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August 29, 2005

VoIP, VoIP, VoIP, Mon., August 29, 2005, 10:51 AM

If real estate is all about location, the future of the telecommunications industry is all about VoIP.

The industry is a new one, so the pure players are mostly small. Two of them, Vonage and Skype, are going to be offering IPO shares in the near future.

I expect the market will receive these offerings well, but not being able to get pre-IPO shares or even shares of the IPO, I will be forced to stand aside.

Vonage, btw, is the brainchild of Jeff Citron, the aggressive young man who built Datek into a day trader's dream in the 1990's. Jeff is a smart entrepreneur who got out of Datek at the top, and went into the Voice over IP game at the very beginning. He probably made several hundred million dollars on selling the Datek deal, which he turned around immediately to bankroll Vonage.

Citron's timing has been incredible, and he must be a good operator too because he has now built successful companies in two unique fields in a tough regulatory terrain, against a herd (or whatever they're called) of 800-pound gorillas. And that doesn't include regulators.

In the Datek deal, however, he ran up a pretty big file at the SEC, which will have to be explained somehow when the Vonage underwriters take over.

I will be writing lots about VoIP because pretty soon most of you will be using it. You are going to learn the upside and the downside.

One of the negatives is that Voice over Internet Protocol only works when your ISP efficiently streams your digitized data packets. Until now, that's been the case. Amazing technology really.

But then people get in the way. Isn't that often the case?

So rather than allow you to continue using VoIP facilities like a conventional telephone line, coming soon will be your cable operator getting into the business and telling you that unless you pay them an even higher toll for hi-speed Internet, which you'll need for voice quality service, they will send your L.A. to NYC VoIP call first to Hawaii or Alaska, and then if that doesn't piss you, they'll move some packets over to Russia, then down to the Middle East on their way back across the Big Pond.

Maybe, maybe not.

Maybe they'll just drop a packet or two.

Can you just imagine a VoIP-based marriage proposal, or business proposal, where, right at the critical point, you hear the words I'd like to (blank...) you." Hmmm.

You better pay up if you want to get the real deal. Cable obviously can offer it; they already do. And Ma Bell won't easily give away their long distance service income, so they'll be introducing higher charges for VoIP too.

If you think I josh about super-inflated ISP fees to come, there has recently been a bit of nasty news about the VIP preferred service" charges of large Canadian cable operator Shaw Communications (NYSE: SJR) (TSX: SJR.NV.B).

And remember; VIP just stands for VoIP without the "o". They got it and you're going to "o".

More to follow on that score. Monkey see, monkey do.

In any event, I learned a long time ago, you get what you pay for.

Nothing valuable comes free " unless, of course, it's this website/blog. ;-)

In summary, the future of the telecommunications industry is largely being built around VoIP. Like the best real estate, VoIP is the place to be.

So, I'll be writing more about it.

Posted by Posted by Bill Cara on August 29, 2005 10:51:57 AM | Category: 50 Telecom Services

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