VoIP is no threat, says British telecom giant

The emergence of usable voice over IP services, which let individuals and companies make phone calls over the Internet--in many cases for free--is not a threat to BT but an opportunity, the British telecommunications giant said Monday.

Speaking at the Voice over IP Forum in London's Le Meridien Hotel, John Blake, head of hosted IP services at BT Global Services, said that although there is a "dichotomy" for BT, which will involve some cannibalization of existing services, the company has an aggressive VoIP plan.

BT, like other telecom firms, faces a loss of revenue if free VoIP services such as Skype take off. According to James Enck, European Telecom analyst/global telecom strategist at Daiwa Securities Investment Bank, Skype has an annual growth rate of 500 percent in terms of on-Net minutes, and 5 percent of broadband connections in the United Kingdom are using the service. "It's practically a household name," Enck said.

BT seems to have learned its lesson from the late 1990s, when it was widely accused of holding back broadband rollout to protect its ISDN business.

"BT is the incumbent operator, and as such we have to defend our traditional market, but we can do that by aggressive and creative pricing," Blake said. BT, he said, has reduced prices, and is establishing longer-term relationships with its partners and customers. "We will have to sacrifice some higher-volume services," he said, "and there will be some cannibalization, but we're about ready."

BT offers two distinct VoIP services: the year-old Broadband Voice, which mimics a regular phone, and BT Communicator which was launched this year with Yahoo Messenger and works with a PC.

Enck said incumbent operators across Europe are beginning to realize they have to work with VoIP. "VoIP is out of the closet in Europe," he said. "We have seen a lot of activity from incumbents" who, he said, used to talk about VoIP as being a flea on an elephant. "Now they talk about how it will impact their revenues."

"We are not afraid of the technology," Blake told the audience at the Forum. "Voice over IP is an application, and if you can get that working right, then other applications on the network become easier to deliver. Once you have broadband infrastructure the technology becomes easier to deliver. Internet telephony has been around for four years, but we were doing it over dial-up connections, and you just can't get the quality on a 56kbps call."

BT plans to deploy VoIP across its own organization, with 30,000 IP phones. It recently completed a 10,000 IP phone roll-out at Abbey Group, as part of a hosted IP contract. "We rolled this service out across 850 branches in five months," said Blake. "We had to do 25 sites a night, with a two-hour window to upgrade each site."

The Isle of Man government says it is planning to install VoIP across the public sector there, with the help of Cisco, Dimension Data and Manx Telecom.

Matt Loney of ZDNet UK reported from London.

[Dachi]

It is a threat

First I am glad to see them embracing VoIP rather than trying to fight it.

VoIP has made a great deal of progress in the last ~6 months and as the word spreads (e.g Vonage, KaZaa now offering Skype etc.) VoIP will be harder and harder for POTS providers to compete against.

A few points:
1) Cost of VoIP phones will come down with popularity.
2) Addition of IP video phones will offer added features.
3) As more calls are terminated to VoIP phones rather than copper, the cost to VoIP providers will come down.
4) With added interest VoIP will become like web hosting is today, everyone is selling it and it costs $4 a month.
5) Even today companies have a 3 or 4 months ROI on installing VoIP PBX's, this does not take into account new setups that don't have to consider taking an initial loss of tearing out the old circuit switched PBX first.
6) How long before Net Cafés and Coffee shops install VoIP based pay phones?
7) the current increase in broadband penetration is going to equal increase in VoIP penetration.
8) many major telcos and providers are currently in the testing process of rolling out VoIP services of their own, these are companies that know how to market products.
9) Increase in cell phone popularity make people more willing to remove their primary phone line as they have a backup.

Even in the state it is currently in VoIP is an 8,000 ton locomotive. I am sure there will be at least one or 2 companies with some good ideas that will move the process along even faster.

Things to possible look forward to:
1) Some solid Wi-Fi VoIP cordless phone solutions.
2) Expansion of a software package like Skype to add Vid. feed (think netmeeting but different).
4) More gamer style headphone/mic solutions to more easily use VoIP software on the PC. (Skype should sell these)
5) Someone like Sony or MS getting involved and adding VoIP ability to the PS4 or Xbox3.