ThinkPanmure thinks telcos worldwide will set up an old style cartel with shades of 19th century settlement rate system. It is supposed be a joint initiative to offer Skype type services. I am not sure if such an alliance is cooking, but if that is the case, the stuff being cooked is likely to remain half baked. Here is why:
• It will be an intergalactic challenge to bring two dozen telcos under one roof. Previous attempts to set up alliances - Concert, Global One etc – have failed.
• The proportion of IP-IP calls is miniscule. It is in the region of 6% of the overall voice traffic in France, the country with world’s highest VoIP penetration. On a global scale IP-IP calls proportion is less than 1%. What that means is even with a Skype type service you are still paying for terminations, the same old story as in the landline business.
• There will be billing issues in the alliance. For example, who bills a customer that is based in a country outside the alliance members’ domain?
• There will be branding issues. For example, will we have 20 logos on the dialer now? If not, will there be an alliance logo now? If not will I wait for AT&T to send me AT&T version of the dialer on CD by post? What is stopping me to download dialer from a website belonging to another alliance member?
• This sounds like shared transport replacing the old settlement rate system. There are QoS issues. In the old system there were call quality agreements in place, the ASR, the MOS, the whole lot. With this imaginary setup, how do you ensure end-to-end QoS over a shared transport public network? There is more bandwidth going into the US, so calls made to US will have great quality, but calls made out of US might suffer in terms of quality.
• If done today, it will eat into the existing revenue streams of telcos.
• The whole idea sounds like a peering setup. If that is the case, and provided you have a large VoIP user base, why not just connect to one of the peering fabrics like XConnect or VPF? They enable free VoIP-to-VoIP calls across telcos.
• Not so long ago the ratio on US-India international calls was 10:1. If that ratio holds for the new setup, you are looking at very unhappy alliance members from India. Their bandwidth will be all eaten up by the overseas calls. There will be total imbalance. In the past that was acceptable because you received settlement for excess traffic. With the proposed venture there is not going to be any settlement.
You will have 20 telcos start from scratch, spend a billion in marketing, find only 10m take up service and then go through all that pain just to cannibalize the revenues. Why not instead acquire Skype? You could have an alliance acquire Skype, but I will still stick to my earlier suggestion of a global telecom player being better suited to acquire Skype. Alliances always have issues and the remains are always picked up by a bigger player in the alliance.