Verizon Finally Realizes That This VoIP Stuff Is Important

Predictions

from the price-war-time dept

The telcos, for somewhat obvious reasons, have been pretty slow to embrace VoIP. It’s a direct competitor to their cash cow landline business — and no matter how much they realize it’s eating away at their core, it’s tough for them to cannibalize their own products. Even if some people agree, it’s always likely to meet some internal political resistance. That’s why, when Verizon first launched VoIP a couple years ago, they made sure it was noticeably more expensive than other VoIP providers and just a bit below their existing landline service. That’s how you pretend you’re recognizing the future, without actually embracing it. Not surprisingly, people couldn’t figure out why they’d want Verizon VoIP at $40/month when Vonage and others were charging around $25 for the same thing, so eventually Verizon lowered the price to slightly more competitive rates. However, again, when you’re cannibalizing your own cash cow, tiptoeing into the waters generally means no one will pay attention to you, and you’ll still lose business to the new upstarts. Not surprisingly, that’s exactly what happened. Verizon got all of about 50,000 VoIP subscribers, while losing an astounding 3 million landline subscribers. At some point, a company has to wake up and realize the strategy isn’t working. It looks like today is the day for Verizon. They’ve cut the price of their VoiceWing VoIP offering, making it a few pennies a month cheaper than Vonage and plan to kick off a strong advertising campaign. Many expect that AT&T, who briefly made a big push for their own CallVantage VoIP offering, will follow suit. Still, a price war alone doesn’t seem likely to help anyone in the long run. The real focus should be on offering more than just a standard phone line replacement service. And, of course, Verizon’s slow rollout of naked DSL hasn’t helped matters either. People signing up for their VoiceWing service probably don’t want a bundled landline as well. The good news is that there are increasing reports that Verizon really is starting to roll out real naked DSL as well (after faking it for a while). Hopefully the competition will finally drive some of these companies to recognize that, while they need to be price competitive, the real value in VoIP will be what it can do that traditional land lines cannot.