And yes, we're as guilty as anybody for jumping on the bandwagon. We just can't stop covering this stuff. For example, here are some news items from just the last couple of weeks:
- How Big Is FTTP for AFC?
- Broadband Growth Is Brisk
- Alloptic Gets Asia-Pac-Happy
- IDC Sees Modest FTTP Growth
- RBOCs See Three Ways to FTTP
- Europe's VOIP Scene Is Hot
- FCC's Powell: Let VOIP Be
- NEA Eyeing More VOIP Deals
- Alcatel Tests VOIP Waters in Russia
- VOIP Gear Hits a Speedbump
Let the latest hype cycle play itself out – it still has some time. But let there be no doubt about it: The companies (and, more likely, the investors) in these markets will eventually figure out that they're in another cutthroat game, where it'll be tough to make a dime.
FTTP? Sure, why not. Wire me up, baby. Nothing's as smooth as glass. The only problem is that FTTP isn't really high-tech at all, because it's all about shovels, backhoes, and union labor. Nearly 50 percent of the cost of FTTP comes in the form of trenching and connection of the fiber itself, rather than all the technology gear. It's really blue-collar stuff.
In our latest Light Reading Insider, Light Reading's paid subscription research service, Senior Editor Mary Jander did some top-notch work uncovering such relevant details. In addition to the fact that half the average FTTP installation can be attributed to trenching and splicing, the current Insider, "FTTP Reality Check," also points out that the RBOC track record for quickly rolling out new technology is hopeless. Let's face it, when the Bells move on something, it's typically with the blinding speed of a pack of Florida Manatees.
A recent poll conducted by Light Reading bore out this perception (see Poll Finds RBOCs Tepid on FTTP). A plurality of respondents (38 percent) said that the chance of RBOCs deploying widespread FTTP next year is "unlikely."
VOIP is likewise promising, but it's also being hopelessly overdone – especially in the stock market, where tiny, unprofitable VOIP service providers are enjoying lavish valuations (sound familiar?). Watch out, because VOIP may best be known for its destructive effect on capital, rather than its constructive effect on services. After all, VOIP is to the telecom industry what Napster was to the music industry – it's going to be FREE!
I'd liken the VOIP market to the early days of email. It's a neat application, but one whose value is constantly dropping, as everybody expects it to be free. On the whole, no doubt, its use will explode. The folks selling next-generation VOIP gear and software may do well. But how do service providers expect to make money from it?
I think it's more likely that VOIP will succeed on the back of other software installations – be it instant messaging, or something like Skype. These communications applications will use VOIP to help generate a captive audience that can be sold something else (advertising or e-commerce, perhaps?). Call it the Yahoo approach. As a feature that's added to existing Internet communications applications, it's a must-have. As a standalone service, VOIP goes nowhere in the business plan.
[Editorial disclosure: That hasn't stopped us from hyping Skype as the new service archetype – check out Skype Me? Skype You!, Skype Spooks Operators, Skype Ain't Hype, Says Poll, and founder Niklas Zennstrom's profile in our Top Ten Movers and Shakers in Telecom feature. Yowza!] Yes, FTTP and VOIP are crucial next-generation moves for the telecom industry. Huge fast pipes are certainly good for something – getting more stuff into the hands of you and me, the users – but making money on them is going to take some savvy thinking. And plenty more time.
— R. Scott Raynovich, US Editor, Light Reading
For more on this topic, see the latest Light Reading Insider report: FTTP Reality Check. Annual single-user subscriptions to Light Reading Insider – which include access to the current report, the complete archives, and each of the monthly reports issued over the next 12 months – are available for $1,250.
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