VoIP: Not just for big MSOs anymore

Net2Phone announced this week the first commercial deployment of its managed cable voice-over-IP services, launching in Puerto Rico through a deal with Liberty Cablevision and in the process effectively inviting the rest of the cable universe--not just the big MSOs--to play with VoIP.

The packet telephony plans of Cox and other big operators have made the news, but smaller franchise holders have been largely left behind due to the costs and inefficiencies of deploying their own networks. But with companies like Net2Phone and Level 3, which is offering its own outsourced switching service to small operators, the economics start making a little more sense. Essentially, these MSOs have been given a green light to start acting like small-market CLECs--cable can harangue the RBOCs for customers on the fringes, not just in the major market battlegrounds.

Don't expect every mom-and-pop franchise holder to jump at the opportunity to face the Baby Bells head-to-head, though. While Net2Phone does have an interesting value proposition for MSOs that fall a few rankings below the top six conglomerates, a good deal of the smaller franchise holders might be looking for a cheaper and dirtier way of getting into VoIP. An out-of-the-box service like Vonage's--or Net2Phone's old service, for that matter--that requires no network upgrade might seem more attractive to a cable company already wincing from the hefty chunk of capital it spent on engineering a return path for broadband. It may be less expensive than installing a softswitch, but building out a PacketCable-compliant network still ain't cheap.

But the medium MSOs, and even some of the larger ones--those still undecided on their strategies--will be watching Net2Phone and Liberty Cablevision's Puerto Rican launch very carefully. I wouldn't be surprised if the RBOCs are, too.

Contact me at kfitchard@primediabusiness.com