Verizon Makes the Leap to VoIP
JUNE 8, 2004
NEWS ANALYSIS
Business Week
By Stephen H. Wildstrom
As the regional phone giant turns to the Net, will other Baby Bells follow? This and more from the All Things Digital conference
The fight over residential phone service is about to get a lot more intense. Using voice over Internet protocol (VoIP) technology, competitors including long-distance carriers such as AT&T (T ), cable operators such as Comcast (CMCSA ), and startups such as Vonage are sending voice service over broadband connections.
So far, however, the four regional phone companies have stayed out of the fray, observing an unspoken truce not to invade each others' territories with VoIP. That will come to an end within a few weeks, when Verizon Communications (VZ ) announces it's rolling out competitive VoIP services.
"We're not going to sit back and watch," Verizon CEO Ivan Seidenberg told an industry conference on June 7. Speaking at The Wall Street Journal's D2: All Things Digital conference in Carlsbad, Calif., Seidenberg said: "We have a national market. We're not restricted out of our service area."
iTUNES TRAVELS. VoIP has the potential to tremendously disrupt the telecommunications industry in general, and regional phone companies such as Verizon, SBC Communications (SBC ), BellSouth (BLS ), and Qwest (Q ) in particular. In the worst case, the technology could reduce them to providing a commodity service -- raw bandwidth -- while new entrants get the profits from value-added services. Residential VoIP service typically costs at least 25% less than traditional phone service. Part of that is due to tax and regulatory savings, but much is the result of significantly more efficient utilization of the network. |
