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RBOC VOIP Coming in 2004

Light Reading
News Analysis
Light Reading
11/21/2003

The VOIP services market is gearing up for some big changes.

If you thought things weren't interesting already, consider this: RBOCs (regional Bell operating companies) are sketching out plans for VOIP services next year just as the Federal Communications Commission (FCC) is examining the potential for regulation in the market (see FCC Sets Date for VOIP Inquiry).

In the past couple of weeks all the Baby Bells have announced VOIP rollout plans for next year as they try to offset defections to competitors, especially to cable and wireless carriers (see Bells' Hell: VOIP?).

SBC Communications Inc. (NYSE: SBC) this week took the wraps off a new VOIP service aimed at businesses with up to 250 workers (see SBC Offers Hosted VOIP).

Dubbed PremierSERV Hosted IP Communication Service (HIPCS), it includes traditional telephone services as well as unified messaging, in which voice mail and email can be consolidated in a single inbox, and voice mail can be forwarded like email; find me/follow me, which enables employees to forward calls to a mobile phone, remote office, or another extension; click to call; and conferencing. A plug-and-play feature enables users to plug in their IP phones from anywhere in their networks.

Next up, speaking at the UBS AG global communications conference in New York this week, Verizon Communications Inc. (NYSE: VZ) vice chairman and president Lawrence T. Babbio spilled the beans on his company’s VOIP plans for next year.

Verizon intends to offer VOIP to its DSL home users in the second quarter of next year and to business customers later. The two-phase strategy begins with a consumer VOIP offering positioned as a second-line service for DSL users. Verizon will either outsource the service or build the application itself. It will offer several plans for local, long distance, and international calling, as well as free on-net calling. It will allow the user to manage features via the Web, including Web-based voicemail and address book integration. Phase two, beginning in the fourth quarter, 2004, will be a managed network VOIP service with QOS (quality of service), aimed at “work-at-home professionals and small businesses,” Babbio said.

BellSouth Corp. (NYSE: BLS) announced in October that it would start offering bundled VOIP services to small to midsized companies (see Nortel, BellSouth Team for VOIP).

And lastly, jumping on Vonage Holdings Corp.'s success beating the regulators in Minnesota last month, Qwest Communications International Inc. (NYSE: Q) announced it would launch a VOIP service in the same state (see Qwest Jumps Into VOIP Hotbed).

Table 1: RBOC Voice-Over-IP Plans

Launch date No. of markets Target customers Price
Qwest Pilot Dec. 2003 Minnesota Consumers, SMEs Not disclosed
SBC Available now 13 States SMEs $29-$39 per month
BellSouth Phased rollout starts 2004 9 States SMEs Not disclosed
Verizon 2Q04 (consumers)
4Q04 (businesses)
Nationwide DSL consumers,
home office
Not Disclosed


At first glance it looks as if this flurry of VOIP announcements by the RBOCs stems entirely from the decision made recently by the Minnesota court judge. The judge agreed to let Vonage offer telephony as an Internet data service, thereby freeing it from various taxes associated with traditional phone services.

But Stephen Kamman, analyst with CIBC World Markets, thinks the transition to VOIP services is not being driven by any sort of regulatory loophole in FCC or state efforts to deregulate data services. "In a nutshell, we expect carriers to buy VOIP on its own merits, not in order to escape the current voice-related regulatory regime,” he said in an investment note issued this week.

Of course, the paradox of all this is that RBOCs may be speeding the demise of their own voice business. But at the same time, VOIP offers them a less capital intensive method of deploying new services and revenue.

— Jo Maitland, Senior Editor, Boardwatch

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lastmile
lastmile
12/4/2012 | 11:14:01 PM
re: RBOC VOIP Coming in 2004
Skype, Vonage, 8.8, Cable Co's and a host of other established names have a remarkable say in VOIP. The RBOC's feature only when they are attacked!
DSL is a good example. They would never have invested in DSL had it not been for startup competitors who upset their balance of existence.
Can someone please explain what happens to POTS when VOIP becomes the main form of voice communication?
aswath
aswath
12/4/2012 | 11:13:59 PM
re: RBOC VOIP Coming in 2004
Analyst Kamman expects that carriers will buy VoIP on its merits. I am of the opinion that the merits of VoIP as a business for the service providers are not fully understood. All service providers either offer unlimited calling to other subscribers for free or for a nominal fee. Since the subscribers need broadband and an always on internet connection a service provider is not needed to mediate on-net sessions. So the only source of revenue for the service providers is when they provide interconnection to PSTN; but then everybody is predicting that PSTN is a dying business. So what gives?

