Fixed Wireless Business

That Old Time Internet Religion

During the boom, the prophets said the Internet would change the world. Steve Stroh reminds us that it's happening, but not at the pace they predicted, nor by the companies that the bankers and venture capitalists bet on.

by Alex Goldman ISP-Planet Managing Editor [July 8, 2004]

As the winds of change sweep the telecommunications industry off its feet, and several veteran companies seem headed for the garbage can of history, an industry commentator points out that WISPs are better placed than ever before to take advantage of all the new, new things.

In his blog, industry commentator Steve Stroh noted that wireless ISPs are feeling no pain from the FCC's crackdown on competition. Stroh noted that WISPs are "in control of their destiny because they own and manage the infrastructure with which they connect to and provide service for their customers."

When we speak to him, he tells us that WISPs have many voice-related opportunities they may not be aware of. "Some WISPs are in reseller arrangements with folks below the level of Packet 8 and Vonage. I advise them to get into the intercom business. Sell broadband to a city by letting the city use it as an internal backup phone system. Put a separate VoIP phone system (perhaps using Asterisk) in the offices of certain key managers."

The Internet is global
He says that although regulators around the world may want to limit VoIP, those in the know cannot, because national regulation cannot halt a global phenomenon. "Powell claims to understand the issue, which is that if they come down hard on the side of regulation, nothing prevents the customer from subscribing to VoIP service based outside the U.S."

This is, to some extent, what happened to gambling (now based in the Caribbean) and cryptography (much of this business moved to Russia) after the U.S. government tried to restrict both businesses.

"Theoretically, they can track VoIP, but if it's going to Mexico or Canada or the Cayman Islands (which have more fiber per capita than anyone on the planet), it'll be tough to track."

Voice wants to be free
The trend in voice, Stroh says, is towards free. It's companies like Luxembourg-based Skype, which has always provided free IP to IP phone calls and is now offering cheap IP to PSTN calls through its SkypeOut service. There's even a service called Stanaphone offering free IP to PSTN calls.

The big companies cannot compete. According to internetnews.com, Cablevision prices voice at $34.95 per month, and Time Warner Cable at $39.95 per month. At those prices, DSL Reports doesn't even bother to list the big companies in its list of VoIP providers.

Stroh suspects that if Comcast is smart, it will offer the service for free. He points to blogger Om Malik's note Let The Price Wars Begin (excerpted from his article for Business 2.0) whose analysis says this is exactly what Comcast is doing.

But he's not certain the cable companies can really do voice. "They will have to voice enable their entire network. It's not just QoS and billing. It's battery backup on the poles for life safety. So [WISP owner] Marlon Schafer decides to comes to Seattle, and if people want service for less than $60 per month, if they want broadband at dialup prices, he can do that with wireless."

The phone companies also have to abandon voice revenues. "The sanest thing a telco could do is declare there is no more long distance, and make every call a local call. That's the driver of VoIP. I've got Vonage. The phone company's getting $20 per month from me for a backup line I haven't had to use, and I pay $30 per month for Vonage and call on it all the time."

Vonage dropped the price without a request from Stroh. "When I signed up, I was paying $35 per month. Then it went to $30. If they drop it to $20, they'll keep me as long as they don't do anything stupid."

Certainly the phone companies won't get Stroh to drop Vonage. "The phone companies think they'll build fiber networks and capture video customers back from cable. I don't think that will fly. They'll never end up paying off the investment. By the time they widely deploy fiber (if they in fact widely deploy fiber at all) consumers will be happily watching video from their PVR, and that video will have been downloaded to the PVR via an existing broadband connection. They'll say 'why do we need fiber or SuperDSL?'"

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