Lights Out for Phone Networks

Doug Mohney — Wed, 25 Jun 2008 13:37:33 -0400

SIP VoIP devices already account for as much as 20 percent of landline phone traffic, with mobile networks soon to embrace VoIP as Fring and Truphone offer options to traditional voice plans, says Daniel Beringer over at GigaOm. It's only a matter of time before SIP makes the analog network go away.

Pile on SIP clients for consumer handheld devices (Games like the Nintendo DS or players like the iPod Touch), gizmos like magicJack, and free calls for subscribers on services like Skype, Vonage, Jajah or Jaxtr and it's only a matter of time before a majority of callers stay "on net" rather than gatewaying out to the PSTN.

Of course, there's the not-so-minor matter of how all the "free" services pick up extra revenue by connecting calls from the PSTN to their clients. A 20 percent VoIP penetration implies that called and calling parties have VoIP devices about 4 percent of the time, leaving plenty of work (right now) for the legacy phone network. Down the road, the penetration of VoIP devices will cross a line where the traditional minutes-based business model of telco and VoIP players alike just doesn't work.

The legacy network has its uses, with reliability giving the POTS an edge over the Internet for sales calls and other "high-value" communications. (This reporter wonders if Berenger thinks telemarketers calling during dinner represents high value). Beyond that, there's a dive into the Brave New World of better devices, cheaper rates, and a train-wreck at some point when the by-the-minute model declines and revenues from arbitrage goes away.

For more
- GigaOm Sees The End of Telephony

Related articles:
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VoIP peering shapes up to disrupt
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Lights Out for Phone Networks