Aswath
rjmcmahon
rjmcmahon
12/4/2012 | 11:13:58 PM
re: RBOC VOIP Coming in 2004
Can someone please explain what happens to POTS when VOIP becomes the main form of voice communication?

Audio connections will be improved by orders of magnitude and the cost per connection will decrease by orders of magnitude.
rjmcmahon
rjmcmahon
12/4/2012 | 11:13:58 PM
re: RBOC VOIP Coming in 2004
So the only source of revenue for the service providers is when they provide interconnection to PSTN; but then everybody is predicting that PSTN is a dying business.

The better model would shift the pendulum from gatekeeper fees to charging for value added services. Unfortunately, the status quo gatekeepers don't get that and they don't realize their inherited postions aren't helping. And it's worse because they are the ones hijacking things and writing all the rules and regulations which prohibit growth and advancement.

So what gives?

Looks to be more BS that doesn't help our industry, our economy, nor our country. Sad that we let it happen.
lastmile
lastmile
12/4/2012 | 11:13:54 PM
re: RBOC VOIP Coming in 2004
From BM.
"I do not see much future and profitability in yjr VoIP services. VoIP will never switch vircuit and packet switched network currently in use."

'yjr VoIP services' is something that I have never heard about. Even 'switch vircuit' is something new to me.

Is all this a new tech revolution that no one has heard about or is it the usual garbage from Dr. Dolitter.
BobbyMax
BobbyMax
12/4/2012 | 11:13:54 PM
re: RBOC VOIP Coming in 2004
BellSouth is moving too quicly in the VOIP business.It is moving too quickly to provide VOIP services without any infrastucture planning, and economic and service model. BellSouth has also not paid enough attention to bundling of services/

I do not see much future and profitability in yjr VoIP services. VoIP will never switch vircuit and packet switched network currently in use.
kampar
kampar
12/4/2012 | 11:13:54 PM
re: RBOC VOIP Coming in 2004
>Can someone please explain what happens to POTS
>when VOIP becomes the main form of voice
>communication

Having attended the recent NGN conference in Boston, I can say with authority (because it was the subject of several presentations) that the world is moving steadfastly in the direction of 802.11x ... who needs POTS when there is a clear plan to move all network access traffic over the unlicensed spectrum? Free bandwidth for all (and you think i'm making this up ... several camps are quite seriously promoting this).

VoIP in the last mile needs an Ethernet transport to become reality ... hence the interest in Ethernet in the First Mile technologies ... forget fiber to the house, EFM is what the ILECs are really waiting to deploy to mess up the MSO's ... you only need FTTH (Fiber To The 'Hood) for this.

Before widespread IP phone ownership becomes viable, someone has to implement large scale VoIP platforms and services in the network first - personally I think that's coming, several companies have proven it can work in the lab and small scale implementations ... just waiting for real demand to drive deployment faster.

kampar
kampar
kampar
12/4/2012 | 11:13:54 PM
re: RBOC VOIP Coming in 2004
BobbyMax is moving too quicly in the message posting business. It is moving too quickly to provide an information service without any infrastucture planning, and economic and service model. BobbyMax has also not paid enough attention to bundling of dictionary and grammar.

I do not see much future and profitability in yjr BobbyMax services. BobbyMax will never switch from poor understanding of topics over packet network currently in use.
Sisyphus
Sisyphus
12/4/2012 | 11:13:53 PM
re: RBOC VOIP Coming in 2004

> .. Having attended the recent NGN conference
> in Boston, I can say with authority ..

Permit me to meet that statement with some skepticism, having attended almost every NGN conference since 1998... :-)

If the ILECs have a plan to replace the subsriber loop with 802.11x, I haven't seen it. 802.11x does seem to have some fundamental issues when it comes to that, in my opinion.

And why would the VoIP platforms have to be huge? If you do the conversion on the CPE, there's no large VoIP platforms a la Class 5 required, it's merely about routers and bandwidth, the network likely to become distributed and flat.
lastmile
lastmile
12/4/2012 | 11:13:53 PM
re: RBOC VOIP Coming in 2004
Sometimes the non-tech guys (like me) confuse the hell out out of the highly qualified tech stalwarts. And in the midst of all the confusion Bobby Max posts garbage.
I would sincerely like to know what will happen to the Copper loop that that connects the consumer to the PSTN/POTS.
If the RBOC's are talking VOIP, Why are they doing so?
Their monopoy in the local Copper loop has been established for centuries then why the hell are they talking about VOIP?
My answer:
Competition. Skype,Vonage,8.8,Cable and a few others that I am unaware of. RBOB's never react till they are threatened for survival. Even a non-tech guy like me knows that.
My humble non-tech opinion.
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