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July 28, 2004
2004: The Year of Best Efforts Telephony
While stories of new consumer VoIP service offerings continue to capture news around the world, I’ve started to wonder what the medium to long term effects of consumer perceptions will be to the brands of “traditional” telcos for introducing “Best Efforts” telephony services.
While the experience a US consumer has had with their mobile phone may have helped lower expectations for “quality of service”, when it comes to voice over broadband services, what is the quality expected? What quality needs to be delivered? Will the advent of the availability of broadband voice services from an incumbent provider of voice services effect their “traditional” branding of other phone services? Do consumers want or care about having different levels of service associated with their phone service? In 2004 is price alone the only differentiator or are there other drivers/variables?
One thing is for certain; this isn’t your father’s PSTN.
For years at our Voice on the Net (“VON”) events people have been talking about qualify of service and the “five nines” of reliability associated with the traditional public switched telephone network (“PSTN”). While five nines are expected on the PSTN, I expect over time we will see the ability to easily deliver at least four nines of reliability using the public internet. Even Free World Dialup can deliver three nines.
With the advent of IP based communications, it has been possible for service providers to deliver best effort communication services, including “voice” services without having to also own the underlying network infrastructure. In this model, it is assumed that the customer/consumer will purchase their broadband access on their own. This is a radical departure of the past for incumbent service providers.
The list of incumbent mainstream “broadband parasites” which have been taking advantage of this new technology platform has been steadily growing during the past twelve months and will continue to grow around the world for the foreseeable future.
While I haven’t heard of many incumbent service providers positioning their VoIP offerings as a secondary phone service or as a true “best efforts” brand when marketing to consumers, maybe they should. When delivered over the public internet, voice over broadband services are by my definitions “best effort” services.
The incremental costs for hands-on customer support needs to be factored in when creating the budgets for the roll-out strategy. Just because the technology is widely available to enable voice over broadband doesn’t mean that the need for customer hand-holding has gone away. Some communication service providers will end up getting blindsided by their underestimation of the costs for customer support / customer service for their new broadband based VoIP services. These days delivering standards-based real-time communication services into the homes of broadband consumers still remains a major challenge.
One area where the cable industry may have a strategic advantage over incumbents is when they offer VoIP services to their respective cable customers. In theory, the cable operator can offer quality of service over their backbone and can maintain that quality on an end-to-end basis. It will be interesting to observe how much this theory holds true in practice. ;-)
Posted by jeff on July 28, 2004 12:37 AM | Permalink
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