(2004-02-27) Shirky Voip

Clay Shirky on VoIP and TelCo structure. If Plan A is "Replace the phone system slowly and from within," Plan B is far more radical: "Replace the phone system. Period." Where Vonage and a number of the other VoIP startups present themselves to the customer as phone companies, emulating the incumbents they are challenging, you can think of Plan B as the Skype plan... The litmus test is emphasis - Plan A emphasizes for-fee calls to ordinary telephones, with free computer-to-computer calls presented as a bonus, while Plan B emphasizes free calls as the main event... The official tradeoff in current telecom regulation is service guarantees in return for monopoly control. Over the decades, though, a third part of the bargain has arisen. Phone companies tolerated high taxation as well, in part because it guaranteed continued freedom from competition. However, monopoly control, essential for the current bargain, is ending... With their monopoly ending, incumbents have no choice but to embrace VoIP someday, because of the cost savings and the superior flexibility. However, they may succeed in significantly delaying that someday with the strategy of attacking their competitors through the regulatory system, while slowing their own deployment of the technology. Plan B, however, is resistant to this strategy, because while it creates the same value as a phone call, it does so without any of the mechanics that regulation attaches to. No dialing, no phone numbers, no phones even, and, most ominously for the incumbents, no charge to the end user. Vonage may be competition, but they don't undermine the idea of charging the user the way Skype or Yahoo Instant Messenger (Instant Messaging) do.