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Summary:

[qi:gigaom_icon_voip] I first started seriously writing about voice delivered over the Internet almost 10 years ago. I’ve written about the meteoric rise and ignominious fall of Vonage, the fabulous sale of Skype, and the deaths of countless wannabe VoIP service providers. Despite the story lines, there […]

[qi:gigaom_icon_voip] I first started seriously writing about voice delivered over the Internet almost 10 years ago. I’ve written about the meteoric rise and ignominious fall of Vonage, the fabulous sale of Skype, and the deaths of countless wannabe VoIP service providers. Despite the story lines, there was one constant in every conversation I had with wildly optimistic VoIP entrepreneurs: Voice will eventually be free.

The voice bits will ride the IP network much like data streams created by Internet applications such as the browser and email. Of course, free is a relative term, but we do seem to have come to a point where voice is nothing but yet another application on the Internet. I think we are getting closer to that vision of the future, thanks to some developments last week:

1. Verizon teamed up with Google and will offer Android OS-powered phones. It will also allow for normal functioning of Google Voice over its networks. Eventually, Google Voice will work over its 3G data channels. (Related report from GigaOM Pro, subcription required: AT&T, Verizon Grudgingly Move Toward Openness)

2. AT&T said it will allow Internet voice services such as Skype to run over its 3G networks, even though it will significantly impact its long-distance revenue.

Both those moves showed that even the descendants of Ma Bell are ready to face the facts: Voice is dead (old-fashioned voice, anyway). Verizon made its decision by starting to sell off its landlines. The company still has over 17 million subscribers of its old-fashioned voice service, but it is a fast-declining base.

Old voice got another hit in its solar plexus today, thanks to Sprint, which has set up a new Partner Interexchange Network (PIN) that is essentially a peering service for VoIP providers.

“Operators are searching for alternatives for how to deliver voice and data traffic,” said Dan Dooley, president of Sprint Wholesale Solutions. “At Sprint, we are seeing greater demand for voice over IP services. As more companies adopt VoIP and migrate away from traditional TDM voice services, there is a definite need for affordable, scalable technologies to securely exchange voice traffic. This is what PIN provides.”

For a long time, VoIP providers have had to use the old-fashioned voice networks as a bridge to other VoIP services — and this costs money. Now, the direct peering of VoIP services means that companies can offer ever cheaper flat-rate voice plans because they can save on settlement costs with the old-style companies. This kind of peering is standard practice for large Internet service providers such as Level 3, Comcast, Cogent and, of course, Google.

Sprint’s new exchange is just a reflection of the new reality. As voice over the Internet becomes more pervasive, we are going see prices plummet but usage increase. As our friend Andy Abramson points out, we are finally entering the era of the voice API, where voice is just a feature of many applications.

This past Friday, Stacey wrote that broadband isn’t just the web, but is our future. And that includes voice and voice-rich applications and services. She put it nicely when she wrote: “Broadband, from the last mile that connects our homes to the long-haul networks that move the traffic around the world, is our voice, our video, our web and our connection to one other.”

This article also appeared on BusinessWeek.com.

  1. @OM,

    It’s refreshing to hear this sentiment repeated. Voice has always held a sort of false prophecy to the large ILEC’s. VoIP adoption has always lagged, not due to technological limitations, but false ideas about revenue streams. Voice hasn’t been a real force of monetization for phone companies since the 80’s.

    I’ve seen hundreds of companies come and go on the promise of VoIP and it’s almost tragic that this technology, which has been around decades, may finally find some mainstream adoption from ILEC’s. Think about how much the price per minute could’ve been reduced if this adoption had happened so very much earlier. And that’s ignoring all the ridiculous amounts of money that’s been poured into maintaining century old infrastructure.

    All I can really say is it’s about time.

    -Josh

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  2. You must be a prophet to have predicted the demise of land lines ten years ago. AT&T and Verizon should have hired you as a consultant although, back then, the corporate blinders might have earned you high fees without any changes in corporate directions. Like Henry Ford said, “you can have any car you want, as long as it’s black.”

    Now that both prophets and wireless carriers realize voice is nothing but data without two tin cans and string, we can concentrate on the more critical issue of lack of wireless spectrum to carry both voice and data. Both the FCC and wireless carriers appear to agree on the scarcity problem, although AT&T and others would probably prefer government “staying out of our business.”

    The carriers will undoubtedly start pointing the finger at Google, Vonage, Skype and others who realize we’re now in the age of IP telephony. It’s encouraging to see Sprint, battered and torn in recent years, step up to the plate and recognize the futility of fighting the future of wireless communications.

