Distance isn't quite dead as a factor in telecoms service pricing, but it is disappearing rapidly, forcing service providers to make rapid adjustments to their business models, speakers warned during a conference panel Wednesday at ITU Telecom World 2006.
Shimmy Zimels, CEO of VoIP service provider DeltaThree, noted that the telecom billing landscape has changed dramatically during the last few years and 'VoIP was important in this change.'
Distance and duration really haven't disappeared, he noted, but they have been calculated into the bundling and pricing plans now offered to consumers. 'As long as the critical mass of calls are to land and cell networks, the VoIP cost structure will remain sensitive to distance and duration,' he said.
Zimels added that to be successful in the new billing landscape, VoIP carriers need to bundle their distance charges into pricing arrangements, examine new business models that derive revenue from other sources such as advertising, identify new communities of users who will call within the same network and, if possible, negotiate reciprocal agreements between carriers.
Jeff Spagnola, Cisco VP for service provider marketing, told the audience that 'we are on a journey of deconstructing the PSTN as we know it' and that new competition and regulatory liberalization have reduced voice prices and displaced distance with bandwidth as a significant factor.
'You've got to provide value-added services on top of the voice IP connection,' Spagnola warned. Video traffic moving over the IP network may well be the key to these new services. 'The future is not about distance. The future is about fat pipes in a flat world.'
Not all panel members were willing to write off the importance of voice service, however. Zhijun Liu, senior VP for Lenovo Group, agreed that distance and duration have become less important considerations, but said 'voice will continue to be the killer app for telecom providers.'
Liu noted that all customers still require some kind of voice service, and despite the industry changes 'people need to communicate with each other.' The growing desire for data services could offset some of the revenue loss from voice, he noted, and mobile TV could end up emerging as another killer app.