http://www.markevanstech.com/2006/12/12/deep-thoughts-about-voips-future-in-canada/ A Canadian Take on the Web Fri, 22 Aug 2008 03:05:04 +0000 http://wordpress.org/?v=2.6 http://www.markevanstech.com/2006/12/12/deep-thoughts-about-voips-future-in-canada/#comment-2162 Anonymous Wed, 13 Dec 2006 15:53:56 +0000 http://markevanstech.com/?p=1970#comment-2162 I thought about this post last night and posted my own thoughts at http://benlucier.wordpress.com. It think it will be interesting to see how the ILECs react after having the ability to set pricing on VoIP and local lines. In a world where the incumbents fight for every dollar for features such as call waiting, voicemail, etc., It must be a difficult pill for them to swallow if they were given a choice of lowering their price by serveral dollars, or lose a customer. If I were a Bell customer, I'd cancel on purpose just to get better pricing. What if 28 million residential customers did that? The ILECs are faced with a disruptive technology (VoIP) that has the potential to impact their sustaining technology (analog phone lines). By the time the ILEC comes around, others may already have taken a large bite out of their business that will be difficult to recover from. The Innovator's Dilemma, a book by Clayton M. Christensen has some interesting things to say about the impacts of disruptive to technology to established organizations, even those that are well run. I thought about this post last night and posted my own thoughts at http://benlucier.wordpress.com. It think it will be interesting to see how the ILECs react after having the ability to set pricing on VoIP and local lines. In a world where the incumbents fight for every dollar for features such as call waiting, voicemail, etc., It must be a difficult pill for them to swallow if they were given a choice of lowering their price by serveral dollars, or lose a customer. If I were a Bell customer, I'd cancel on purpose just to get better pricing. What if 28 million residential customers did that?
The ILECs are faced with a disruptive technology (VoIP) that has the potential to impact their sustaining technology (analog phone lines). By the time the ILEC comes around, others may already have taken a large bite out of their business that will be difficult to recover from. The Innovator's Dilemma, a book by Clayton M. Christensen has some interesting things to say about the impacts of disruptive to technology to established organizations, even those that are well run.

]]> http://www.markevanstech.com/2006/12/12/deep-thoughts-about-voips-future-in-canada/#comment-2161 Anonymous Tue, 12 Dec 2006 21:05:39 +0000 http://markevanstech.com/?p=1970#comment-2161 You keep dreaming about this supposed price war. Just like there's a price war in cellular phones, a price war so incredibly vicious that getting voicemail costs extra, getting caller id costs extra, until you're paying $90/month for a phone you barely use? Newsflash: these companies operate as a cartel. They will not compete against each other. They will take action to prevent new entrants from joining the fray, by cross-subsidizing their services to run newcomers out of business. Competition does not magically appear when there are at most 3-4 companies competing for your business. If there were a dozen competitors, probably one of them would break free of the cartel. But most people in Canada have one (1) phone company and one (1) cable company. Please understand that "deregulation" does not mean "the government will cease making phone companies charge such high prices, allowing prices to fall". What it mainly means is that "the government will stop forcing the incumbent phone companies to share their taxpayer-funded infrastructure with any other companies, driving those companies out of business since they would have to create a whole parallel telephone infrastructure and that isn't going to happen". What's going to happen is that compating VOIP services won't be allow to tie-in to the local phone network. So you'll be able to get all the VOIP you want, but you won't be able to call anyone with a traditional landline because Bell Canada charges $893,000,000 for competing VOIP companies to connect to "their" taxpayer-funded network. Bell Canada will have the only VOIP service that can interconnect with the traditional phone network. Basically, all you need to know is this: Bell has been pushing for this deregulation. That tells you all you need to know about whether it will be good for competition (=bad for Bell's profits) or whether it will be bad for competition, and good for Bell's profits. You keep dreaming about this supposed price war. Just like there's a price war in cellular phones, a price war so incredibly vicious that getting voicemail costs extra, getting caller id costs extra, until you're paying $90/month for a phone you barely use?
Newsflash: these companies operate as a cartel. They will not compete against each other. They will take action to prevent new entrants from joining the fray, by cross-subsidizing their services to run newcomers out of business. Competition does not magically appear when there are at most 3-4 companies competing for your business. If there were a dozen competitors, probably one of them would break free of the cartel. But most people in Canada have one (1) phone company and one (1) cable company.
Please understand that “deregulation” does not mean “the government will cease making phone companies charge such high prices, allowing prices to fall”. What it mainly means is that “the government will stop forcing the incumbent phone companies to share their taxpayer-funded infrastructure with any other companies, driving those companies out of business since they would have to create a whole parallel telephone infrastructure and that isn't going to happen”.
What's going to happen is that compating VOIP services won't be allow to tie-in to the local phone network. So you'll be able to get all the VOIP you want, but you won't be able to call anyone with a traditional landline because Bell Canada charges $893,000,000 for competing VOIP companies to connect to “their” taxpayer-funded network. Bell Canada will have the only VOIP service that can interconnect with the traditional phone network.
Basically, all you need to know is this: Bell has been pushing for this deregulation. That tells you all you need to know about whether it will be good for competition (=bad for Bell's profits) or whether it will be bad for competition, and good for Bell's profits.

]]> http://www.markevanstech.com/2006/12/12/deep-thoughts-about-voips-future-in-canada/#comment-2160 Imagina Tue, 12 Dec 2006 18:36:38 +0000 http://markevanstech.com/?p=1970#comment-2160 Real VoIP right now is used mainly as a second-line for long-distance savings and fax service in North America. The cablecos are offering local access over their cable infrastructure. Security, reliability and quailty will remain the key issues in first-line adoption for some time. Look how long it took for cell phones to be used as the prime line in households which initially provided mobility with reduced quality. Consumers do not yet have that common need to switch to VoIP. It will be a common opportunity through features that will start the migration. Real VoIP right now is used mainly as a second-line for long-distance savings and fax service in North America. The cablecos are offering local access over their cable infrastructure. Security, reliability and quailty will remain the key issues in first-line adoption for some time. Look how long it took for cell phones to be used as the prime line in households which initially provided mobility with reduced quality. Consumers do not yet have that common need to switch to VoIP. It will be a common opportunity through features that will start the migration.

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