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Telecom future to look a lot like the past - study

Lumbering dinos hold all the VoIP chips

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A study by Mercer Consulting brings depressing news to readers who hope that Internet technology will help overthrow the telecommunication industry's dinosaurs. The idea is that by using the same broadband pipes that people use for the Internet to carry voice calls, people will by-pass these vested interests, who have grown fat from captive markets. That's the premise behind Skype and Vonage, which offer telephony on top of a DSL or Cable data connection. But faced with a choice between VoIP offerings from established names or start-ups, consumers will be more inclined to go with the devil they know, according to the report which interviewed over 1,000 punters.

Mercer reckons that VoIP entrants could capture as much as 30 per cent of the residential voice market - which isn't bad at all. But the techno-utopian fantasies of replacing the incumbents' PSTN (public switched telephone network) infrastructure with a home-built people's network are wildly misplaced.

Right now, VoIP appeals to tightwads and bloggers says Mercer Consulting, although it phrases it a little differently, diplomatically referring to "highly price-sensitive consumers and technology geeks." Only these two groups are prepared to put up with lower sound quality and reliability right now.

The upstarts need to improve their quality and reliability to match the PSTN before much of the public can trust them, according to the report. And the incumbents can leverage their existing relationships with millions of customers much more easily. They've already got them where they want them. Much of the debate has concentrated on freeing up the regulatory structure which favors these Baby Bells: who set the fees for access to the local loop and make it hard for people to keep the same telephone number when switching providers. But Mercer reminds the upstarts that they simply have to get better at delivering their primary service: phone calls. Don't get carried away with gee-whizz features, they warn, reminding us of Interactive TV, and stick to the basics.

You say you want a revolution...

But VoIP can hardly be blamed for being overloaded with so much hype. The promise that the technology makes plays into two of our most important myths.

One is the idea of business as a meritocracy in which the smart beat the stupid. Who doesn't want a plucky, clever David to beat the stupid and slow Goliath? The idea taps into the belief that the marketplace is the primary emblem of social renewal.

The other myth is that technology changes society, rather than the other way around, which Linus Torvalds likes to points out. It's not a binary choice, of course, but a dynamic, but Linus is surely nearer the truth. For example, will consumers change the shape of VoIP offerings or will VoIP force consumers into new habits and rationalizations? That's already been answered. People want to make phone calls and will make a rational choice about the best deal. For this to happen, VoIP providers will have to make something that looks, walks and quacks like a reliable phone service. For most ordinary people, being told thatvit's "revolutionary" or "emergent" doesn't hold much sway.

Perhaps if we looked elsewhere for our revolutions and renewal, technology evangelists couldn't make such silly claims in the first place. They could try, but they'd be laughed out of town. Aren't there more important things that need fixing? ®

Related stories

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VoIP to transform telecoms market
Corporate VoIP to challenge Skype
Broke telcos doing everything they can - Qwest exec
VoIP set to generate megabucks
VoIP will be US broadband killer app
US Internet homes aware of VoIP and want it now
VoiP lobby wins first US legal victory
Skype: putting the hype in VoIP
Skype won t make it, says WSJ columnist
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