Telcos need maximize voice revenue to finance going all-IP

Telephone service providers who ignore the revenue streams flowing from existing voice services are missing out on a steady stream of money that can finance an all-IP network, Richard Shockey, chairman of the board of the SIP Forum told a telco-centric crowd at Genband’s Perspectives15 conference.

“People pay good money for PSTN,” Shockey pointed out.

While operators should not forget their foundation, however, they should quickly advance on the future: an all-IP network as a way to “protect what you have” to tap into an estimated $140 billion opportunity for real-time communications, he advised.

IP, therefore, is more about enhancing networks for future services and applications; it’s a defense mechanism for those quickly encroaching on the telco space.

“Cable operators have been all-IP for years,” he pointed out while only 30 percent of telco traffic comes over IP networks.

Shockey, to the surprise of many in the audience, dismissed the notion that quick-to-market over-the-top applications are devouring telco revenues.

“Don’t worry about OTT. OTT is all about fragmentation of the network (and) fragmentation is a friend” because consumers will then appreciate the value of telecom’s established quality of service and quality of experience, he said.

There are threats to the industry that are more important than OTT, he said, not the least of which is the cost of content for telcos moving into the video delivery space.

“Content is the new net neutrality,” he said, calling the Walt Disney Co. the “biggest single threat to the industry” because of content rates that have spiraled over the years. Shockey advocated following the Canadian a la carte model, even while admitting early attempts by service providers like Verizon and Cablevision have met with strenuous resistance from the content providers.

In yet another parallel to the cable industry, the other big threat to telcos is net neutrality.

Regulators who are intent on forcing broadband providers across the spectrum to succumb to 80-year-old telco rules are “boxing at shadows” because there has been no real indication that service providers are blocking, throttling or inappropriately prioritizing Internet traffic, said Scott Belcher, CEO of industry trade group TIA.

Uncertainty about Internet regulation, he said, is already leading service providers to scale back investment in broadband networks, Belcher said.

Belcher also called out what he described as a Trojan horse in the proposed regulations; regulators would determine rules to make certain that prices for new products and services be “fair and reasonable. I don’t even know what fair and reasonable is.”

What is clear is that the telecommunications industry, on every front, has lost public support.

“They don’t want big bad industry running the Internet,” he said. “We have to do a better job of telling our story. It’s a religious issue; it’s not a technology issue.”

There is a technology issue that telcos face and cable and wireless operators do not, the “existential fear that someone will accuse the industry of taking away Grandma’s phone with an all-IP transition,” Shockey said, noting that the AARP, responsible for protecting the interests of older citizens is “the most powerful lobby in Washington.”