Question: If I where an ISP today, would I really venture into VoIP?

I was asked to work on that question for one of my customers. Most Euroepan ISPs are not doing VoIP as their core business - their core business is still selling and deploying broadband connections.

Some places in Europe we now see a shift from deploying VoIP in the residential market and into the business market.

Should the ISPs leave the business market to the pure VoIP operators, or should they venture into that market at all? For a lot of reason I do think ISPs can do a lot of business in that market.

If we look beyond the 12 month mark the picture may not necessarily be so clear anymore - at least not in the SME market.

Let's first take a look at VoIP in the SME market.
Until 2008 very few VoIP operators really wanted to venture into the business market - most operators deploys ATAs. For a lot of customers this is going one step back from using ISDN. However, those operators which did venture into the business VoIP market have had a struggle finding the right way for a valid business model instead of earning money. Another issue have been the telecom incumbents lack of business VoIP strategy - and tried a few trick to either bad-talking VoIP for business use or right out trying to outlaw the usage of VoIP on their wireless networks.

However, people have been using VoIP in their homes and seen, or rather, heard, that the quality is not as bad as the incumbents told them. Another reason for the perception of good quality is that people have been used to bad quality on the GSM networks. So they ask them self: If the quality is good for my home - why can't I use this technology in my business? They try to go to their residential VoIP provider - but they do not offer VoIP services in the business market. They then locate smaller, and unknown, VoIP providers that operates in the business market - but become scared of their ability to deliver a adequate service at all.

In the mean time they are using MSN on regular basis - maybe even tried using sound and video. After a while they try Skype. MSN may be the most used IM program deployed - but Skype is surely the most deployed VoIP platform in the general population. And they are happy - both as MSN users and Skype users. These platforms just works out of the box. Easy to install - elegant to use. Complete bliss. They do not care about the negative sides of using MSN (a good vector for spreading mal-ware) or Skype (becoming a SuperNode eating up all the bandwidth).

So what happen when people see that these kind of software packages works very well, and at the same time the incumbents have been bad mouthing traditional VoIP in the business market? Their preferred VoIP platform becomes very clear. The incumbents Fear, Uncertainty and Doubt is for all practical purpose backfiring. In a worst case scenario they keep their old PBX installation - or they use VoIP internally, but not externally.

Let us not forget that everyone is on MSN and that Skype have between 9 and 11 million users signed on at any one time.

To confuse matter even more: Google is entering the VoIP realm with their Google Talk. Anyone using Gmail (unknown number of users - a "few million" is my estimate) is automatically linked to Google Talk.

It is also just a matter of time before "Skype In" kind of services is becoming available in more countries than today. There are 3rd party organizations out there which are working to provide "Skype In" in their domestic market. I have also been told about people working on a MSN2PSTN gateway. Given the number of Skype users in the business market - what will happen when the Skype service "grows up" and becomes a fully qualified telecom operator in most countries? This thought should scare any smaller VoIP operator.

For the last couple of years people have also been more aware about Open Solutions - and Open Protocols. Google uses XMPP and Microsoft uses SIP in their offerings (Skype is 100% proprietary).

Both Skype and Microsoft is targeting IP telephony in the small business market. It is also a matter of time before Google Apps for the enterprise also have a VoIP offering built in.

Now back to the ISP and the infrastructure providers.
So people are getting used to VoIP based services on their desk top and on their lap top. In fact, they really do not care where these services are found as long as they are available.

So what happens when their terminal becomes mobile? iPhone is a very good example. Currently a very crippled unit - but still a disruptive one. When Apple realizes that marrying only one provider in one market is Not A Good Thing - and when they realize that a "European communication model" (full 3GPP support) is a Good Thing - we are going to see a huge shift in peoples willingness to pay for "wireless broadband". Same goes for so called Smart Phones - newer models have 3GPP support, but lacks the sexiness of the iPhone. Another thing happening is that even lap tops are sold with 3GPP support (just insert your GSM SIM card) and easy to use software to switch between WiFi and 3GPP.

Both MSN and Skype is more or less available on mobile handsets. And it will be only a matter of time before Google Talk also will be available.

When the deployment rate for MSN and Skype on mobile units reaches a critical mass, the demand for Wireless Broadband will become huge.

There are many good and valid reasons why a ISP should venture into the VoIP market. However, their core business is selling broadband connections - and it makes much more sense to sell a package consisting of both broadband coming over the Aether as coming over a cable.