The PhoneBoy Blog


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Consolidation in the VoIP industry, redux

About two weeks ago, I blogged about the fact that consolidation in the VoIP industry is inevitable. Of course, Andy Abramson mentioned it first.

A couple of days ago, Leonardo Faoro mentions there are 400! VoIP providers in North America and asks some pointed questions about consolidation.

In my previous entry on this subject, I had mentioned a few companies I thought were worth watching as time goes on. The companies I didn’t mention were, of course, the traditional local phone companies (a.k.a. the ILECs). I think once the ILECs get serious about VoIP, and some of the signs are suggesting that time is coming soon, they will quickly become a serious contender, even if their offerings are slightly overpriced.

While there are plenty of reasons that this will likely occur, it comes down to one thing: trust. People know who the dominant provider of telephone services is in their area. They may not like that particular provider, but it’s a name they know. They know the company has been around for decades and trust the company will probably continue to be around for quite some time. It’s an evil, but it’s the evil they know. And from what I know about human nature, I know that people tend to feel more comfortable with the evil they know rather than the evil they don’t (i.e. the other 400 plus VoIP providers).

Does that mean the other providers are doomed? Not necessarily. Just as there are plenty of traditional long distance carriers out there (many of which resell tiem on other peoples networks), there will be plenty of VoIP providers. Will there still be 400? Maybe not. I’d be interested how many of the 400 plus VoIP providers out there today are simply resellers of someone else’s service. I know Broadvox lets companies private-label their services, and I’m sure other “larger” providers do the same thing.


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