Internet Calling Pressures Bells to Lower Rates
Competition in the phone business, intensifying this year as Internet-based calling has taken root, has reached the point where many industry experts are anticipating an era of remarkably cheap and even free calls.
Context & Ripple Effects
Internet calling options began debuting in March 2006, and by July services were being designed to put Internet and land-line calls on one phone. That convergence makes Internet voice calling a practical substitute for conventional service rather than a separate niche.
The reported rate pressure matters because industry experts were already anticipating calling prices falling toward cheap or free levels, challenging the value of voice service priced on its own.
First-order effects
- Bell telephone companies face immediate pressure to lower calling rates as Internet-based alternatives compete for voice-call usage.
- Phone customers gain lower-cost calling options, including services that combine Internet and conventional calling on a single device.
Second-order effects
- Bell companies must compete more directly on price as Internet calling makes conventional voice charges easier for customers to compare and avoid.
- The business case for premium standalone voice service weakens when competitors can frame calls as cheap or free.
Third-order effects
- If cheap or free calling becomes the market baseline, voice service shifts toward a commodity and providers must find value beyond the call itself.
The trend: Internet-based voice is turning calling from a metered telecommunications product into a low-cost connectivity feature.