Cable VoIP Call Quality: Where to Not Innovate

Keynote Systems has a new study out on the quality of telephone calls on Voice over IP systems.  The results show that cable network based VoIP systems rated better phone quality than traditional telephone company offerings.
Here's a summary from Engadget:

"VoIP hard / soft phones, digital cable VoIP phones, and traditional landline phones were all tested and compared, only to discover that cable company-provided VoIP phones that utilized PacketCable -- an IP multimedia transmission system optimized for coax -- scored a whopping 4.24 MOS (mean opinion score), trouncing the 4.0 found in traditional phone networks."

Should telephone companies worry about the rise of VoIP and cable voice services? Absolutely. But voice quality is not the issue.  The quality of voice service surpassed customer needs a long time ago and has become commoditized.  Cable and VoIP companies know that voice-quality is a minimal requirement to get in the door, but it won't make a sale. The VoIP company that leads with voice quality is admitting to a me-too service.

Observing consumer behavior, we can see customers have adapted to substantially inferior voice quality over cellular networks. And the traditional five-nines reliability of the Public Switched Telephone Network has become a moot point for many telecom users, including some businesses, who readily use their cell phone as a backup.

This is not to say that customers won't complain about voice quality or network downtime. But they do not appear to be willing to pay for higher quality by these measures. Consumers also appear to be ready to accept lower quality in exchange for new capabilities, as is the case for traditional cellular, Nextel push-to-talk functionality and BlackBerry phones.

The key issue for telcos and would-be disruptors of telecom is to consider these two questions:

• Where is the telecom experience for customers good enough? <-- stop innovating here because this is commoditized
• Where is the telecom experience for customers not good enough? <-- work on this because this prevents commoditization

Consider whether these innovations from telcos would warrant a premium from customers:

• Telecom service more customized to the customer's industry or business;
• More flexible service to scale up or down based on seasonality
• Better integration between wireless and wireline service
• Single point of contact for service
• Sinlgle point of contact for billing
• Better integration with standard PC and office tools, such as Microsoft Outlook

Another question for carriers:
If not voice quality, what are the attributes that customers value and pay for on VoIP systems or on other successful telecom innovations? (The cop-out answer is lower prices.)

**Other views**
Cbeyond is an IP-based carrier focussed exclusively on the small business market in several major U.S. cities. Financial performance has been strong with high-growth, profitability and 18% ROE in a traditionally neglected, poor-service segment of the telecom market.

VoIPCentral says VoIP carriers are adding 100,000 subscribers per month.