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Summary:

A new report from ABI Research hits the rather obvious note that customers are loyal to good service, not a particular carrier. As geographic boundaries for telco services erode thanks to unlimited wireless pricing plans and potential femtocell deployments, services and service are key. ABI Research […]

A new report from ABI Research hits the rather obvious note that customers are loyal to good service, not a particular carrier. As geographic boundaries for telco services erode thanks to unlimited wireless pricing plans and potential femtocell deployments, services and service are key. ABI Research Vice President Stuart Carlaw in the report states that:

“[W]ith a very conservative uptake of new innovative services enabled by femtocell solutions, it could take as much as five years before carriers go into the black following the trials on femtocell solutions. It is important to put this into context: nearly 75% of consumers in developments buy the solutions of more than two services. It is apparent that creating services beyond the go-to-market, cheap voice strategy will be crucial. And this will enable marketers to push the femtocell beyond the early adopters.”

It’s just another reminder that while folks out on the bleeding edge may be keen to wirelessly stream data from their laptops to their PCs, and Gen Y and those younger than them are more comfortable texting than talking, for the majority of the people out there paying a telco or cable provider, cheap, quality voice for less is what they want. Build that, and they will come. Keep it working, and they will stay.

By Stacey Higginbotham

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  1. EXACTLY!

    However, when it comes to reporting about VoIP applications, I have noticed a bias against cheap voice on GigaOm and other tech blogs. Tech blog gurus don’t seem to be too enthu about cheap voice in the VoIP arena. Any idea why?

    As an average consumer, I know that cheap voice calls are the biggest draw towards VoIP for many people.

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  2. “while folks out on the bleeding edge may be keen to wirelessly stream data from their laptops to their PCs, and Gen Y and those younger than them are more comfortable texting than talking, for the majority of the people out there paying a telco or cable provider, cheap, quality voice for less is what they want”.

    I’ll differ here since I don’t believe its what they “WANT”. I think its more of what they “GET”.

    Telcos make their money on voice and as that slowly (I think that’s going to increase) goes away what will remain?, a market thirsty for something other than plain OLD telephone service.

    But Libran Lover hit it on the head when he said, “As an average customer, I know that cheap voice calls are the biggest draw towards VoIP for many people”. How sad is that? After all these years, VoIP is synonymous with cheap voice.

    VoIP is so much more than that and when telcos start showing its strength to “average consumers”, it will be a whole new ball game.

    5tacos

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  3. Femtocells do nothing to blur geographic boundaries, as they require the operator be licensed for the region in which they are deployed. Or are you lumping unlicensed FMC technologies like UMA into the femtocell basket?

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  4. [...] new report from ABI Research hits the rather obvious note that customers are loyal to good service, not a particular carrier. As [...]

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  5. “cheap, quality voice for less is what they want. Build that, and they will come. Keep it working, and they will stay.”

    That’s true, but what makes things interesting is when there is more than one option for quality voice. We have 4 carriers now offering nationwide calling, all with basically the same level of call quality. Combine that with voice prices bottoming out, and the focus switches to the extras and features.

    So what features will it take to get someone to defect? We saw one answer a year ago: a sexy handset. 40 percent of iPhone buyers were new to AT&T, presumably coming from another carrier. (More here: http://www.shaiberger.com/?p=52).

    Finding such features, and bringing them to market first, is what will determine who wins and loses among the carriers. (And if you have such a feature to sell to them, you’re in good shape!)

    Jesse – How do you get your picture to appear next to your comment? I’m tired of being blue silhouette man.

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  6. @Shia – sexy handset is not going to draw defections in other markets; it only worked in US because we live in the stone age of handset development.

    @Libran Lover – VOIP applications is a theme of last decade. Most carriers are now already blasting IP traffic over SIP front end. Voice calls are already cheap nowadays and carriers are milking money on the roaming charges.

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  7. i believe there is more than ‘cheap voice calls’ to attract customers. but it is not what is being offered; and it is not features. there are three things that consumers want when it comes to telecoms.

    1. cheap(this is number 1 – a monster. no getting around it)

    2. quality voice – i don’t think many people will pay extra for quality or think much about the issue when shopping for service. but having above average quality will help retain your customers and in there long run give you a competitive advantage against other services. so quality without a price premium will defiantly help build a VOIP company.

    3. customer service – this is the biggest complaint with nearly all the alternative phone services. just take a look at support forums of skype, gizmo, etc. again like in number 2 you can not charge anything extra for having great customer service but it will help retain and build customer base.

    very few consumers have any interest the the extra features or gimmicks. particularly on a VOIP line. a cell phone they may want spruce up a bit with some features. but the VOIP or landline is about cheap calls.

    another thing if you are offering a landline replacement service; everything should work as closely to the way the landline did as possible. most consumers do not want any reminder that anything as changed. remember most will have been skeptical about changing but did it for a single reason. that reason was to save money and absolutely nothing else; they do not want any reminder of that decision with the exception of the lower bill each month.

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  8. Telecom companies have infantilized the consumer market for decades. The entire market has been conditioned to respond to cost (which is largely arbitrary, and trending toward zero) and to quality (which is bullshit — they’re all governed by the same laws of physics). The result is actually a downward trend in quality caused by Last Mile gymnastics and decreased quality of customer service (caused by cost-cutting at the incumbents). Considering the fact that we now all have wireless and broadband, the average telecom spend per household has actually increased substantially since the 1990s.

    Businesses will and should pay extra for higher-quality voice. Specifically, things like full-duplex audio and wideband CODECs would be hugely beneficial for conference calling, for example. Skype does some of this.

    Of course the major delimiter is the PSTN, which is a ghetto. Until the march to shift switching to software from digitally-controlled hardware facilities approaches near ubiquity, you can expect no substantial change in the technologies, price points, or product offerings.

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