Telecommunication Costs Continue to Climb

Published reports have recently shown that communications spending by corporations is likely to be up to $133 billion in 2008. In other news, cable companies are alleging Verizon Communications Inc. has violated marketing rules, while AT&T Corp. announced a deal with Starbucks Corp. to provide in-store Wi-Fi services.

Focal Points:

• A recent published reported predicted that companies would spend up to $133 billion in phone costs in 2008. Of this total, about 39 percent will be corporate telecommunications. The report also showed that wireless revenues were growing at 13 percent, the largest rate of growth of any telecommunications area. The segments of industry that spent the most money for wireless services included construction, financial, insurance, and real estate. The report also predicted an overall decrease in wire line spending over time.
• Last week the leading cable companies filed a complaint with the Federal Communications Commission (FCC) against Verizon for allegedly breaching rules against "retention marketing". Comcast Corp. has teamed with Time Warner Inc. and Bright House Networks in charging that Verizon is trying to prevent customers from porting their numbers to cable digital voice services, which is against FCC rules. Verizon allegedly offered gift cards and price incentives that, once accepted, allowed Verizon to cancel pending service transfers. This complaint came after Verizon filed patent actions against cable operators Cox Communications, Inc. and Charter Communications, claiming a breach of Verizon VoIP patents.
• Officials from AT&T have recently announced a deal with Starbucks to provide Wi-Fi wireless services in their stores. This is in anticipation of their launching new Internet voice and other IP communications services. Some analysts have speculated that this will put AT&T in a position to offer VoIP service through its CallVantage service, which can include connections through 8,000 McDonald's Corp. outlets, in addition to over 17,000 Starbucks locations.

Experton Group believes telecommunication costs will start to be seen less in isolation, but more as a part of the overall communications infrastructure, to include all networking services. As technology makes it easier to switch between voice, data, wireless and wired networking, the value in communications networks will be seen by their ability to allow seamless interconnection of all applications and services. Voice will be increasingly seen as a distinct subset with specific quality of service (QoS) requirements. IT executives should develop requirements for networking services that bundle voice communications as part of a holistic communications package.