Growing number of companies, from start-ups to giants such as AT&T, are pitching VoIP (Voice over Internet Protocol) as a cheaper alternative to traditional service carried over a 100-year-old infrastructure by companies including SBC Communications and Verizon Communications.


"While in most countries migration towards VoIP resulted in price reductions, in India, VoIP is still struggling to find itself a role. That is particularly so because prices have already hit rock bottom"




Voice-Over-Internet-Protocol (VoIP) service prices are not expected to drop any further, says Unwired Ltd general manager John Pollock.

Mr Pollock was commenting on another player Kidanet entering the VoIP market this week.

Mr Pollock said Unwired offered prices 70 per cent below the traditional pricing. He said the VoIP market was confused with all the deals that were on offer.

"There is no doubt that once people fully investigate the benefits of VoIP they will adopt the service," Mr Pollock said.



Prices: The switching space in India is a highly competitive market, with prices of TDM switches hitting rock bottom. Though VoIP equipment are just getting deployed in India, they compete with TDM switches. Thus, TDM switch prices play a significant role in price determination of VoIP equipment. And VoIP vendors targeting India have not had the buffer of a new market when it comes to price competitiveness. VoIP equipment prices are calculated for every unit of port equivalent to every DSO circuit or line in the case of TDM switches. Per port prices of VoIP gateways during fiscal 2002–03 varied from Rs 4,500–7,000 ($90–150), depending on the size of deployment.



VoIP provider VoicePulse has a $15-a-month plan for unlimited local calling, while 8x8 offers unlimited dialing to any phone in the United States and Canada for $20 a month.

The dropping prices are also affecting the higher-quality services that VoIP providers now sell to smaller businesses, a crucial market for any provider hoping to wedge its way into the world of corporate spending. Smaller companies are nimbler in terms of technology and are usually the first to try cutting-edge gear. Six weeks ago, Vonage dropped the price for its business plan from $60 to $45 a month. That matches a similar offering from VoicePulse and other providers.


How low can you go?It's unclear how far VoIP companies can go in cutting prices further.

Others said they believe prices will likely stabilize following the latest round of cuts, but said there may be room to cut prices again down the road.