A few weeks ago, I wrote that if Cable companies adopted wi-fi and VoIP into their set top boxes, they could make a serious run at challening the incumbents for local phone services. This would in turn really put the screws to the RBOC's in a way that local competition hasn't to date. I said they needed to do something before it was too late. We are officialy approaching Too Late. Vonage gives you a pretty much unlimited calling plan with free long distance for 39.95 a month. Toss in 5cents a minute to places like hong kong, london, etc., free voicemail, free call waiting, free forwarding, free everything else, and can you say "SBC IS SCREWED"? As I understand it from a friend close to the company, these guys are signing up about 7000 new customers a week and are ahead of plan. They are well capitalized, as DATEK and Island ECN founder and SEC attention-getter Jeff Citron runs the joint.
The RBOCs have two choices: they can a) innovate, innovate, innovate. fast, fast, fast. or they can b) sue and lobby, lobby and sue, sue and lobby. Let's make a couple predictions. First, make no mistake, once Vonage is really on their radar screen, they are going to sue and lobby. You can hear it now: "no fair, they don't have to provide service to rural areas, they don't have to do xyz, we have to do abc and efg, this isn't fair, etc etc.".....I predict their complaints will not fall on deaf ears and that they will be successful in adding additional burdens to VoIP operators. Everything from inability to operate in states where the RBOCs have deep political ties, to hounding the FCC to layer on massive regulations around VoIP. However, all this aside, the end is near for the SBCs of the world unless they get on the innovation bus, and quickly. There are only a couple problems: a) they are not innovators and b) the strategic consultants they would traditionally hire are not innovators. Accenture and McKinsey are very good, extremely good, at synthesizing state of the market thinking on a topic and helping a company "catch up" to others that are performing reasonably well. These two organizations are bad, very bad, at innovating. I worked at one of these for 9 years, on a project to reinvent the way the organization went to market across industry verticals, and I can say with much confidence, these organizations don't innovate and can't help others innovate.
No, SBC and the other RBOCs must take dramatic measures to look for opportunities to stem what is about to be a significant tide of customers abandoning them for greener pastures. The RBOCs still have significant assets, not the least of which is a line into just about every single home in their geography. This is an asset that can be optimized, but it must be done quickly and in dramatic fashion. "free caller id with call forwarding option" is not going to get it done now.
Just look at all the extras and cool apps you get with Vonage. Why wouldn't you switch to them!?
Posted by Dick at September 1, 2003 01:52 PM | TrackBack