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Summary:

No its not me who is saying this, but instead it is officials from Level 3, a company that has bet big on VoIP and is hoping for wholesale VoIP to rescue it from the low-margin life of a bandwidth wholesaler. Charles Meyers, group vice president […]

No its not me who is saying this, but instead it is officials from Level 3, a company that has bet big on VoIP and is hoping for wholesale VoIP to rescue it from the low-margin life of a bandwidth wholesaler. Charles Meyers, group vice president of marketing for Level 3 said that the early adopter market is saturated, and perhaps that is why the market is growing much slower than expected.

Numbers back him up – In July, Frost & Sullivan lowered their VoIP forecast from $5.4 billion market in 2008 to being a $4.1 billion market in 2010. Meyers pointed out that – less than 1% of total voice revenue comes from VoIP, and less than 3% of U.S. households have switched. “And the next 97 [percent] will be a lot harder than the first 3.”

“People view VoIP as a cheap alternative, and that’s not how we get to the early majority and the mainstream …. This industry has to substantially increase its marketing sophistication, beyond focusing myopically on price.

I could not have said it better, and time and again, I have brought this point up. I think many get swayed by the “early adopter” market place, and start believing that change will happen overnight. Most of us, who don’t study history, forget that revolutions take “years.” VoIP is precisely that. I think from a consumer perspective, VoIP or PSTN, it doesn’t matter. What matters is that their phone works. Vonage, Sun Rocket, Call Vantage and others have yet to prove that they are bullet proof.

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  1. Interesting news, Om. I’ve only just started really testing out a VOIP solution (vbuzzer) and some hardware (a Sipura Ethernet/phone interface box) and while I found the hardware configuration really insanely complex, once it was configured, I’d have to say that this VOIP solution is splendid. In the last 72 hours I’ve tested the system with long calls from my Colorado office to Toronto, Canada, Los Angeles, California and Gold Beach, Australia, and each time the connection was clear, glitch-free and remarkably high-quality. Not ready for prime time? Quite the opposite: I’m already getting family members asking exactly how I have $0.01/min to Europe and free North American calling…

    I believe that the challenge that Vonage and similar companies have is in making a true plug-and-play solution and then seeding their package – and it must include a traditional phone, or at least a standard phone jack on a hardware device – to the opinion makers in key demographic segments.

    I’ve been blogging some of my experiences too, if people are interested in more specifics of my configuration: http://www.intuitive.com/blog/

  2. Dave,

    Obviously you haven’t tried Vonage. They ship equipment that is already configured and setup is a breeze- about 10 minutes.

  3. David in Charlotte Monday, September 26, 2005

    I’ve used VoicePulse successfully for 5 months now. Remarkably good service. I took the adapter out of the box, plugged it in, and it worked. Very few problems, and the customer service people really follow up. Only $14.99 per month – all taxes included! I’ve used it for faxes, etc. I’ve disconnected the regular phone company and transferred my old number over. I’m extremely pleased!

  4. The point is not ease of use, it’s reliability. I used Vonage for nearly a year and had mostly reliable service.

    Unfortunately, mostly reliable isn’t good enough in the voice business where the ILECs, for all of their faults, provide a nearly bulletproof solution. Vonage et. al. not only have their own outages to worry about, but also any glitches in the broadband connections that they rely upon to get into your home.

    When your spouse is unable to call her family exactly when she wants to on several occasions, the argument that “it usually works” will eventually lose. Despite the added cost, I was forced to drop the VoIP and go back to standard wireline for most calls. (http://www.wilkinsons.com/Bananna/2005/09/goodbye-vonage.html)

    Although I do still like to use Skype when traveling. (http://www.wilkinsons.com/Bananna/2005/07/vonage-vs-skype-in-blogoshpere.html)

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