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Free SMS – the First Blow of VoIP against the Telecom Carriers

Updated on August 14, 2012
The Emergence of VoIP
The Emergence of VoIP

Cheap Voice – a Nightmare for Telcos

If there is one doomsday scenario that all telecom companies in the United States dream of, it is that their entire telephone revenues will be supplanted by VoIP. This is a legitimate concern and the drain of profits has already begun. The emergence and success of Internet-based communications is evidenced by the fact that they have already lost 9% of the revenue that they used to obtain from SMS services which were almost all profit. This erosion of SMS revenue is only the beginning. It is inconceivable that given the option of free alternatives, people are not going to continue to take greater advantage of the communications utopia that the Internet offers.

But the true threat to telecom companies is VoIP. Already, individuals in the European Union are fast making the switch to VoIP services and giving preference to them over the traditional PSTN system. The situation in the United States is somewhat less dire for telecom companies mainly due to the differences in the way that people purchase their phones and voice minutes.

Over here, individuals are locked in to two-year contracts that provide them with a certain number of voice minutes every month. Because of this, they see little incentive to move to alternative forms of communication like VoIP until and unless they see the cost-saving benefits. However, telcos make full use of human nature by dangling a subsidized handset in front of customers to tempt them into signing a contract. Even though it ultimately turns out to be more expensive in the long run, the lure of paying little to nothing for a subsidized phone can prove too strong for many.

Getting Your Foot in the Door

The key to changing the behavior of customers with regards to mobile phone purchases, lies in their making use of "gateway services" that open them up to the idea of trying something new. Once individuals warm to the notion of using the Internet for bypassing expensive services, it's only a matter of time before they look further to do the same. In addition, the newer the generation is, the more open they are to alternative ways of doing things. Given all this, it's a bleak situation for the telecom companies who sooner or later will be forced to adapt their business models to accommodate VoIP services.

Dedicated land lines are already losing their value. The time is not far away when the entire telephone business model will have to be rethought. Find a local provider for cheap phone services. For example if you stay in Los Angeles, you can easily find a Los Angeles VoIP provider who will be able to set you up in as little as 15 min.


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