Leonardo asks some good questions in his post today about the number of VoIP providers.
My view has always been that there will be a shakeout.
I feel that Vonage will likely go public or flame out. If they flame out someone will buy the only assets they have, their customers.
Many others of the more than 400 will continue to offer “me too” services. The winners will be the companies that can understand and deliver Value and a Service Creation environment for applications that the consumers and enterprise customers want.
His questions:
– How many of these will be still operational in 1 year ?
Andy says—some will go, some will stay. New companies will come along. There will be consolidation through M&A activities or the vertical and or horizontal integration– Who will be engulfed, and who will be the sharks ?
Andy says—Vonage can go either way. Look for comapnies like Packet8, VoicePulse, BroadVoice, Delta Three, iConnect Here, Broadvox to all have to grow or go. They all have the technology and understand the space. If they can get the capital they can really shine as they are carving out niche’s.
Long term companies like AT&T, Verizon, SBC, QWEST, BellSouth, and the MSO’s in Cable will be big players. So too will be the wireless carriers like Sprint, T-Mobile, Cingular, Nextel and the new generation of carriers called MVNOs like Virgin Mobile. Phone service will become ubiquitous and VoIP enables these companies to help users stay connected.
ISP’s who sell broadband are in an ideal position to buy up companies. Covad has already shown they are in the mindset with the GoBeam acquisition, even if it was a stupid buy for a platform that is easily duplicated and had hardly any users. Still they are learning. Speakeasy is in the space and can become a owner of large customer groups. Earthlink is another player out on the fringe who is already reselling Vonage. AOL is making noise about being a VoIP player, using Level3 technology.
Sprint, Qwest LD and MCI all also can get into the game on the consumer level, but that takes marketing dollars. Right now it’s easier for all of them to sell to the enterprise customers they already have.
Don’t rule out the MLM’s from becoming a near term force. Their account bases will eventually get bought up, but they will generate lots of VoIP users the same way their predecessors created customers for the alternative Long Distance carriers.
– Any chance of interoperability without having to go through the standard PSTN ?
That technology already exists. Skype and Peerio from Popular Telephony, Nimcat also are in this space now. Stealth Communications VPF enables calls to bypass the VPF which is how Popular Telephony will do what they plan to, and already enables Vonage to do what they do to some extent
– Are the Baby Bells more likely to develop their own VoIP divisions, or just acquire smaller companies with some experience ?
I think they in essence the RBOC’s are already have created their own divisions. Clearly both Verizon with VoiceWing and SBC already have shown their fangs in this area, and I think QWEST has been in the space longer than all of the RBOCs.
So far only BellSouth has not showed their intents, but the are also in one of the least penetrated Broadband markets. I think some of the Baby Bells are working with the smaller players like VoicePulse in trials to see what can work best for them, so Leonardo’s question of if the smaller guys will get acquired is dead on. They will. Likely for their technology and understanding of the market, not for their customers.
The cable companies, especially CableVision, have proven that they can take customer away from the RBOCs and once the other MSO’s emulate them with a great platform like CableVision has deployed, they too will pick up customers. This is exactly why AT&T took the forward looking move to work with the cable operators almost from the launch of CallVantage, and why Vonage also started there, but never stayed on that path. I actually think if Vonage was not coming on the heels of @HOME with their offer a few years back that the Cable MSO’s would have been more open to listening. Instead the MSO’s learned that @HOME’s approach was not as good as doing broadband on their own, so they decided then that VoIP, or home alarms, has to be their own business, and they became builders and buyers of technology, not deployers of a turnkey service. Vonage also suffered from having nothing in the middle which would guarantee QoS, something the cable operator would have insisted on.