Incumbents and Value Added Service (VAS)

I'm completely at lost how incumbent telcos are able to fool themselves into delusions that they can replace high-margin voice minute revenues with new VAS, without needing to streamline operations into low-margin product future.

Most incumbents are offering residential VoIP, some kind of music-on-demand service, IP-TV and so forth. These services are marketed only to existing subscribers so potential market is from 100k's to million or two. I cannot see how they could compete against skype, itunes, spotify, tivo etc, who are targeting whole Internet and are doing it as their core business. Skype can produce the service much cheaper due to economics of scale, there simply is no way incumbent can have this market. Incumbent would be as likely to succeed in any new random enterprise, such as starting pizza chain as they would be in VAS. Not impossible, but it is much more likely that new startup can succeed it in, who don't have century of red tape around them and who are vastly more numerously attempting it.

Rather than VAS telcos should concentrate their efforts on being profitable at pushing bits around, attempt to become skypes preferred PSTN<->SIP provider, provision and manage residential DSL so that you are profitable without counting on VAS to fix your cashflow.

It would be competitive advantage for telco to realise that they are utility like electricity and water, most important thing they have is their physical infrastructure, which they can sell to end users and competitors, it is expensive long term investment to expand that infrastructure, maybe not fitting for trendy quarter economy, but putting your money on black and hoping to win house (skype et.all) is simply delusional and waste of time.

Be Profitable Bartering Bits, BPBB.

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