February 02, 2006

Is Voice Special?

While commenting on one of Om 's post, John Allsopp suggests that the real target is VoIP providers when AT&T wants to charge the content providers. He continues on to say that "text, even lots of it doesn't suck bandwidth like voice."

In the scheme of things voice doesn't require much bandwidth. A wideband codec like Speex requires only about 40 kbps one way. The problem is in the collective perception that voice can demand a premium. This includes those who claim, correctly I may add, that voice is just an application in IP world. But then when companies like eBay and Google say that they can charge premium for click-to-call, there is a scant murmur to be heard. Shouldn't the stalwarts of "everything is an application" shout at the top of their lungs or at least hammer away in their blogs? Why the double standard?

So here is a request for any blogger who is going to lament about AT&T "double dipping": please add at least a passing comment challenging the click-to-call business model. If you disagree with me, then tell me why I am mistaken.

Posted by aswath at February 2, 2006 12:02 PM
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An application is only worth what people are willing to pay for it. If nobody is willing to pay for it, then it has no value. If people are willing to pay a premium for it, the application has a higher value even though a similar application may be much cheaper.

While I'm not a big fan of AT&T's "double-dipping" either, if companies can make money doing click-to-call, more power to them. My take is that this model is ultimately doomed to failure, but in the short term, it has some potential. I am all for letting the free market decide whether this is a viable business model or not, though.

Posted by: PhoneBoy at February 2, 2006 02:02 PM

I agree with PhoneBoy. I have mentioned the same in my blog.

Posted by: Jonty at February 3, 2006 06:28 AM

Voice is special in the sense that convincing people it costs per minute to provide is one of the greatest scams in history. Joe Nacchio, former CEO of Qwest, famously boasted that "Long Distance is still the most profitable business in America, next to importing illegal cocaine". His choice of comparison points is telling...

How much longer the price for voice can defy gravity is another question. Telcos are just trying to milk the cash cow for all it's worth while the going is good, and postpone the inevitable with the usual lobbying tactics.

Posted by: Fazal Majid at February 4, 2006 01:15 AM


But my point in this post is that even the new entrants seem to think along the lines of Nacchio and nobdy seem to think anything of it, but depend on the "free market".

Posted by: Aswath at February 4, 2006 09:26 AM

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