Vodafone have announced that they’re going to block all VoIP calls over their network from 2007.

Actually, look at the fine print and you see they’ve already done it according to Hartmut Leuschner, MD of Off the Record GmbH, writing at W2F (subscription needed):

For its new datacard tariffs, Vodafone has doubled the available data
volume for the same price. Great! But when you look into the small
print it says that VoIP usage within these tariffs will be "technically
disabled" from July 8th.

While this was entirely predictable (actually I wrote that it was going to happen in February), it’s also entirely the wrong thing to do, representing more of a a knee-jerk reaction, than a mature business strategy. Rather than a panic response, operators must face the fact that VoIP is inevitable and trying to ban it is simply pointless.

If it’s inevitable, banning it from your network is an invitation to all your customers to switch to a network which does allow cheap VoIP calls. Because someone will offer VoIP - someone with less to loose and everything to gain. Probably someone like a nasty MVNO will do the dirty deed and make a hell of a lot of money from the process.

When a sector is faced with fundamental change (and VoIP is such a shift), the right course is the counter-intuitive one - you MUST embrace it or you will end up far worse off.

In this case, Vodafone should be promoting VoIP like crazy. This will be good for the customer and there will be no reason to switch to another carrier. This move will cannibalize revenues to an extent, but the carrier gets to keep the customer and benefit from a continuing, if reduced, revenue stream over the longer term.

So what’s next? More carriers will certainly follow suit - if Vodafone are doing it, it must be right! We’ll probably see some attempts at rubbishing the quality of VoIP or the security, which are the two apparent vulnerabilities, in technical terms.

I don’t see security as a real issue for most users, most of the time, though paranoid corporates might see it as important. The kind that ban camera phones, for instance.

Quality of VoIP is variable, but many people will accept reduced quality for those magic words "cheap" or "free".

Despite this, I would anticipate some marketing campaigns along the lines of "Isn’t she worth a real call?" with a bloke calling his dear old Mum, just so she can hear his dulcet tones clearly (and expensively).

That approach won’t hold back the tide though and carriers will realize that their customers are voting with their wallets, forcing them to back down and offer VoIP grudgingly and too late for many of the lost customers.

That’s also assuming that they’re not forced to back down by some legislative move before hand.

Sometimes you have to wonder who is in charge of thinking at operators. Or am I wrong? Leave a comment and tell me what you think about this. Short-sighted, muddled thinking or unappreciated business genius? You decide.

On the subject of Skype, Om Malik has a story about CNET Net News estimating that Skype’s (undisclosed) revenues are $6 - $10 billion or about 3 times Google’s. How’s that for stupendously, atrocious reporting? Maybe $6 - $10 million, but even that seems on the high side to me, given that most of their products has zero income.

Original article TMC Net. Incidentally, they have my vote for possibly the most annoying interruptive advertising message I’ve ever seen. The screen sort of peels off to reveal an ad, totally obscuring the content. Come on fellas, don’t insult your readers with this kind of cheap trick.