nicely, "put on hold." Furthermore, unless service providers get an extra fee, videos streamed on the Internet may not be of very high quality. In general, we can expect service providers to provide inferior Internet service unless they are paid a premium by the customer, the content provider, or both.
Once we accept these certainties, the question becomes how to make money in such a new world. If you think the model of charging $15 per month for VoIP and raking in cash is the future of your VoIP company, you may as well plan to start passing out the pink slips by New Year’s Eve.
This concept won’t work; the only way to differentiate yourself is to provide different offerings. Explore higher quality VoIP, surround sound VoIP, stereophonic VoIP, videophones, collaboration products, dual mode phones, and so on. You can partner with anti-spam or security companies to offer a bundle of secure voice and Web surfing.
The one thing you need to stop doing is going head-to-head with Vonage. This is a nice business model, but can’t last forever. Survey your customers. Hold focus groups. What do your customers want? Do everything you can to figure out where the money will be tomorrow.
Here is a simple idea worth hundreds of millions, in my opinion. Offer a wake up service hosted by celebrities. How many teenagers would pay $.25 per day to be woken up by Justin Timberlake or Britney Spears? How about a service that wakes you with an MMS message containing a Paris Hilton photo? You can even choose the rating.
Design an AJAX-based application to allow full call control and a toolbar that sits in IE and Outlook. Make your services stickier and stickier.
Explore enhanced 911, where any calls to 911 are recorded and sent via e-mail to loved ones. Integrate 911 with video cameras in the home, so emergency workers can see what is happening, in case those three digits are dialed.
Get creative. If one more service provider tells me they are better than Vonage because they are cheaper, I may scream. If you have to price lower than Vonage to make sales, you have a cheap phone service, and customers don’t want a cheap phone service to carry their 911 calls. As I have asked before, would you rather have the ambulance taking you to the hospital made by Honda or Yugo? Which would you send your kids in?