Oct 12, 2006

Future Revealed - VoIP decimates Telcos in France

Hear this U.S. telecommunications giants: you had better stop playing the fiddle when it comes to broadband technologies and applications. FT's Tom Braithwaite's recent report from France is devastating: though the leading incumbent telco originally forecasted that adoption of VoIP service by consumers would reach a frightening 15% share of residential traffic in 2005, they now predict that the new technology will grab 40% of consumer traffic by the end of the year. Ouch indeed!

Not surprisingly, France Telecom's earnings and share price are plummeting as consumers desert fixed line telephones in favor of new broadband applications. Meanwhile, it seems that major telcos in the U.S. continue to be clobbered by cable companies in the great race to lock in the broadband service relationship with consumers. Vonage, Skype, Webex and other solution providers are dominating the internet communications applications space.

Where do U.S. telcos fit in? These horrifying business developments are still going to be racing forward after the illusory comfort of the current merger and acquisition frenzy is over. A good start might be to rely less on old school industry consultants, moving instead to bring in new leaders to develop some fresh, exciting growth plans. Or, sit by and watch the new guys on the block take all the spoils.

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