    While CTIA members were battling with Genachowski in San Diego, I wrote a blog post called “Carriers and Cable Companies Fight for Wireless Spectrum: Beyond Marconi”:

    http://mobilebeyond.net/carriers-and-cable-companies-fight-for-wireless-spectrum-beyond-marconi/

    Then I challenged readers to pretend they were the Feds and had to choose only one of four worthy broadband Internet projects to fund:

    http://mobilebeyond.net/federal-broadband-funding-for-indian-reservations-clearwire-philadelphia-and-appalachia/

    As we head into the age of wireless, let’s hope sanity rules to serve the common good.

    Brian Prows, MobileBeyond

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  3. I worked on a similar product in 2000. The partner company imploded in the dot com bust. I dont expect this effort to do any better.

    We were trying to avoid the historical problem of congested peering points but that problem has been solved. The best efforts internet (particularly a neutral best efforts internet) is good enough.

    The other argument was that getting everyone to come together a one point would facilitate bilateral arrangements between players. But one thing about the internet is you dont really need to meet physically in one location to join a closed user group. All you really need to do is set up your commercials and set up the connection this can all be done without a third party.

    Good luck to them but I think they have a solution for a problem that doesn’t exist anymore.

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  4. “Long live the New voice!” – Voice is alive and well, you can see that over at @ribbit, @ twilio, @adhearsion, @cloudvox and, of course, @googlevoice!

    P.S.

    Love this:

    “Old voice got another hit in its solar plexus today…”

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  5. Long live the new voice! As I type, we’re hard at work incorporating voice functionality into PBworks collaboration, all thanks to the explosion of new APIs and other services.

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  6. The telcos are realizing that to be the last one hanging on to old revenue models is suicide. Now it’s a race to lure new customers with slick voip apps, open mobile devices and pricey data plans. At least that might be a positive take on what is more probably fear and horror inspired gift-making to the FCC. Sprint, Verizon, etc are faced with the possibility that Genachowski will slap even their mobile networks with net neutrality regulations. A game-changing event the carriers would be heartbroken to see.
    #gigaom_a9q

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  7. Glad to see some optimism on Gigaom.com w.r.t VoIP. I remember a couple of old articles (Jan 2009 and Nov 2008) in which VoIP was declared dead on this very blog!

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  8. In my 17 years (it’s hard to even look at that number) in voice related services, it seems as not a year has gone by without hearing about the demise – or pending demise – of voice in some capacity. In some ways, the predictions have been right, but upon a closer look maybe not so:

    – The death of the PBX: Yes we don’t use this term the way we once did but nearly every business using its functionality. Even those who have moved to the cloud – that is still one very large PBX routing calls. And while Unified Communications are changing the way we buy and implement business services, trunking, routing and end user addressing still sits at the core.

    – The death of Long Distance: And yes LD is greatly something of the past. This is particularly so for early adopters, but I can still find people all over the world crowing about what they saved on their long distance by making their calls another way, or with another company. While its minute stealing and considered boring in these parts – there remain many newer and older businesses alike either growing or maintaining profitable revenue levels through ‘minute stealing’. When I was in the mobile VoIP business it never ceased to amaze me the number of people I could talk to who did not know they could make LD calls on their cell without a second mortgage.

    – The Death of the Land Line: Also a yes that this is happening. The numbers don’t lie. Surely I hear more people considering removing their land line than ever before, even these are still primarily earlier adopters or very young people. But how many products – of any kind out there – are in everyone’s home? This will take time and along the way instigate innovation as companies thirst after the expense line so many are cutting.

    So while it is now nothing more than bits traveling across broadband – no small shift after more than a hundred years of doing it another way – perhaps the term VoIP has done the industry more bad than good. Too quickly it became synonomous for cheaper calls. Just a thought.

    I agree that voice is changing – always – and that it is worth debating its future (thanks, Om) but I don’t view it as a dead or alive issue. More so as a ‘what will it become’ issue and about how companies will monetize this unique ubiquitous offering. Look to companies like Ribbit, Ifbyphone, Ooma, Voxeo, Twilio, now Cloudvox and surely others to show us the way forward.

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  9. I remember talking to you @OM in 1998 about how voice and its infrastructure will change when we started ipVerse (now called Veraz) at that time to add our part in enabling that change. You have been a great supporter of those concepts from that time. However, voice is still alive and well. The voice usage in minutes term is up significantly but the revenues are down for most companies in the voice business and they are struggling at best including startups and established companies.

    One of the reasons for slow uptake is that operators don’t invest in a business that is declining in revenue even if it is inefficient. So expect operators to continue to use their old clunky infrastructure for voice as long as they can while they invest in new data infrastructure.

    What this means is that the voice related products and services which now can ride on data networks will continue to happen around the operators. The value of voice services will not be measured in minutes of use but in what business problems it will solve. Yes, when voice becomes an API to the Web world, lot of magical applications and services will be created besides many we already know.

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