The Goldman Sachs Communacopia conference continued with the theme of free VoIP during the discussion with SBC’s COO Randall Stephenson today. Not surprisingly, Stephenson scoffed at Rupert Murdoch’s notion that voice will be free within three years, but added an interesting twist.
“This seems to come up every so often…we always look at this, we’re kind of old-fashioned network telephone types. The reality is that there is a lot of cost behind providing these services,” he said. “As long as there is a cost attached to it [the connection into the home], free is just illogical to me.”
The twist: if broadband providers can’t make up for network costs by selling voice service as a separate offering, they’ll just recoup their costs by raising the price of the broadband connection. “At the end of the day, we’re going to charge for that connection into the home.”
More noteworthy news from Stephenson:
— IPTV deployments are on track. The company is in the middle of a phase 3 trial of its IPTV service, known as Project Lightspeed, in San Antonio, and expects to launch a market trial in December. If all goes well, “scale” deployments will begin in May or June 2006.
—Everything is working well with IPTV but the silicon and integration. The network is delivering the needed speeds, the encryption is working and powering issues are resolved. Stephenson almost, but not quite, disputed the idea that Microsoft’s TV platform is the key bug slowing down SBC’s Project Lightspeed, as has been widely rumored. He said, when pressed, that “Microsoft is not the long pole in the tent…the long pole is the integration exercise.”
—SBC’s new deal with Dish Network requires that Dish Network pick up the customer acquisition costs. Despite this affirmation that the integrated SBC-Dish video service offering is a real dog, SBC and Dish plan to step up efforts by rolling out an integrated TV-DSL-VoIP box and marketing it in territories where the company’s IPTV service isn’t available.
Cynthia Brumfield at 11:51 AM|Comments(1)
Brave words from Randall Stephenson. The reality is the cost to provide VoIP services over existing Internet connections is very very low. Look at Skype. There is an opportunity to charge for value added VoIP services, but even here the cost to provide these services is very low.
The problem for the ILECs is they have a gold plated cost structure compared to new VoIP competitors. For a comparison look at the airline industry. The old-line airline carriers cost structures and business models are being murdered by new entrants like Jet Blue and Southwest with much lower cost structures. Raising the price of Internet broadband when VoIP requires only 32Kbps will not save the ILECs. It will only spur the municipal broadband movement.
Posted by: Mike Bookey at September 22, 2005 5:59 PM
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