Thursday, May 12

VoIP - it is happening!

Two or three recent stories have led me to write this post. There was no doubt in my mind that VoIP is the "killer app" for broadband access. In January, Standard & Poors declared "cable operators call on internet phones for growth" and went on to say VoIP is fuelling growth in broadband customers. A new report (May 10) on VoIP Spending and Trends by eMarketer says "More telephone services are being offered over the Internet through VoIP (Voice Over Internet protocol) and its steady growth this year will see a spillover into mainstream US residential households and businesses by 2006". I personally use Vonage as my VoIP service provider. Privately held Vonage recently announced that it raised 200 Million in funding led by Bain capital. But what happens to the service providers may still not be as clear. While Vonage has run up to the top with more cash (maybe cash is a means to show its credible), there are over 1100 different VoIP service providers. Then there are the RBOCs who are as of yet watching from the sidelines. From this murky picture, two certainties arise:

  1. VoIP equipment manufacturers will win - specially the leaders. And the leader today is none other than Cisco. Cisco reported earnings on May 10 and whats important to note is that "the IP telephony group "blew past" the $1 billion run rate, joining security in the billion-dollar club" according to CEO Chambers.
  2. VoIP bandwidth providers will win. The bandwidth providers are the backbone for VoIP service providers, their data networks and fiber pipes carry the packetized VoIP data from a subscriber to the service provider. Mind you, that it is not just data, but it is a VoIP call. Level 3 is among the foremost in this intelligent voice bandwidth provisioning with many products at different entry levels geared towards VoIP service providers. More importantly, Level 3 already has its network built out (since they got such a head start thanks to the prescient CEO Jim Crowe).

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