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VoIP will be US broadband killer app

Without FCC intervention, that is

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Voice over IP is the killer app for broadband, according to a report just released from home networks research house, Parks Associates.

The white paper, entitled "VoIP: At Last a Killer App?", says that if regulations stay the same, then consumers switching to a broadband line and VoIP - and throwing away their dial-up and conventional phone - will actually be saving money each month.

The savings are small: $8 a month per US family, based on current charges. The report notes, however, that the wrong type of intervention by the FCC could kill of this tiny advantage and crush the nascent industry. It also points out that a family that uses the VoIP phone as an extra phone would be paying $30 a month more, so it needs to be a leap to VoIP-only households to save money.

Parks says that this could finally kill off resistance to going broadband in US households. "Among narrowband households not interested in broadband, almost 60 per cent cite price as the main deterrent," said Parks analyst John Barrett. "VoIP changes that equation by offering an overall net savings if you upgrade to broadband."

"Eight dollars is not a tremendous margin," Barrett adds. "If regulatory changes cause the cost of VoIP to increase by just a few dollars per month, the incentive to switch disappears. Most people will not go to the trouble."

These calculations have been done using VoIP offerings from US telcos. If you did the calculations with the free VoIP services from rogue P2P companies such as Skype, the incentive is even greater, because calls are free.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here

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