RBOC VOIP Coming in 2004
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|
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