Tomorrow’s Phone Company

Tom Evslin writes:

I do think that eBay may be your next phone company. Or Google. Or Yahoo. Or MSN. Microsoft Windows Server System may, someday, include, an IP PBX. I just dont think that any of them will make any money directly by being a phone company. They are being forced into offering voice service by an arms race with each other. Great for us talkers, not so great for providers.

If you want to know the future of voice communication, look at the history of email. Once upon a time email was offered on closed networks. MCI Mail even charged by the MCI ounce a thousand characters. AT&T bought Western Union EasyLink so that Ma Bell could become the post office of commercial email. Trouble is that email doesnt require a post office. It travels over the Internet between sending and receiving server directly. Enterprises own their own sending and receiving servers. Individuals share the sending and receiving servers of their ISPs or of Yahoo, MSN, or Google (you can usually tell whose server someone is using by their email address, of course). We think of email as being free because there is no incremental cost per message.

IP Voice communication (VoIP) doesnt require network intermediaries any more than email does. Thats why Skype could afford to provide free Skype-to-Skype calling. With a tiny bit of distributed directory help, the callers machine can talk directly to the callees machine. There is money to be made in switching calls between VoIP to POTS (Plain Old Telephone Service) because that switching requires a lot of server power and business relationships (thats part of what my old company, ITXC, did). SkypeOut and Vonage both charge their users in one way or another for these calls which are leaving their networks.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.