VoIP vs. traditional telephony

Henning Schulzrinne in a slide entitled “Why should carriers worry?”^† nicely states the threats to traditional operators:

Evolution from application-specific infrastructures ⇒ Content-neutral bandwidth delivery mechanism - takes away the large margins which the operators are used to (and want!):
- “GPRS: $4-10/MB, SMS: >$62.50/MB, voice (mobile and landline): $1.70/MB”
Only operators can offer services ⇒ Anybody can offer phone services
SIP only needs to handle signaling, not media traffic
High barriers to entry ⇒ No regulatory hurdles^‡

In addition to this we can add:

Only vendors can create services ⇒ anybody can create a service

NB. These new services can be far broader than traditional telephony services.

^†Henning Schulzrinne, “When will the telephone network disappear?”,as part of Intensive Graduate Course "Internet Multimedia", University of Oulu, 3-6 June 2002.

^‡ see later slide on “Regulations in Sweden”

Transcript

[slide49] Henning Schulzrinne had a slide called, "Why Should Carriers Worry?" And he basically said, well, the problem is, as we go from application-specific networks where we can charge very high prices for certain traffic, so for GPRS at the time, $4 to $10 a megabyte, but for SMS, and they loved SMS, they were getting $62.50 per megabyte. Right? It was a wonderful deal, particularly when you could carry SMS over GPRS. We went from a world where only operators could provide services to anybody being able to provide phone services. The SIP only needed to handle the signaling, not the media stream. And we went from a world where very high barriers for entry. There were only a few companies that were big enough to afford these huge investments that were needed, to basically no regulatory hurdles at all. And I think we can add to that, that previously we were in a situation where only the vendors of that telephony system could introduce services. Now, anyone with an idea could introduce a new service. This is a very, very, very enormous change. Not surprisingly, Henning Schulzrinne for a while was the chief technologist for the FCC in the U.S.