The New York Times has a detailed breakdown of the the Verizon announcement in today's online edition which registration is required.
There's a lot about this that indicates this is a "oh #$^%R, we better get into this space now" type of effort from Verizon, rather than one that has been too well thought out. Here's why.
1) Verizon had the option a few years back to buy Genuity (now part of Level3). For those who don't know their history, Genuity was originally called BBN, and was ONE of the major players that led to the growth of the Internet. They were part of GTE and when Verizon and GTE got married, BBN had to be spun off and Genuity was born. Genuity had a best of breed IP platform at the time and unfortunately the geniuses inside Verizon tended to not value the VoIP potential and did everything they could to minimize things. This approach is very similar to what you see in the recorded music industry. The old hands who ran/run distribution did everything they could there to stay away from digital downloads, even saying things like "it will never take off." WRONG.
2) The second reason why this product makes no sense is it is inferior and costs more. If you're not a Verizon DSL customer you pay full boat, or what Vonage started at before dropping in price to $29.99. The $39.95 and even discounted $34.95 price is higher than Vonage and Packet 8 by 5 or 15 dollars, higher than AT&T CallVantage's introductory price of $19.95 a month, and even when AT&T goes to $34.95, unless you were on the Verizon DSL network, you would be receiving a weaker level of services at the same price.
3) The service is using the public internet. Unlike even Packet 8, which works with Level3, or the AT&T CallVantage service which uses their own top in class managed network, what Verizon is offering is akin to what they always said VoIP was and not what they wanted to be offering.
4) Their pricing, incentive discount and services, i.e. lack of advanced features like CallVantage's Locate Me, are basically designed to slow down the canibalization of their existing PSTN business.
In my view, this is purely a defensive play by Verizon, and meant to be a stake in the ground for them.
They also have to figure out how to deal with an internal threat as well as all the other VoIP players. Verizon Wireless has millions of customers. There is no guarantee that Verizon Wireless won't say, they may one day have a VoIP play also and work to marry their customers away from the mother ship's PSTN and now, less than robust offering.
Bottom line, this is more noise than substance, and until Verizon uses its own network, this is really not a factor and consumers should still look to a more proven solution.
You need to get your facts straight. Genuity was a financial disaster losing over $140 million in cash flow each month. Buying Genuity would have been crazy.
Posted by: Roderick Beck | July 27, 2004 at 04:49 PM