VoIP providers facing though competition

Filed in archive Technology on June 15, 2004

The NYT is pretty gloomy about the prospects of independent start-ups as Vonage and Skype in the booming VoIP market.

"The findings, based on a poll of 1,000 consumers in the two countries to be released today, suggest that the market for low-priced Internet phone services will most likely be dominated by phone companies like AT&T and cable providers, and possibly local phone carriers, but not the new entrants that control much of the Internet market now.

"The companies with existing relationships with consumers have huge advantages," said Martin Kon, a consultant at Mercer and the author of the survey. "It's an uphill battle for the upstarts with no customer base."

While Internet calling, which sends voice calls as data packets over the Internet, is considerably cheaper than traditional calling, most consumers will not switch solely because of price, Mr. Kon said."

I pretty much disagree with th report. Skype is at least a strong buy for many existing phone companies as they have created a new client relationship to 10 million downloaders in the last 6 months that are fine with the kind of connection Skype delivers.