John Bartlett's blog post below reminded me of an exchange that took place in one of our VoiceCon Orlando 2009 plenaries, about the relative costs of different WAN solutions for conferencing.Zeus Kerravala and I were moderating a session on cloud computing for enterprise communications, and the first question that came up from the audience cut right to the point: "If cloud computing is so great, how come the #1 opportunity for UC ROI is to install audioconferencing bridges on premises?"
Our panel sort of chewed that over a little bit and made some noises about where cloud computing could provide quick ROI, but the Zeus was the one who got to the real answer. I don't have it down verbatim, but essentially he asked: Isn't the answer that the conferencing service providers continue to keep their service prices artificially high?
Which I think is the right answer. If the conferencing providers dropped their prices to make them more competitive with CPE-based IP conference bridges, enterprises would probably choose to stick with those services rather than take on a new piece of equipment to manage. They'd save more money if they got lower prices on the service without having to change anything they currently do.
Bartlett's blog post alludes to ISDN's advantages when it comes to supporting videoconferencing, chiefly its ability to run across the PSTN and thereby allow any endpoint to contact any other endpoint seamlessly. As John points out, ISDN really is no longer practical for videoconferencing, from a technical standpoint, because video bandwidth demands have grown beyond ISDN's capacity. And part of the reason for ISDN's disfavor had to do with poor configuration and management, which by no means had to be the case.
But the real killer for ISDN services was that the carriers refused to budge on their pricing model, which was a base rate plus per-minute charges. That was a non-starter, and so customers were never motivated to demand better configuration or even a reasonable amount of circuit-bonding for higher bandwidth. They knew they weren't going to buy much or any of it at those prices, so who cared about its other drawbacks?
For comparison, take the example of cellular SMS services. I wrote earlier this year about the issue of whether SMS service is priced artificially high, and I subsequently had an interesting conversation with Tom Nolle about the issue. Tom points out that cellular carriers need hefty margins on texting to subsidize the cost of licenses and infrastructure that serve the largely-commoditized voice service. They wouldn't be able to hang onto those margins if wireless IM were to gain in popularity, but so far that shows no sign of happening.
Which is the point here. It's really pretty simple: You can get fat margins on a product if nobody's offering a less-expensive way to do the same thing. Once somebody comes up with that less-expensive option, you either lower your prices or lose the business.
