VoIP Providers Doing Their Best To Get Your Money - part 1
by Rick Hendershot
by Rick Hendershot, Linknet Business News - Jan 6, 2006
We've seen this happen before. A new technology promises cheaper and better service. But when consumers try to take advantage of it, the new "cheaper", "better" service ends up being a degraded level of the same old thing, and usually for more money when all is said and done.
Think cell phones. Think internet connections.
The problem with cheap new technologies is that they don't provide sufficient profit to be developed at a mass level. That's why telcos and cable companies dragged their feet for years before getting serious about broadband internet. Do you remember when 128k connections cost $300 a month? Why give people ten times as much capacity for much less money?
Which brings us to VoIP. There appears to be no incentive at all for the major telco and cable carriers to get into this business yet. Until they find a way to leverage their infrastructures for their own profit in the VoIP business, you can expect them to throw up obstacles. Like tollgate fees. The idea of charging companies like Vonage and Skype for use of the "free" IP network has been floated, and is not likely to go away any time soon.
Fracturing of the VoIP market
That leaves companies like Vonage, Skype, and Microsoft to compete at the consumer end of things. They are fighting over who will get the most customers. Just like the cell phone companies, they are using specialized hardware and added services to differentiate themselves from the others.
You can expect they will all be taking a page from the cell phone marketing book. Offer cut rate (or free) hardware to get customers signed up to a long term contract. But the catch is, the hardware will only work with one system. That way customers will not jump ship without thinking twice about investing more money in new hardware.
The strategy was apparent at this year's Consumer Electronics Show in Las Vegas. Each of the major players unveiled new gadgets that only work with their system: a special Wi-Fi phone for Vonage, speakerphones and USB handsets for Skype, and handsets from Uniden and Philips that only work with Windows Live Messenger.
The dilemma is that the major players in the VoIP business need to generate cash. They hope to do that by tying up lots of customers with exclusive hardware that is not compatible with their competitors. But the risk is they will alienate a lot of the same consumers they are trying to convert.
Will new handsets make Microsoft a VoIP player?
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VoIP Providers Doing Their Best To Get Your Money
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