Videotron's not-so-secret Internet telephony plans will come to fruition today when Canada's fourth-largest cableco unveils its service today in Montreal. This move was highly expected after it held several meetings a couple days before Christmas with industry analysts in Toronto. It will be interesting to see Videotron's pricing strategy. Do they go premium based on the idea of high-value services and high-reliability, or do they go low and battle Bell, Vonage, et al on price?
According to a couple British newspapers, it could be a matter of time before the world's most poular search engine offers a telephony service. This speculation is based on an ad on Google's Web site for a “Strategic Negotiator, Global Infrastructure” who would be responsible to help with the “development of a global backbone network”.
Google has moved into a variety of online services such as blogs (Blogger), comparative shopping engines (Froogle), social networking (Okrut) and e-mail (Gmail), so why not VOIP. All Google would have to do is offer Skype-like software that would sit on a browser toolbar. If Google wanted to buy network capacity, there is no lack of wholesale carriers willing to offer bargain-basement prices.
From a strategic perspective, Google needs to find another home run to drive growth. It hit paydirt with AdSense by copying Overture's business model but its other diversification efforts have, at best, seen modest success. For example, Gmail has been out for several months, and it's not like Hotmail and Yahoo Mail are disappearing. Froogle's a great tool to quickly make sure you're geting a deal on eBay, while Blogger's still looking for ways to real money. The tiime will come – and it's coming soon – when investors start to lose their lust for Google and start demanding new high-growth vehicles. Then what?
That said, Internet telephony could be different for Google because voice is a mainstream application. Google could provide the Internet telephony market with a big-time boost by raising the technology's profle and credibility with the masses who are happy – at least for now – not be among the bleeding edge. If you want to take Google and telephony another step forward, why wouldn't it become a virtual wireless service provider? It has the same kind of brand recognition as Virgin, which has enjoyed great success in Australia, the U.S. and the U.K.
As the music industry struggles to deal with the illegal downloading of tunes, there is a troubling pattern emerging where the business takes one step forward and one step back.
Actually, there were two noteworthy steps forward this week as retail music sales in Canada edged up 1% last year — the first gain since 1999. As well, paid digital music downloads rose tenfold in 2004 to 200 million tracks as new services were established and selection improved.
This is good news for an industry stung financially by a peer-to-peer file-sharing networks such as Kazaa, and a new generation of consumers who do not believe in paying for music. The industry has attempted to fight back, using legal tactics to shut down P2P services, and suing individuals who illegally download music.
While the music industry can claim its high-profile legal action has been effective, it has also alienated many consumers. As a result, P2P services have not disappeared. People are still happily using Kazaa, eMule, Limewire and other P2P services.
At the same time, private P2P services also have emerged such as Q-Next Inc. and Grouper Networks Inc. which let small groups share music, video, photographs and other data. If you want to copy of a friend's Led Zeppelin collection, there is no need to burn CDs when it can be shared digitally.
Brad Friesen, Q-Next's director of marketing, said the key difference between P2P services such as Kazaa and private ones such as Q-Next is that the latter are not designed to steal music and movies. Instead, they are application platforms that free and fee-based services can use to reach consumers.
Mr. Friesen said the music industry needs to embrace P2P. Q-Next, for example, is developing a music-streaming service where one user can, with permission, listen to another user's music collection. A logical move for a music label, he said, is to work with Q-Next to introduce ways for consumers to buy what they listen to.
“The music industry needs to worry about fixing their business model more than fighting the technologies,” he said. ” There is a lot of upside that isn't being discussed. P2P is being demonized rather than being discussed to improve and make life better.”
The music industry's response to private P2P networks is that they are just another way of illegally distributing songs. But one argument is that this activity is much like when friends taped LPs on to cassettes — something the industry never seemed bothered about.
Another threat is the “got'em, need'em” approach — whereby the owner of an MP3 player lends their unit to a friend, who then copies all the tracks they want. An activity that will only increase as lower prices get high-capacity MP3 players into the hands of more people.
To address the technology, the music industry has to figure out how to monetize P2P networks by co-operating with players such as Q-Next. It could make the paid download process, for example, far less cumbersome by letting consumers do more with the tracks they buy. And it could get off the 99 cents-a-track standard, giving consumers incentive to do the right thing.
The industry should look at P2P as an enormous revenue opportunity. “If services are interesting enough, people will pay for them,” Mr. Friesen said.
© National Post 2005
Now that concerns about VOIP's reliability, access to e911and back-up powerhave mostly been resolved, the next big obstacle to consumer acceptance can be proactively addressed – hooking up several phones throughout the house.
According to Carol Schuk at Voxilla.com, Uniden is coming out with a new “whole house” system that “aims to make putting a VoIP phone in every room as plug-and-play as a conventional phone.”
While VOIP-savvy folks see the multi-phone household issue as easily addressable (“all you do is go down to the basement and plug the incoming cable connection into the old telephony network, and Bob's your uncle”), this is a big thing for many people who are intrigued by VOIP but still afraid of the technology. If you've got four or five phones in the house, you need a friendly way to make them all work when/if adopting VOIP – which is something that people who live alone or use VOIP in the home office don't worry much about.
Apparently, Cablevision is solving the multi-phone problem by sending technicians to connect new telephony customers. This is obviously great customer service that is winning the company lots of business, but it's also expensive. The better way is to make customers do it themselves.
Bell ExpressVu has jumped upon a tried-and-true way to boost revenue: hike its prices. The satellite-television service provider, which is owned by BCE Inc., is hitting its customers with a $3 a month increase – a move that will add another $36-million into the corporate coffers. No one should be too surprised by ExpressVu's decision to raise prices given the television market is pretty much saturated. If there is little room for subscriber growth, price increases are one of the few tools left to generate top-line growth.
The problem facing BCE, however, is it faces or will face the same challenges in its other growth businesses – wireless, high-speed Internet access. While BCE CEO Michael Sabia has done a commendable job restructuring the BCE empire in the past three years and slashing costs, the real hard work lies ahead in trying to generate real growth. There is already some thinking BCE could turn itself into an income-trust and milk its mature business units for profit. The other option is acquisitions into new areas or geographic territories. BCE has tried this tactic before and not fared particularly well.