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VoIP in 2008: “I’m Not Dead”

VoIP remains a hot topic in the IP communications world, but it’s definitely evolving. The following is my most recent article for a column that I write for TMCnet, and it’s a year-end review on VoIP as well as my outlook for how it’s changing for 2009.

Colleague Alec Saunders posted his response to my article yesterday, and it’s a good read. If you’re interested in where VoIP is headed, then my article should help keep that dialog moving along within the CircleID community. Here we go…

I’ve been writing my Service Provider Views column for just about a year now, and VoIP has been a constant theme. Mainstream service providers and VoIP have for the most part never gotten along very well, even though at one point VoIP seemed to be the Holy Grail of telephony.

That brings me to that classic line in the Monty Python film of the same name. It’s during the “Dead Collector” scene. You remember — the guy with the pushcart going door-to-door, shouting “bring out yer dead.” Then a man comes out with another man slung over his shoulder and pays the Dead Collector his ninepence to take the body away. Of course, we next hear the body speak up, proclaiming “I’m not dead,” and we all know how the rest of that scene goes.

This sure reminds me a lot of VoIP in 2008. The best-known names in VoIP — Skype and Vonage — have not gone away, much to many people’s surprise. As things kept going from bad to worse with Vonage throughout 2008, they’re still with us. It may not be more than a faint pulse, but the telcos have not knocked them out entirely, and those 2 million subscribers have got to be worth something to somebody — don’t they?

Skype’s viability has never been in doubt, but with all of eBay’s problems, they sure looked like an orphan nobody wanted. While it’s easy to write them off as an out-of-synch walled garden with minuscule ARPUs, they continue to post great numbers, and last I checked, there’s typically 15 million using Skype at any given time. Nothing wrong with that.

Sure, I’ll concede that it’s futile now to be a large scale pure-play VoIP provider, and that the Vonage business model has been broken from Day 1. Landline telephony is getting cheaper all the time, and the cablecos have pretty much won this market with their bundles. I don’t think they can make money just selling VoIP, but telephony adds a lot of value to their offering, and I don’t see this trend changing much in 2009.

For the telcos, the bundle is all about video and IPTV — not VoIP. So, don’t expect them to be talking up VoIP in their pitches as they fight for their lives. They’re not betting the farm on fiber for telephony — that’s just an add-on now. Video is the future for them.

So, why are we even talking about VoIP for 2009? I can think of many reasons, and none of them have to do with Time Warner or Verizon. VoIP as we know it may be dead, but there’s a lot of life left in this technology, and I think we’re in for an exciting year on this front. What I see happening is VoIP moving up the food chain, where’s it now becoming more valuable for end users.

Traditional landline VoIP was a good place to start, but in 2009, VoIP will be more about voice services than telephony. Wireless has pretty much become the mode of choice for telephony, and that frontier is largely closed to VoIP — at least for now. So before clobbering VoIP over the head and dumping it on the Dead Collector’s cart, you need to think of VoIP differently.

The VoIP that I’m thinking about won’t be showing up in your landline service any time soon. However, it will show up in lots of other places, some of which are Voice 2.0 applications, with others being closer to Web 2.0. Whatever the case, in 2009, VoIP will be more about voice-based or voice-enabled applications that make the voice experience more interesting. In some cases it will be about making calls less expensive, but for the most part it will be about doing new things or old things in new ways.

So, what exactly am I referring to? If the Vonage deathwatch was your idea of VoIP in 2008, then you missed out on all the innovation bubbling beneath the surface that is setting the groundwork for 2009 and beyond. There are many companies doing interesting things, several of which have been featured in earlier columns. While there is room to debate just how much each of these is really “VoIP”, there is no question they are all making voice more valuable, and that alone should make them interesting for service providers.

This column is not the place to elaborate on the details, but here are some prime examples of what I think is going to make VoIP much more interesting for service providers in 2009:

Fonolo — their “deep dialing” application will actually make call centers a worthwhile and efficient experience — for both callers and agents

Jajah — Babel - a real-time speech translation service that will help carriers truly open up their markets globally

Mobivox — their voice-activated services platform opens up many possibilities for carriers and makes life much easier for handling calls in your car

Voxbone — iNum makes it possible for anyone to have a global inbound number using the new, ITU-approved 883 area code

Calliflower — they’ve added great new features, and more importantly, a flat rate pricing model to make conference calling more affordable and accessible than ever before

Phone.com — there is no shortage of SMB IP telephony solutions, but this one really shows what’s possible with a Web-based service. They offer residential service as well, but more importantly, Phone.com makes ease-of-use a priority, and shows just how flexible do-it-yourself VoIP can be.

Jazinga — they’re targeting the same market as Phone.com, but with a different approach. They too, have made ease-of-use their centerpiece, but with a premises-based solution. Jazinga brings a very extensible solution to market, and beyond the rich feature set, the built-in router/firewall ensures QoS, and delivers far better audio quality than any over-the-top VoIP service can provide.

Vayyoo — vPost just launched with Blackberry, but is a sign of what’s to come for people looking for an easy way to do real-time multimedia uploading to their websites and blogs while on the go

Vidtel — the stars may have finally lined up for residential video telephony, and the timing looks right for this startup. In many ways it’s the polar opposite of telepresence, but Vidtel is a great proof of concept that voice and video can coexist in the home, and we’ll know for sure in 2009.

Truphone — there are many interesting mobile VoIP plays in the market, but nobody sets the bar higher for potential disruption. Their free iPhone application initially enabled VoIP calls over WiFi, but now extends to cellular calls. On top of that, the application can now be used on the iTouch as well.

SIP trunking — nobody owns this space, but it’s reaching critical mass now and is changing the economics of business telephony. Companies like Ingate, Bandwidth.com, Broadvox, and BroadSoft have created serious market momentum, and I expect this will be a catalyst for VoIP in 2009, especially among SMBs.

Hopefully this will convince you that VoIP is alive and well, and will be anything but dead in 2009. I could have cited many other examples, and my main message is that innovation is thriving in the VoIP space. As the worlds of telephony and the Internet continue to meld, and as the mobility overlay continues its ascendancy, VoIP will keep evolving. I have no doubt that many of these innovations will become mainstream in 2009, and as they do, will seed future waves of innovators that should keep people like me busy for quite a while.

On that note, I want to wish my readers all the best for the season, and to give thanks for those who have followed this column throughout the year.

By Jon Arnold, Principal, J Arnold & Associates

Jon is also co-founder of Intelligent Communications Partners that focuses on the smart grid space.

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