Many have lined up to offer VoIP-based services. This by itself is not surprising given that barrier to entry is almost nonexistent. Everybody has heard that the capital cost is very minimal. The rollout is not problematic. The situation is analogous to retail business. A brick and mortar retailer needs to open in many locations to have nationwide presence, whereas an online retailer can operate from a limited number of physical locations.
The same dynamics exists in PSTN vs. VoIP scenario. A single PSTN switch has a limited geographical reach. So it is more expensive for a PSTN service provider to support 1000 customers distributed over 10 clusters, rather than concentrated in a single area. On the other hand, a VoIP service provider does not have this problem. So it is much cheaper and easier to start rolling out a VoIP network. At least it looks that way.
A couple of days back Om Malik suggested in an entry in his blog that some people are complaining about quality of Vonage’s service. Some of the respondents identified quality of connection to be their concern. Also many established PSTN service providers who have announced their VoIP plans have indicated that QoS will be their main differentiator. This is easier said than done. First of all the service provider must remove the traffic from the third party access networks and move it to their managed IP network at the earliest. Of course architecturally Session Border Controller (SBC) will do the trick. That means, SBCs need to be deployed close the customers. So we have reintroduced the geographical planning complexity and the related capital expenditures.
This does not solve the problem fully. The access networks at either end could sufficiently impact the quality that having the SBC-based architecture may not be sufficient. By the time we address this new issue, I submit that we would have recreated PSTN equivalent from business complexity point of view. So we are better off sticking with the original concept end-to-end application, free of service providers.Posted by aswath at January 20, 2004 03:49 PM
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