Tom Eisenmann of Harvard Business talks about how to get to the next billion. We need ubiquitous VoIP and thus ubiquitous broadband, he says. Maybe this requires a push from cable because the local carriers (ILEC) will not cannibalize themselves otherwise. He thinks startups alone are not likely to suffice.

He thnks startups alone aren’t enough to get to a billion because their quality of service isn’t good enough. (Tom Evslin says that all calls are going over multiple networks so no one can guaranatee QoS.) Not to mention that the cable companies have the marketing clout.

He thinks that enterprise acceptance of VoIP will create demand for the same features in the residential market. There might be a beneficial race to the bottom.

He presents some facts: 95% of homes are within reach of cable. 64M homes in the US already have cable video service, constituting 62% of the homes within reach. 89% of homes within reach have cable modem service offered to them. Of those, 18% have cable modems. Cable companies are marketng VoIP aggressively. Morgan Stanley predicts 14% of homes within reach of cable will be using VoIP by 2008.

Tom does a case study of Cox cable and concludes that they are providing a service that emulates “normal” phone services, and charge for it accordingly. They handle IP voice as if it were IP traffic. They have “soft switches” but in every way it looks to the customer like plain old circuit switched telephony.

A study shows that people first want reliable access to 911 (74%), always on (69%), accurate and easy bills (63%), and low cost (57%). [Sounds like a market that doesn’t know what’s possible. And if it knew what “low cost” means in a VoIP world — I think it’s $0.03/minute to London from the US with Vonage — “low cost” would probably climb to the top of the list.]

Why aren’t they innovating, I ask. Tom says that it’s because they’ve been an unregulated monopoly and just don’t think that way. Bob Frankston adds that they’re afraid of opening the pipe because it’ll kill their video business. Jeff Paine of Utstar says they just don’t think that way. Besides, he says, VoIP is just a small part of their business.

Three scenarios: 1. ILEC’s go extinct and a patchwork prevails, or municipal broadband steps in, or they are propped up. 2. Dueling duopolists (ILEC Video vs fiber to the neighborhood or satellite). 3. Duopolist Detente (Cable stays out of the voice business and the ILEC stays out of the video business, and we all get locked into monopolies). Tom goes into these possibilities in some depth.

(Tom says RCN is bankrupt. Ulp. They’re my provider. Bob Frankston says that “bankruptcy compost” can be fertile.)

Categories: Uncategorized dw