With the Canadian government intent on de-regulating the country's $10-billion local telephone market and giving the incumbent carriers the freedom to set their own prices, it will be interesting to see the impact this decision will have on Canada's VoIP marketplace. To be perfectly frank, VoIP hasn't been overly successful in Canada. By this, I mean Real VoIP with all the bells and whistles that a Web-based service can offer. What Videotron and Rogers are offering right now is VoIP-lite because it's just plain old telephone service (POTS) with none of the online frills such as voice-mail to e-mail that rivals such as Vonage, Primus and BabyTel are offering.

Perhaps the reason the cablecos haven't rolled out the value-added features that makes VoIP such a compelling proposition is they haven't been compelled to do it yet. With the carriers being regulated in the local market and an unwillingness to become more aggressive with VoIP until the rules became more clear, the cablecos have been able to get away being an alternative option to attract consumers. In Quebec, Videotron has used ultra-low prices if you have a multi-service bundle, while Rogers and Shaw have been content to pick off customers pissed off with Bell and Telus respectively.

But what happens if Bell and Telus suddenly get more aggressive with their phone prices (both traditional and VoIP) to win back customers who may have strayed to the cablecos, Vonage, etc.? And what happens if Bell really starts to push Bell Digital Voice as a premium, multi-feature VoIP service, while cutting prices on traditional local service? This could become a strategic conundrum for the cablecos because they would have to determine whether to compete on price against traditional service, which looks and smells the same as cable telephone service provided by Rogers and Videotron. Or do the cablecos go upstream and go head to head with Bell Digital Voice by adding all the Web-based features of Real VoIP.

If I had to guess, the cablecos will go the premium route because it fits into their focus/obsession with disciplined pricing and ARPU. If this materializes, it would be terrific for VoIP and customers who want Real VoIP because the cablecos and carriers will have to compete on features and services - much like they do in the high-speed Internet access market where both sides are intent to increase speed and add more features as opposed to - heaven forbid! - drop prices.

Technorati Tags: VoIP

The deregulation of Canada's $10-billion local telephone market took a big-time move forward today when the federal government unveiled a new structure that will let incumbent carriers set prices however they wish to compete against new and fast-growing rivals such as the cablecos (Rogers, Shaw, Videotron, Cogeco, Eastlink, etc.) and independents such as Vonage.

The decision overturns a CRTC ruling earlier this year that stipulated carriers couldn't have competitive freedom in a particular market until they lost 25% of the market. This decision was badly flawed because it failed to take into account wireless customers - many of whom don't have a local line - and the reality cablecos could pick off the carriers' best customers to the point where they could have 30% or 40% of total market revenue while still staying under the 25% market share threshold (based on customers).

So what does it mean? For carriers such as Bell and Telus, they will now have much more freedom in markets where there is another facilities-based network (aka a cable network) to use price as a competitive weapon to retain and attract customers. Of course, carriers are scrambling to grow/maintain revenue so they may be somewhat reluctant to reduce prices. Then again, when Videotron is winning major amounts of market share in Quebec with prices as low as $16.95 a month, Bell may have little choice but to fight on price.

Nevertheless, the decision will level the competitive playing field between the carriers and cablecos. The winners could be consumers IF a price war breaks out (that's a big if given the cablecos have embraced pricing "discipline" in the VoIP and wireless markets). You have to remember local phone service is seen as the key element within a consumer bundle so if you have/can keep a local phone customer, you'll likely be able to sell them lots of other services.

Now, let the games begin!

More thoughts: You can argue until the cows come home whether there is healthy competition within the local market, and whether the non-carrier players will be able to survive/thrive now that Bell, Telus, et al have more pricing freedom. Truth be told, the cablecos are well armed for battle so there's no reason not to let true competition happen. Who knows, maybe competition will lead to benefits other than lower prices such as new, innovative services as the cablecos, carriers and others battle for customers. For other thoughts, check out Mark Goldberg.

There's a lot to be said for Skype, e-mail, instant-messaging, Webcasts and video conferences but nothing beats talking to someone in the same room. We (most of the b5media management team) just wrapped up five days of strategic planning and operations meetings in Toronto, and covered a tremendous amount of ground that would not have been possible if we hadn't been together. It's the ability to brainstorm, propose new ideas, discuss and even argue while being able to read another person's body language is what makes real-life meetings so much more productive. Of course, it also helps to have several whiteboards to help people visualize and capture all the ideas being tossed around. As a virtual company, b5media lives and breathes Skype but nothing beats getting together. Note: Being together also let me tap Darren Rowse for blogging tips, including the use of my new, favourite blog publishing tool, ecto.

According to VoIP News, I'm one of the top 50 industry influencers (every time this kind of thing happens, I feel the urge to break into a Sally Field-like "you like me. Right now, you really like me" speech). Among my peers in the "The The Daily Show – VoIP Bloggers, Pundits, & Thought Leaders" category are folks such as Jeff Pulver, Andy Abramson, Om Malik, Rich Tehrani, Alec Saunders, Jon Arnold, Garrett Smith, Greg Gatlizine, Russell Shaw and Tom Keating. Tags: VoIP, Sally Field

Has it already been more than a year since eBay decided to cough up as much as $4.2-billion for Skype? The International Herald Tribune takes a look at the deal and how Skype has evolved within the eBay empire. So did eBay get suckered into making a pre-emptive bid ahead of rival suitors such as Google, or did eBay made a savvy move by acquiring the world's leading VoIP player? So far, there has been little indication eBay has been able to do anything with Skype strategically other than giving sellers the option of putting "Skype Me" buttons on their stores. On the other hand, Skype as a telecom service provider is showing promise as a standalone business. In the past year, the number of registered Skype users has more than doubled to 136 million, while Skype's revenue is expected to more than triple this year to $195-million from $60-million in 2005. But is that enough to justify spending $4.2-billion? The answer - and apologies for being so wishy-washy - is only time will tell. But let's conservatively assume Skype's sales see compound growth 25% over the next five years. This would result in sales of $675-million by 2011 with healthy profit margins. That's a pretty good business. Let's also assume eBay can use Skype to get into the pay-per-call market, which the Kelsey Group forecasts will become a $1.4-billion to $4-billion business by 2009. Assuming Skype captures 10% of the PPC market, that would be another $140-million to $400-million of sales - boosting Skype's total revenue to $810-million to $1.1-billion. Again, that's a pretty good business. Of course, the $4.2-billion price-tag will always be used as a benchmark on how the deal is "valued". But if Skype grows as expected, its acquisition may look like a pretty good move in five years. Tags: eBay, Skype, VOIP, M&A