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 PC-Calling Success Depends on
Consumer Apps
The number of people
making PC-based phone calls using IP is expected to grow, but so much
depends on economic conditions - and a killer app or two - that the
future is still hazy.
by Keith Dawson
PC-based phone calling is
gaining user acceptance much faster than most people expected, according
to some fresh data from research group Ovum.
They're guessing that by January 2006, 166 million Internet users
worldwide will be regular users of PC-to-phone IP telephony. This
represents almost a quarter of Internet users, up from 5% today. Growth
is being pushed along largely by quality improvements and ease of use,
among other factors.
What's interesting about this projection is that it allows us to get
past the technical matters of network design and transmission that might
(or might not) hamper growth, and puts the focus squarely on the issue
of consumer acceptance. If all else is equal, it seems to say, a
significant portion of end users will choose to use the Internet to make
calls for free (or nearly free).
Right now, PC-to-phone calling relies on a tenuous business model: calls
are free because they're paid for by advertising that's splashed across
the user's screen. Pulled along with that is a low-cost (but not free)
model, which offers less advertising and better call quality.
The first case stands on shaky ground simply because it's affected by
factors that have nothing to do with technology or quality: if the
market for advertising dries up (as it has in the parallel free-ISP
market and for web ads in general), then the companies that provide free
calls have no revenue, and hence cannot provide the service; customers
then become jaded and are forced to retreat to either the online
pay-per-call providers, or back to the traditional telephone.
One can also make the argument that with "real" telephone
network rates so low, the incentive isn't great to go to even a
high-quality IP-based service.
Unless, of course, there are compelling value-adds thrown into the mix.
And for that, we're still waiting for a killer app that's going to
leverage the power of the PC to manipulate data (address books,
calendars, shopping preferences, etc.) and apply that intelligence to
the calling process. The killer app could be something as simple as
online-phone-based couponing: the customer could derive some kind of
benefit from a retailer in return for using a PC to make a call, and
sharing some information automatically, or viewing a special web page --
the possibilities are endless.
Even so, 2006 is not exactly right around the corner, and even then, a
quarter of Internet users making calls is not nearly a quarter of all
people making calls. We're still at the very beginning of the long road.
According to the Ovum report, free PC-to-phone calling is now available
to around 30 countries worldwide and very low price calling to many
more. What they describe as (e-calling¦ eliminates geographic
boundaries and bypasses any local regulation of telephony. Even those
countries that have not yet introduced competition in voice telephony
will not be able to stop people using their PCs to makeinternational
calls. As a result, e-calling's growth is happening as much in the
developing world as the developed.As for the economic downturn that
threatens to put the breaks on any number of interesting but unproven
technologies, Ovum consultant Peter Hall notes that "portals
including Yahoo! and MSN entered the market in 2000 and many more will
follow. Many portals will expand their offering beyond PC-to-phone and
PC-to-PC calling to provide a full range of consumer telephony services,
which will pave the way to some becoming the future global consumer
telcos."
Ovum predicts that world revenues for PC-to-phone services will reach
$6.2 billion in 2005 and a third of this will be generated in
advertising. PC to phone calling will become popular not just because
its cheap, or even free, but because other services like voicemail and
unified messaging will be part of every service offering.
The report, entitled IP Telephony: Exploiting Market Opportunities
examines the market development for IP telephony and is aimed at telcos,
ITSPs, ISPs, portals and other service providers who wish to enter or
expand their activities in the IP telephony market. Makes for an
interesting speculative roadmap on the consumer side.
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