Tuesday, March 15, 2005

Back to VoIP again

Ross Rader chimes in on the VoIP debate in response to a post by Om Malik.

I agree with Ross...the feature-set of VoIP doesn't have to be nearly as reliable as the telcos for a number of reasons.

1. People have redundant, instantaneous communication systems now. Back in the days of yore, when my granpappies used to ride their dinosaurs to school, I had two options: mail a letter, or place a phone call. One was instant, the other was not. Now if I can't call you on your main phone line, I can get you on your cell phone, or I can IM you, or send you an email, or even fax you. This redundancy in the systems makes the reliability of any one medium less important.
2. The key purpose of phone calls is communication. As long as people can communicate effectively and not get distracted too much by the medium, they will be okay with minor distractions. I will deal with some jitter, some echo, some tinniness in VoIP as long as one basic criteria is met: I can communicate with more people, more effectively than I could before under the old system.
3. The level of distraction tolerated is directly proportional to the added value of the new service offering in question after subtracting out switching costs.

VoIP meets these criteria without question. Under my old phone plan I was paying $45/month + long distance charges. My out-of-state friends, my international family, and my wife's out-of-state employer all caused us to rack up long-distance charges that caused our bills to average around $80-$100/month. Now, we pay $25/month. Even after talking to relatives in South America for several hours at a time I've never had a bill above $33 (since Vonage's new price scheme went into effect). That's real money in my pocket.

In addition, I get lots of valuable services that I didn't have under the old system. Voicemails get sent to my email, I have number portability, additional lines are cheap and require little to no new infrastructure, and I get 3-way conferencing free of charge. I don't have to wait for tech support personnel to show up at my house when something goes wrong. I have the ability to keep long-term records of my voicemails as WAV files to be sorted, catalogued, remixed into songs, or what-have-you.

Switching costs are absolutely non-existent.

When you tack on the added bonus that additional features are easier to implement because they require no new hardware infrastructure and are programmatically introduced, you get a long-term cost-benefit curve that is almost flat.

All those things combined are the appeals of VoIP. If you want to try and tell me that a little static is going to send me running back to the telcos you're crazy.

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