Monday, February 12, 2007

The minute stealers' coffin nail?

It seems that the business model of Jajah and other "minute stealers" which try to bring down the cost for mobile and fixed line telephony can't last forever. Maybe their window of opportunity is closing very soon.

There is an interesting article from New Zealand which tells under the title "Skype rival Jajah another nail in the toll call coffin" how Jajah works. But the article, which I found trough Andy Abramson's blog, tells in fact much more: It shows how big phone companies are fighting back against Jajah, Skype, Gizmo and the others. New Zealand's Telecom, formed in 1987 out of the telecommunications division of the New Zealand Post Office, calls it "0161 international calls".

International calls are optionally being routed over lower cost circuits. (I suppose that this means that they are being routed over the internet and maybe the quality of service is not as good as over the normal phone lines.) All customers need to do to get the cheaper pricing is to dial the prefix 0161 when they make a call instead of the usual 00 international prefix.

The article sums it up to:
Telecom doesn't promote the service much publicly, to avoid cannibalising its conventional toll call revenues, but keying "Telecom 0161" into will bring up the relevant information.

As more customers take advantage of these services, regular phone companies, including Telecom, will continue to cut their standard pricing to compete. Toll calls will no longer be what they are today – a tax on the time-pressed, risk averse and computer illiterate. Just don't then be surprised if telcos appear increasingly pressed for cash to invest.
My own research for an article, which is still to be published, also shows that the minute stealers are aware that their window of opportunity is not open forever. But most of them are counting on five years in which they can snatch costumers from old fashioned phone companies that still rely on high prices.

But if you have to decide between installing a software and subscribing to a new service, which often is difficult to use, or just dial another prefix on your old phone without even switching on the computer - what would you prefer?

Maybe we didn't find a nail to the "toll call's coffin" but to the "minute stealers' coffin"?

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