The Preliminary Study on Industry Structure and Business Model of Internet Telephony—A Case of Vonage

• Main Authors: Chun-Hao Hung, 洪君豪
• Other Authors: Jong-Tsong Chiang
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/09337968136016848193

碩士 === 國立臺灣大學 === 商學研究所 === 94 === My research focuses on the industry structure and business model of internet telephony. Industry Structure So far, the players that have provided VoIP service can be categorized by its core competence: 1. Pure VoIP Players: Pure VoIP Players have no their own networks, so the different cost structure makes them launch a cheaper voice service. Voice packets, however, must be passed and processed by several intermediate players, and they have to adopt the suitable strategy to control the voice quality, such as leasing data centers or P2P architecture. They have the most subscribers due to launching VoIP earlier. The business model could be again divided into two: TA-based Vonage and softphone-based Skype. 2. Internet Service Providers: Internet Service Providers own some or all parts of networks, so they could guarantee the voice quality in the contract. The most used model frequently is “bundling” internet access and internet telephony. 3. MSOs: After understanding that VoIP in supply side is a more mutual-dependant solution than PSTN, Multiple Service Operators started to extensively launch VoIP service by triple play—bundling internet access, video service and voice. Their competitive advantage is that they have possessed the last mile, the wide video subscribers and the ability to launch triple play. 4. Traditional Telecom: IXCs have adopted VoIP technology as means of reducing access cost for a long time, but still have dilemma of launching VoIP service or not. ILECs so far have no intensively willingness to launch residential VoIP service. 5. Mobile Operators: Mobile operator will face the threat of Voice over WLAN in the future, and now they have to learn how to pricing 3G packet to avoid Voice over 3G. 6. IM Providers: Voice over IM becomes a trend after Skype’s vogue. Their business model is more special than others—to build a large subscriber base to lift the users’ switching cost and to expand the internet portal and platform. 7. WISPs: WISPs cooperate with Pure VoIP Players to provide Voice over WLAN service at their hot spots, and maybe turn into MVNOs in the future. 8. Operation System Providers: Microsoft plans to launch SIP-based collaborative application in Office Live Communications Server 2005. 9. Solution Providers: IPdrum will provide a solution that a mobile can be used to make VoIP calls, and Bellster spread the ideal of “free calling” by community. Vonage’s Business Model Vonage is the largest VoIP service providers in North America. Its appeal is “unlimited calls”, “rich voice value-added service”, “well voice quality” and “online free calling.” Increasing subscriber base to achieve economics scale is the major objective in this kind of model, so Vonage spent a lot on marketing, promotion, store display and other ISPs’ resale, but maybe in vain because the TA-based VoIP service inevitably has the shortcoming of limited function upgrading and subscriber growth, and its acquisition cost is higher now. Besides, with the more fierce VoIP competition, Vonage has the large opportunity to fail and finally go to the niche markets. Therefore, I recommend Vonage to change the position of its softphone from an accessory into a complementary, re-propose a new service plan to stimulate growth, and seek other methods or technology to improve the quality instead of leasing call centers, sp that the large amount of fixed costs could be saved.