Advantage Incumbents:

IP is Built on Trust

By Barbara Lancaster

Because consumers have many choices, the battle for VoIP revenue will be fought with service innovation and great consumer experience. Thus far, marketers haven't pushed service innovation much beyond predictable bundles of dial tone, basic call management features and various low- or no-cost long distance packages. Consumer experience is where the opportunity to win customers, generate loyalty, and grow revenues rests. Incumbent telcos are the reigning champions when it comes to reliability, scalability, availability and quality. Virtually all incumbents have announced IP Telephony offerings, and consumers will turn to them because of their reputation for reliability. All other VoIP and would-be IP application providers should take note.

CLECs Struggle to Match Incumbents
Over the past 8 years, competitive local exchange carriers (CLECs) in the United States have struggled to match incumbents’ services and service orientation. Many CLECs failed to meet the standards incumbents set in the past. Orders were often not processed accurately, installation dates were missed, promised features were not available, invoices were delayed and payments were slow in posting.

As service provider operations experts, our firm was ready to assist. We offered to help create operating capabilities that would make customers happy when they chose to leave “the big guys.” But in those heady bubble days, CLEC management teams and their investors were not interested in “carrier class” processes, policies, tools or management skills. In the end, the incumbents didn’t have to work all that hard at adding obstacles to the CLECs’ paths - they crippled themselves. Operational complexity even plagued cable operators as they ventured into switched voice services and Class 5 networks. A few CLECs and most of the cable operators got it right, but there were 1,500 competitive providers at one time and between one third or one fifth that number today.

Like many other firms around the OSS sector, LTC is keenly interested in a successful competitive environment. As a result, we have made it a company policy to acquire our telecommunications services from competitive carriers. The service we’ve received has been at various times amusing, competent and absolutely dismal. VoIP is supposed to make everything much simpler however, and some assume that competition will thereby flourish, with the incumbents fighting to stay in business. This is not a safe assumption.

Voice over IP specialists like Vonage, 8x8, and ICG have carved some inroads. They have capitalized on early adopters' interest in novel technology, cheap calling, and features like voice mail delivered as email and global number portability. With less than a million lines in service, however, these companies collectively pose little threat to incumbents. In order to gain greater significance, they must reach beyond the early adopters that are willing to take a few bumps. After all, mistakes make for great pioneering stories at parties. But as VoIP goes mainstream with incumbents and cable operators, consumers won't accept anything less than bulletproof service and a responsive consumer experience.

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