Label 2003 "Collapse of Denial," and compare Vonage (replace the phone system slowly and from within) to Skype (replace the phone system, period), says Clay Shirky in his essay "VoIP - Plan A vs Plan B" (2/26/04).
For decades, monopoly control was the cost of service guarantees. But with the monopoly franchise came the burden of high taxation and regulatory costs passed on to customers. The introduction of competition breaks down the stability of that three-part bargain, argues Shirky.
Critics of the new competitors grumble that VoIP is just a parasitic technology and its rise will bankrupt the teleco's DSL market (subsidized by those monopoly margins on POTS) on which it rides. Shirky differs, noting that the bankruptcy of the old railroad companies did not mean the end of rail service or the ripping up of the physical rail system. Nor will the arrival of a market economy in voice communication mean the end of the copper wire infrastructure. (Read more ... )
VoIP companies like Vonage embrace the new technology but the old business model, suggests Shirky. The Skype model doesn't contemplate a "phone company" ... just a protocol ... no presence to regulate. That undermines the concept of charging the user anything (think AIM, ICQ, Kazaa and Gnutella).
Established telcos are overestimating Vonage and underestimating Skype, suggests Shirky, and fighting it the way that the RIAA has been fighting P2P music sharing. He suggests that if old telco succeeds in killing or assimilating Plan A (like Vonage), it will increase the likelihood of success of the "far more radical challenge from Plan B."
Clay Shirky closes saying:
"The only thing that might save Plan A from death by delay is evidence that users are adopting Plan B in large numbers, using the internet for voice applications completely outside the framework of telephony as we've known it for more than a century. We should all hope that happens, because if wide adoption of Plan B convinces the regulators and incumbents to acclerate their VoIP offerings, the users benefit. And if it doesn't, Plan B will be all we get, so we may as well start experimenting with it now."
This essay is available at Clay Shirky's Writings About the Internet, and was originally distributed 2/26/04 through his "Networks, Economics, and Culture" mailing list, licensed under the Creative Commons Attribution License, by which the licensor (Clay Shirky) permits others to copy, distribute, display, and perform the work. In return, licensees must give the original author credit. Subscribe to the mailing list.
See also, "VOIP as Reality Revives Call for Regulation," (Unintended Consequences 12/15/03).
Posted by dougsimpson at February 29, 2004 06:12 AM | TrackBack