Bold idea or utter hogwash? You be the judge

With voice lines eroding rapidly, AT&T, BT, NTT and other incumbent carriers soon will launch their own IP telephony competitor to Skype, essentially writing off voice revenues entirely while moving customers to data, wireless and IPTV services, predicted investment banking firm ThinkPanmure in a research note.

ThinkPanmure expects a consortium of 10 to 15 incumbent global operators to launch a competitor to peer-to-peer Internet telephony service Skype by 2009, with a motivation of keeping voice subscribers from “completely disappearing, reducing win-back marketing costs. The service would be free when calling any other subscriber of the consortium.”

The report was educated conjecture, ThinkPanmure admitted. But could it work?

Makes Sense

• Circuit-based voice business is eroding; moving customers onto IP networks via wireless and data services makes voice just another application anyway, one that could be folded into those fee structures.
• Win-back marketing costs are high; rather than lose those customers to cheaper voice competitors, telcos need to keep them on the books and sell them new IP services such as video.

Utter Nonsense

• It's not trivial to essentially write off high-margin (though shrinking) landline revenues all at once; “loss by erosion” at least provides service providers time to transform their margins and revenue breakdowns.
• Is “best-effort” Skype really the competitor to emulate? With a history and competitive advantage in delivering high-quality, guaranteed service, telcos should aim higher with next-generation voice services.