Verizon Finally Realizes That This VoIP Stuff Is Important

from the price-war-time dept

Fri, May 5th 2006 10:22am — Mike Masnick

The telcos, for somewhat obvious reasons, have been pretty slow to embrace VoIP. It's a direct competitor to their cash cow landline business -- and no matter how much they realize it's eating away at their core, it's tough for them to cannibalize their own products. Even if some people agree, it's always likely to meet some internal political resistance. That's why, when Verizon first launched VoIP a couple years ago, they made sure it was noticeably more expensive than other VoIP providers and just a bit below their existing landline service. That's how you pretend you're recognizing the future, without actually embracing it. Not surprisingly, people couldn't figure out why they'd want Verizon VoIP at $40/month when Vonage and others were charging around $25 for the same thing, so eventually Verizon lowered the price to slightly more competitive rates. However, again, when you're cannibalizing your own cash cow, tiptoeing into the waters generally means no one will pay attention to you, and you'll still lose business to the new upstarts. Not surprisingly, that's exactly what happened. Verizon got all of about 50,000 VoIP subscribers, while losing an astounding 3 million landline subscribers. At some point, a company has to wake up and realize the strategy isn't working. It looks like today is the day for Verizon. They've cut the price of their VoiceWing VoIP offering, making it a few pennies a month cheaper than Vonage and plan to kick off a strong advertising campaign. Many expect that AT&T, who briefly made a big push for their own CallVantage VoIP offering, will follow suit. Still, a price war alone doesn't seem likely to help anyone in the long run. The real focus should be on offering more than just a standard phone line replacement service. And, of course, Verizon's slow rollout of naked DSL hasn't helped matters either. People signing up for their VoiceWing service probably don't want a bundled landline as well. The good news is that there are increasing reports that Verizon really is starting to roll out real naked DSL as well (after faking it for a while). Hopefully the competition will finally drive some of these companies to recognize that, while they need to be price competitive, the real value in VoIP will be what it can do that traditional land lines cannot.

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17 Comments

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Anonymous Coward, 5 May 2006 @ 12:15pm

Woo Hoo! First Post!
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Nick Iler, 5 May 2006 @ 12:33pm

I should have started a VoIP company
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Todd Henkel, 5 May 2006 @ 12:34pm

Price War
If/when a price war breaks out, be prepared for a bumpy ride!!!

Most telcos are still catching up from LD price cutting from $0.40/minute to unlimited bundles. Steering into new cash flow sources will take these ships some time to align with.

Service and captial investment will suffer in the meantime...
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Other Brian, 5 May 2006 @ 12:34pm

First Posting...
"First Post" needs to get a higher weight in the spam filter.
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Angry Rivethead, 5 May 2006 @ 1:15pm

Verizon, naked DSL and VOIP
With Verizon expanding FIOS at a nutty rate, should we really be that impatient for naked DSL (from Verizon anyway)? Or should Verizon be in any rush to offer it? I think not. Does Verizon have any competition in this field? I don't hear of any other providers with a similar product. Maybe this was thier strategy all along...and maybe an internet/voice and TV bundle using fios may actually be the 1st real bargain in bundle history...and maybe I'm a Chinese jet pilot.
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haywood, 5 May 2006 @ 1:32pm

reboot
I've long suspected the reason for the Verizon several times a day DSL modem reboot was; to discourage VIOP. I wouldn't even consider using it, you would just disappear from the other party in the conversation every time the reboot happened. It even makes sniping on E-bay chancy.
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Anonymlus Covard, 5 May 2006 @ 1:51pm

Insert something about a horse and barn and a door here...
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Paradigm Shifty, 5 May 2006 @ 3:08pm

I used to work for Verizon...

DSL is just another service you sell when you sell a landline.

No, really...
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PseudoDragon (profile), 5 May 2006 @ 3:33pm

Re:
and im a Chinese Jet Pilot.....

No, really....
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zachary pond, 5 May 2006 @ 4:04pm

Re: reboot
riiight -- verizon intentionally has your dsl modem reboot several times a day. don't you think this practice would discourage people buying their dsl service, and not just using 3rd party voip?

maybe you should call verizon tech support and have them swap out your modem...
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Chris H, 5 May 2006 @ 5:49pm

Interesting, my Verizon DSL modem occasionally locks up. I can connect to the router itself and get an IP from the DHCP, but my WAN connection is dead.

Powering it off or resetting it fixes the problem. Is your's a Westell by any chance? Mine hadn't done it for about 2-3 months and then it did it twice in 2 days.
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skibare, 7 May 2006 @ 7:18am

CABLE makes 800,000 VOIP sales calls per day
maybe somebody can figure the math at VERIZON and figure out CABLE VOIP is killing them.............
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Akuma, 7 May 2006 @ 11:37pm

Landline
I am all for VoIP and Verizon's FIOS, but I think there is something to be said about a Landlines security. So until my calls are completely secured over the internet I am keeping a landline with a corded phone around if only with only dial-tone and no bells and wistles like Caller ID or Call Waiting.
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Anonymous Coward, 8 May 2006 @ 2:06pm

Akuma said on May 7th, 2006 @ 11:37pm:
"But I think there is something to be said about a Landlines security. So until my calls are completely secured over the internet I am keeping a landline with a corded phone around if only with only dial-tone and no bells and wistles like Caller ID or Call Waiting"

Yep. Verizon Freedom Value includes local, regional and 50 state long distance for a 24/7 flat rate of $29.95/mo. A hell of a lot better than a crappy VoIP connection.

Add Home Voice Mail, Caller ID, Call Waiting for another $10.00. Works for me.

Hey, Verizon. How about a no-frills $30 cell plan that just includes phone calls? I don't need no stinkin downloads...
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Scott, 30 May 2006 @ 3:47am

$40/mo ?
Um, I pay under $20/mo with all taxes with verizon(MCI) VoIP, including voicemail...
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Anonymous Coward, 31 May 2006 @ 7:52pm

Re: $40/mo ?
how????
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Jay Cross, 10 Sep 2006 @ 4:07pm

$40/month
that's all he sends them.
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