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Berninger: Twilight for Telephone Networks

1896 Telephone, hand crank on right (Sweden)

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In Telerupted: Twilight for Telephone Networks, Daniel Berninger projects that at some point VoIP networks will connect more individuals than the PSTN, and then asks what might happen to current minutes based VoIP businesses. These businesses depend on charging for access to the VoIP network via the PSTN or vice versa.  Moreover, the artificial constraints that this dependency imposes are real and substantial.  Daniel writes:

Companies that depend on the telephone network inherit of a range of artificial constraints. VoIP devices connected via the telephone network lose the prospect of delivering high-quality audio. Traditional telephones do not support the use of domain names for routing or hyperlinking. Global flat-rate termination that serves as a driving force for applications of the Internet get sacrificed. Embracing the telephone network postpones the search for new forms of communication.

We live in interesting times in the telecom industry.  Recently, I saw a presentation from a VoIP telco showing a great growth curve for a number of quarters followed by a flat period. After multiple quarters it suggested that in some markets mere POTS replacement has reached the point of saturation.  Now this service provider, like the incumbents, is out looking for value added services to add to its portfolio.

Disruptive pricing can only disrupt for so long, it seems.  At some point, that advantage can be erased, returning the basis of competition to service, products and features.

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{ 1 comment… add one }

  • Frank Miller June 26, 2008, 12:12 pm

    Interesting. I've wondered the same thing over time. However, I keep coming up with two words that make me think this might take a lot longer, quality and reliability. The inherently unreliable nature of IP is the Achilles heel of VoIP. And I'm starting to wonder whether its what is generally referred to as a physics problem, i.e. one that you may not be able to overcome. No carrier will hang their hat on VoIP until this can be solved. And there's really only two ways to do it, buffer or manage bandwidth end-to-end. Buffering has limits due to the added delays introduced. It can't solve the problem by itself. Managed bandwidth looks a lot like the current phone system, so why should they go away from it? Features can be done in either network and the 64K channel has not proven to be enough of a limitation as yet. I just see this taking a lot longer than anyone I've ever heard speak about it predicts…

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