VoIP's future is calling

With massive interest and plenty of contradictory opinions, VoIP is looking lively but confusing. The future is clearer, even if it is not to the telcos' taste.

There's a lot of noise on the line in retail VoIP at the moment. BT and others are enjoying price-cut fisticuffs, while Skype has managed the gratifying trick of turning a mostly free, mostly closed service into a multi-billion dollar payout. With shades of dot-com overexcitement and much smoke over standards, there is some excuse for bewilderment among those who follow the scene.

Yet the evolution of VoIP will follow a predictable path. It's all about the money. Because the incremental cost of adding VoIP to broadband is effectively zero, broadband users are migrating to VoIP in droves. For a while, there will be revenues from PSTN gateways — but not for ever: the cost of using VoIP on broadband is actually zero, so the existing users will draw more people into broadband subscriptions. Eventually, it will become cheaper for BT to service the remaining PSTN customers with a broadband connection and VoIP disguised — and billed — as an ordinary telephone. For telephony, the digital switchover will be complete.

There will then be just two models for revenue generation: a closed system of bundled services or sets of open services available to all comers. Closed is much easier — it's what IM providers have relied on as they battle against multi-service clients and scrupulously avoid adopting open standards. If your friend or your company is using that system, then so must you — and so must your other friends or your business contacts. It's not very convenient.

An all-comer service provider doesn't care where the customers come from, it just wants to serve them. The more clients supported the better, so open standards are ideal. Although this is harder to make work than the cosy community model, the potential market is much larger and the fearsome competition will make the services that survive much sharper than those protected in their closed gardens.

The critical point comes when there are more and better open standard services for users to chose from than there are services available from any one closed VoIP supplier — and there will always be more people developing ideas outside any particular organisation than within. It's not a matter of if, it's when.

So don't worry unduly about the details of price wars, standards and providers. The canny will be able to find ever-better deals, while the lazy will get the benefits in due time. But the end point is clear: open services will triumph in the end. The VoIP provider which hears that call the clearest will be the one to which the others answer.