<incom> VoIPocalypse Now

[Bruce Girard]

 From the World Dialogue on Regulation for Network Economies
www.regulateonline.org

by Amy Mahan    

Pyramid Research, a USA-based consultancy firm, has released a report on 
Portal VoIP services and fixed telco operators, "*VoIPocalypse Now: How 
Google, Skype, and Yahoo! Will Change Fixed Telcos Models*". While 
unable to get a copy of the full US$1490 report, WDR correspondent Amy 
Mahan reviewed the recommendations for fixed telcos in the free report 
excerpt made available by Pyramid.
------------

Francis Ford Coppola's /Apocalypse Now/ brought the pernicious themes of 
Joseph Conrad's /Heart of Darkness/ into a then modern-day but similar 
context of imperialism as a brutally corrupting force and the 
hypocrisies inherent in its justification. The violent madness of Marlon 
Brandon's character, Kurtz, while revealed as being closely linked to 
imperialism is also posited as a relative state of being. Ultimately, 
Coppola's film and Conrad's novella comment on the condition of being 
removed from social infrastructure (the light of civilization) and the 
resulting excesses of unchecked power in the absence of a higher 
authority. Which of course leads us to the issue of fixed line incumbent 
telcos and the need for regulation.

It is apt that Pyramid Research chose to appropriate this imagery for a 
recent intelligence report, *VoIPocalypse Now: How Google, Skype, and 
Yahoo! Will Change Fixed Telcos Models*. Priced at US$1,490, the 
publication is beyond the means of our research resources budget. 
However, the promotional material provides a glimpse into the strategies 
to maintain the empire, at least for now, in face of the "unstoppable 
tide" the new technologies and services that will force fixed telcos to 
rethink their revenue strategies.

The first of five strategies is a commonsense one:

    *Highlight VoIP vulnerabilities*. Compared with PSTN calling, VoIP
    can be considered a less robust medium for voice. Call quality can
    be impeded by other data traffic, calls may have difficulty
    connecting, and in power outages calls will not be possible at all.
    For subscribers, these may be persuasive reasons to retain an old
    fashioned copper wire to the home.

This is an important point for regulators too. Quality of service, 
emergency services, directory assistance, and itemised billing -- these 
are important consumer-related considerations and should be subject to 
regulatory conditions.

    *Cultivate subscriber lethargy*. Tactics can be introduced that
    increase the degree of friction required to switch operators, such
    as impeding number portability, fixed term contractual commitments,
    providing inclusive hardware, and discounting for long-term
    subscribers. At best, such activities temporarily slow churn. At
    worst, they may alienate existing subscribers and deter prospects. 

I can only speculate that the full report also provides strategies for 
couching such tactics in a promotional language: incentives rather than 
friction; stability rather than impeding; etc.

The next point requires no additional comment:

    *Interfere with---or even block---VoIP packets to affect QoS for
    third parties*. Narus, a San Francisco based company, has been at
    the forefront of developing network analysis technology specifically
    designed to monitor and isolate VoIP data packets. The software
    either directly blocks third-party VoIP calls made over operator
    networks, or introduces interference, lowering the overall quality
    of conversations.

    *Such practices are at the mercy of regulatory
    intervention*---should net neutrality be enforced in the US,
    operators would not be able to prioritize operator-owned data over
    third-party data. However, in countries where incumbent operators
    remain closely aligned with the government in power, protection of
    PSTN revenues can be maintained. Operator VoIP in such markets could
    also be priced at a premium, since quality can be guaranteed to be
    better than third-party equivalents. 

Finally, while contentious, at least not an illegal strategy in most 
countries:

    *Lobby for the ability to interfere with/block VoIP packets*. The
    regulatory environment in most developed countries will aim to
    provide a level playing field and competitive environment. Since IP
    technology has altered the rules of the game, allowing new entrants
    to directly compete with established players at a fraction of the
    expense, fixed operators may find regulatory support in proposals
    that would allow preferential treatment for data owned by the
    network operator since they are paying for the underlying network.
    Alternatively, tariffs could be levied for third-party data sent
    over an operator's network. The arguments for and against net
    neutrality warrant extensive examination in their own right, but it
    is certain that VoIP will be one of the core motivating factors for
    both sides of the debate. 

The final sentence in the above paragraph is the most sensible one in 
the promotional download.

There isn't much to add here that isn't already obvious. As Pyramid 
Research itself comments in its promotional brochure, this is an 
unstoppable tide. Underhanded tactics to resist revenue cannibalism may 
save the CEOs of today, but won't build an information economy for 
tomorrow. 

-

The US$1,490 report and free extracts are available from 
http://www.pyramidresearch.com/store/rp_voip.htm

PS - Pyramid Research will host a free Webinar on VOIPocalypse Now: How 
Google, Yahoo, Skype and others plan to dominate telcos at 11:00 EST on 
29 August, 2006. Register at Pyramid's website 
http://www.pyramidresearch.com/
 

-- 

Bruce Girard  |  www.comunica.org
tel: +598 2 410.2979 | mobile: +598 99 189.652
Dr. Pablo de María 1036  |  Montevideo 11200  |  Uruguay