Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: Gary R. Owens who wrote (2555)	3/9/1999 7:29:00 AM
From: Frank A. Coluccio	Respond to of 3178

Gary, I think that in both cases the executives have been forced to admit that we are nearing the nadir of what makes sense on the product pricing scale, where cost per minute is concerned in a service venue that continues to leverage AIN and SS7 fabrics. Pure VoIP is another story, and there are many discussions we can have as to how other forms of VoIP can be delievered. But these other forms are not what we're looking at today. In the PSTN-mimicking genre of VoIP, you can squeeze only so much before it stops making sense. Of course, they have to state that there are other reasons for a number of reasons. The true promise of FUTURE converged applications is one reason, and having to put on a good show is the other. It's like a placeholder that they have to insert in the story, reminding people where to come back to when the time is right. It may take a while. Why else would users look forward to VoIP, otherwise? It certainly doesn't sound any better, and the current dialing plans with multiple steps for 800s, PINs, etc., are for the most part, counter-intuitive, and a nuisance. The T exec is right, though. If you use the DOMESTIC model that is being used to deliver VoIP in a hybrid fashion, PSTN is cheaper for the providers to deliver. That doesn't necessarily mean that it will cost users less, though. The larger carriers tend to price there services, with "each other" in mind, not the customer, or costs. That is, to a large degree they compete within the field of their peers, not necessarily on the basis of cost plus. The larger ones, in any event, work this way. The smaller ones compete on the basis of costs and reaching their EBITDA objectives. It averages out, because the dominant ones have the [much-] greater economies of scale, whereas smaller ones will address cost-plus based margin pricing, and they are willing to forego the larger margins in favor of bulk. What I've stated above about the PSTN vs VoIP being a wash can be explained if you take into account that they are using the PSTN anyway on the other sides of the gateways to originate and terminate the calls. The only thing saving the startups on the domestic front is the "fairness" role of the FCC (which is one of those arbitrary things that may go away at any point without notice) which has waived the assessing of access and terminating charges for the ITSPs thus far. Otherwise, costs would be on a par, more or less, and in some instances even more expensive to place a single VoIP call from NY to Miami, say, when you consider the extra infrastructure that is required for the VoIP components. The intermediate long distance transmission costs are sometimes over-stated. This is where compression is used on IP backbones to leverage, but that leverage is not that great, when you consider the overall infrastructure costs involved that are "not" addressed by VoIP. International? That's another story, and will continue to be, until the settlement and accounting rates are brought into focus, and brought down to be more reflective of cost-based and competitive pricing levels by the world's PTTs. There will continue to be opportunities there for some time. Regards, Frank_C.