There is a battle over telecom superiority, and the consumer is the spoils of war.
In one corner is hosted VoIP, providing extensive features with a small regular monthly fee.
In the other, are multi-national telecom giants, charging their users high fees for services that are eerily similar to those provided by smaller VoIP companies.
Indeed, today many telecom service providers use the same basic digital technology to provide consumer phone service. So the question remains, why does the cost of service differ so greatly?
The basic monthly cost for VoIP residential service providers is very low, often around $5 to $10/month. For example, VOIPo, a popular residential service provider, costs $6.21/month, with no setup fees and an array of standard features. The basic monthly fee for basic home service from AT&T is $20 with an initial setup fee of $45.
AT&T is a traditional “POTS” (plain old telephone service). This means that AT&T, like many other major telecoms, relies on a complex system of wires, cables, satellites, and towers to deliver phone service. However, today, much of the POTS system has been converted to digital technology (just like VoIP service!). So why the price discrepancy?
According to Doug Ramsey, Director of Communications for the California Institute for Telecommunication and Information Technology at the University of California San Diego, it seems as if the telecom giants are charging their customers extra so they can maintain and develop their privately-held network of digital telecom services.
“Although they have made the move to digital, they still need to shore up their bottom line. The digital platform may be cheaper, but they still need to offset the cost of developing and maintaining their network,” Ramsey said.
Ramsey goes on to say that the larger companies are banking on the idea that their networks are greater because they maintain and develop the system themselves, allowing for better service with little to no problems for users.
However, Ramsey continues to say this “perceived” advantage will soon be null and void: “We will soon have bandwidth so great that the small hiccups experienced with VoIP, such as echoing or inconsistent service during peak internet usage times will no longer exist,” Ramsey said.
Ramsey agrees that soon VoIP will become the standard for the telecom needs of most customers, but he also predicts that larger telecom outfits will still stay alive by providing more expensive services for, “larger corporate contracts, while individuals will be steered towards using a hosted system...which may be even cheaper than existing VoIP providers at present,” Ramsey said.
The only way for the consumer to stop subsidizing large telecom companies is to switch to a VoIP service provider. In the short-term, VoIP is the much cheaper option, and in the long-term, VoIP may really be the only viable option for homes and small businesses.