Another New York Times’ noteworthy piece today — Matt Richtel and Ken Belson have this article on how the low price of VoIP service is putting downward pricing pressure on all telephony providers.
New competitors, including the major cable companies and start-ups like Vonage and SunRocket, are putting intense pressure on traditional phone companies like AT&T and Verizon that have built multibillion-dollar empires by selling phone service over copper wires. On the defensive, AT&T and Verizon are discounting heavily and pushing customers toward packages of more advanced services.
Online services like Skype that offer free calls from computer to computer for users with headsets have attracted the tech-savvy and are trying to push into the mainstream. In the process, they are dragging down everyone else’s prices and pointing the way toward a time when it will be harder and harder for companies to charge anything for a basic home phone line on its own.
Although the article doesn’t take into account Skype’s dual-mode phone, which untethers users from their PCs and is merely a sign of things to come, the piece makes the same point I raised yesterday: it’s hard to see how traditional cable and phone companies can get away with charging $40 or so per month for voice service when dirt-cheap or free VoIP options abound.
Charles A. White, senior vice president of the research firm TNS Telecoms, said that down the road consumers would “spend less and less for voice” and stop paying a separate fee for calls. Instead, he said, they will “just pay for ‘communications services.’ ”
Predictions that VoIP service prices will drop to nothing may be premature, simply because the government levies fees for VoIP providers and customers are always going to want value-adds.
“Voice calls will never be totally free,” said Jeffrey A. Citron, the founder and chairman of Vonage, the largest Internet phone provider with 1.6 million customers. “If you want voice mail, you pay. If you want a phone number, you pay. Suddenly, free is $15.”
Cynthia Brumfield at 10:28 AM|Comments(0)
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