VoIP as Narrowband Application

Many market analysts have been pointing to VoIP as the "Killer Application" to drive demand for broadband. I agree that VoIP, and the value-add features enabled by the platform, provide compelling value for the always on connection of broadband. However, what I find interesting is that in the scheme of broadband, VoIP is really a narrowband application. By narrowband, I mean that the application places a relatively light burden on the network connection.

The following excert from a recent article on 8x8 highlights the capacity requirements for VoIP:

The second difference is invisible, but perhaps more important. It seems that the Packet 8 service uses up less of your internet connection's bandwidth than does the Vonage service. Packet 8 say that the phone uses about 17kb of bandwidth in both directions, and suggest not using it on lines slower than 64kb for best quality. Vonage recommend a minimum line speed of 128kb.

Which brings me back to the difference between cable and DSL. The cable guys continue to to push their capacity advantage over DSL as the major selling point of their clearly higher priced service. So, if VoIP is the "Killer Application" for broadband, and VoIP is really a narrowband application, then do the cable companies truly have an advantage in the short-term? Lower priced broadband combined with feature rich VoIP seems like a pretty compelling value proposition to me.

Further, todays news indicates that the cable operators continue to push content as a key differentiator for their broadband platform with a new programming agreement with Major League Baseball. Seems to me that we have a split in the market between companies that believe the future of broadband is entertainment and companies that see the future as being driven by communications.

Provided the tremendous success of email, instant messaging, discussion groups and mobile telephony, I'll put my money on communications as the real value driver.

Comments

[Patrizia]

Communication is Entertainment, at least the good part of it.
And VoIP is a narrowband application but the future will be Video VoIP (VoIP is not only saving money...it is also a full new world of new features,).
And not only video.
That is the catching part of VoIP, it is not a Telephony replacement as the computer WAS NOT a type writer replacement, even if you could use it for that reason.

A computer is a new world as much as VoIP.
In the past communicating meant talking, in the future will involve most of our senses, may be even all, who knows...

Patrizia

http://woip.blogspot.com

[BT]

VoIP and related comms services should indeed help to drive broadband market penetration. On the other hand, the broadband suppliers don't necessarily see the bottom line benefit. A voice minute is a voice minute whether delivered over IP or POTS - and the VoIP and comms suppliers are unlikely to limit their channel to specific broadband suppliers (though the more aggressive may look to cut distribution/agency deals).

Short term, content which can be licensed on an exclusive basis (such as live sporting events) is the only real proven value driver. The problem for telcos/cablecos is that due to infrastructure competition the content owner now benefits from being able to auction rights to the highest bidders.

Longer term, there must be new clever applications which will keep the telcos/cablecos from becoming just another utility... just wish I knew what they were...