New entrants into the telecom market are rolling out innovative VoIP services at a furious pace and on a scale that should have incumbent telecom companies worried.
On the consumer side, Vonage spent $414 million in 2005 on advertising to build its brand and expand market share, while cable operators continue to bring voice, data and video to large numbers of residential customers. Now there is a push among small, nimble providers to bring VoIP service to the SMB market.
You would think the incumbent telecom companies would be more aggressive in protecting their SMB base, but they are distracted by the immediate threat to the consumer base and worried about VoIP cannibalizing their SMB revenues.
Ultimately, the incumbents will have to get into SMB VoIP in a big way. They'll reap less margins than traditional voice services, but will be in a better position to sell more services like wireless, reduce churn, and eliminate the cost of replacing customers lost to the competition.
Meanwhile, smaller competitors are leading the charge.
