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SunRocket Closes: Is the Internet Telephony Business Model Flawed?
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msg:3398305
 4:52 pm on Jul 18, 2007 (gmt 0)

Does the abrupt demise of SunRocket spell trouble for Vonage and other VoIP players?

SunRocket, which launched service in late 2004, shut down on July 16 without warning its 200,000 or so customers—marking the first failure of a prominent Internet phone company in a business that was already looking shaky. While the technology behind Web calling, known as Voice over Internet Protocol, or VoIP, continues to thrive and reshape the telecommunications industry, SunRocket's crash adds doubt to the question of whether a business can survive by VoIP alone.

VoIP Provider Closes: Is the VoIP Business Model Flawed? [businessweek.com]

 

LifeinAsia




msg:3398329
 5:08 pm on Jul 18, 2007 (gmt 0)

Another advantange the cable companies have is tech support. If you use different companies for cable and VoIP, the user can have both companies pointing at the other when there are problems and having to bounce back and forth between techs at both companies before someone actually tries to fix the problem. With one company providing both services, it's easier to call one tech support and say you don't care if it's your cable or your VoIP service that's broken, just fix it.

kaled




msg:3398617
 10:28 pm on Jul 18, 2007 (gmt 0)

I've always considered VOIP to be dubious as a business. In any case, if net neutrality dies, you can be bet VOIP dies with it.

Kaled.

mole




msg:3398654
 11:27 pm on Jul 18, 2007 (gmt 0)

well, the business model as used by SunRocket was obviously flawed. But it isn't necessarily the VoIP bit that's the problem - it's the Least Cost Routing that's going on behind the scenes that can cause problems (financial ones, that is).

Have a look, for example at the failure of RSL in Europe - a telecomms company who started up looking like they had everything going for them, then fell flat on their face shortly after the turn of the millennium. And that was basic telephony without the added commercial pressures of VoIP.

Kurgano




msg:3398810
 7:18 am on Jul 19, 2007 (gmt 0)

It may have been a good time to get out with Grand Central on its way. United Online isn't hyping their VoIP as much as they did recently and United shut down photosite right after the photobucket aquisition too.

Are big players getting out of the way or just positioning themselves for a handsome buyout? Time will tell.

lammert




msg:3399841
 10:00 am on Jul 20, 2007 (gmt 0)

In the Netherlands VoIP is gaining ground, mainly because the main telephone company is changing its basic model "telephone line with internet as add-on" to a new model "ADSL only with VoIP as additional service".

The telephone company decided that telephony as a seperate service will die around 2010 and that broadband internet access with many low-cost services on top of it (VoIP, Internet TV, etc) is the way to go. Quite an interesting step to take for a company which has been in telephone since 1881.

VoIP which was special a few years ago is rapidly changing to a normal internet service like email or webbrowsing. With this situation where VoIP is just a low cost service, it is very difficult for VoIP-only providers to stay in the market. Therefore I expect more specialized VoIP providers to leave the market and see their place taken by broadband providers (ADSL or cable based) who offer VoIP in their standard package.

trillianjedi




msg:3399852
 10:15 am on Jul 20, 2007 (gmt 0)

People seem to forget that voice is just an application, and one of many that can be used on a network infrastructure. And VoIP is just a technology. VoIP will never die, it's the future. BT are moving to a 100% VoIP network by 2010. It's just a technology for the transmission of voice.

As a commodity, voice is heading rapidly to zero (the per-minute charging model will not exist in a few years time). So competing against per-minute pricing is a waste of time.

The way that companies will make money in this space is by the delivery of applications over networks, including, but not just, voice. Voice itself and on its own is no longer a money generator.

Innovation will shine through and generate profits, but bad business models (making money from per minute charges) will consistently fail. You need to deliver a suite of applications for a monthly subscription fee (triple play - voice, TV and internet). The so called "pure-voice" model is a flawed business model. You can't compete with free.

If there was a way to short-sell private company stock I'd be betting against 90% of the current "players" with VC funding.

In the Netherlands VoIP is gaining ground

And in Norway, where Telio have something like 15% market share, but they also have naked-DSL which makes it possible to survive. Some stats:-

[telegeography.com:80...]

There are niche areas where it's possible to make money. Hosted PBX provisioning for businesses for example, with high grade Quality of Service routers and other infrastructure which gives high quality connectivity. Businesses will pay a premium fee for quality. Consumers will not.

TJ

kaled




msg:3399961
 1:52 pm on Jul 20, 2007 (gmt 0)

BT are moving to a 100% VoIP network by 2010.

What's your source for this? What's your definition of 100%? What's your definition of VoIP?

Kaled.

trillianjedi




msg:3399969
 2:02 pm on Jul 20, 2007 (gmt 0)

What's your source for this?

Dave Axom, British Telecom (a friend of mine) - responsible for the development of 21CN. More info on this at BT's website:-

These plans - which aim to substantially complete the national 21CN rollout by the end of the decade

[btplc.com...]

The current plan, which Dave spoke to me about last week, is to have the full roll-out complete by November 2010.

What's your definition of 100%?

The standard definition - 100%. All of it. Nothing left at all that isn't based on IP. Right down to and including last mile copper. Yes, with BT this will mean we will all have to change our phones (and BT started rolling these out 3 months ago), or get an ATA (Analogue Telephone Adaptor).

What's your definition of VoIP?

VoIP stands for Voice over IP. In telecoms terms this means not POTS (which is still partly analogue) but an IP network.

Many people confuse VoIP with "internet telephony" which are two different things, but both utilising the same technology. VoIP just means "voice on an IP network". That IP network may or may not be the internet. You and I could have two VoIP phones and a standard CAT V switch, plug them in and talk to each other on our own LAN. That's VoIP technology. I've edited Neils title to reflect that. In the case of 21CN, it's a private network - VoIP, but not internet telephony.

As per my post above, VoIP is just a technology. It's not a brand or service or business model. It's just voice on an IP network.

VoIP is the future. It makes every sense for telecoms infrastructure to be all IP both for services and network costs. Contrast 1 call per twisted pair copper on POTS to 1,000 simultaneous calls per twisted pair copper with VoIP.

It's a no-brainer.

Is "internet telephony" in trouble? For the pure-voice players, yes. There will shortly be no value add. At the moment the value add for the likes of SunRocket and Vonage was (and is) cheap calls. That has to move to a multi-service model or it's doomed, for the reasons that SunRocket have experienced.

kaled




msg:3400241
 6:26 pm on Jul 20, 2007 (gmt 0)

Many people confuse VoIP with "internet telephony" which are two different things, but both utilising the same technology. VoIP just means "voice on an IP network". That IP network may or may not be the internet.

If the data medium is not the internet, it isn't relevant. It doesn't matter what technology the telcos use, be it IP or not, if it isn't part of a public network, who cares.

When I asked what is your definition of 100%, I meant, for instance, will I need to buy a digital phone. If my old analog phone still plugs into an analog line that runs all the way to the exchange, the network isn't 100% IP - not in my book anyway. If every analog phone line gets a permanent IP address, I suppose that's nearly 100%, but if those IP addresses are not publicly addressable, the technology is still irrelevant.

If we all had IP phones then that might qualify as 100% and that would be relevant, esp if those IP phones acted as broadband modems too. However, I haven't heard of this happening.

Kaled.

trillianjedi




msg:3400313
 7:58 pm on Jul 20, 2007 (gmt 0)

if it isn't part of a public network, who cares.

It's a public network, complete with an API and developers platform. In the UK we're regulated by Ofcom and there are statutory requirements in place for it not to be a walled garden. Everyone can play.

When I asked what is your definition of 100%, I meant, for instance, will I need to buy a digital phone.

Yes, you will. The network will be 100% IP based - including last mile to the home.

esp if those IP phones acted as broadband modems too.

They do. I had a demo of these over at BT's head office last week. Completely plug and play too - they've adapated what happens at the DSLAM end to eradicate requirements for usernames and passwords. You get a xDSL/Voice account, plug in the unit and switch it on. Job done, internet and phone get activated within 60 seconds and self-configure.

TJ

lammert




msg:3400386
 9:35 pm on Jul 20, 2007 (gmt 0)

esp if those IP phones acted as broadband modems too.

Does a broadband modem acting as IP phone count? I was yesterday officially transferred by the telephone company from my POTS line to an xDSL-only connection where my analogue phones now directly plug in my router. The local number I had was ported to the VoIP account and I can reassign the VoIP connection to any IP I have access to.

kaled




msg:3400755
 10:08 am on Jul 21, 2007 (gmt 0)

Where does the power come from?

If we must all switch to IP phones (or phones that plug into IP boxes) does the IP box have to be powered up permanently? If yes, does the exchange provide the power or does the customer provide the power? If the customer has to provide the power, there are safety implications - either battery backup is required or landlines will no longer be as effective in emergencies.

Does BT have any plans to go optical (from the exchange to the customer)?

Kaled.

trillianjedi




msg:3400772
 10:40 am on Jul 21, 2007 (gmt 0)

Where does the power come from?

Good question - I suspect down the same copper as normal for regular phones, but I don't actually know. For DECT phones the legislation is different (if you have a DECT and have a power cut, you can't make calls anyway, 999 or otherwise, as the base station unit goes dead). The BT devices in BETA that I've seen are DECT.

If we must all switch to IP phones (or phones that plug into IP boxes) does the IP box have to be powered up permanently?

Ofcom, BT, the police and a bunch of service providers are in consultation currently regarding emergency services issues and 999 dialling. No conclusions have been drawn yet, but there will be some statutory requirements set up.

Does BT have any plans to go optical (from the exchange to the customer)?

Not as far as I know, but I think that's inevitable eventually. That's a big cabling job though ;)

Does a broadband modem acting as IP phone count?

That's "internet telephony", and that comes with additional complexities for the ITSP's in terms of compliance with 999 regulations. Geographic information becomes important because internet telephony is nomadic - you could theoretically take a VoIP phone with you to a different location (different country even), log it in to your account and dial 999. The "registered address" for the phone is not the place from where you placed that emergency call.

At the moment what happens is the 999 operators get a qualified location flag - which basically says "caller is registered at <address> but is on an internet device and information may not be reliable".

There are plans afoot for a highly complex infrastructure enabling internet service providers to upload IP information to a central database controlled by the authorities. There is a draft spec flying around for this, but it's very much in flux.

You'll find more information on this at Ofcoms website:-

[ofcom.org.uk...]

Ofcom refer to "internet telephony" as "voice over broadband" (VoB).

lammert




msg:3401231
 10:08 am on Jul 22, 2007 (gmt 0)

If the customer has to provide the power, there are safety implications

It was actually the main thing I considered before I made the decision to switch from POTS to Internet telephony. It could be a problem if a short circuit causes a fire in my house, and at the same time that short circuit blows your fuses and the telephone stops working. (Hopefully the fuses blow to cut-off the source of the fire)

But for my situation I decided that even in such an emergency situation there is still a backup communication device, i.e. my mobile telephone.

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