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September 1, 2004
The regional Bell operating companies
stand to lose 15 percent of residential lines with average monthly bills of $24 to cable companies, independent carriers and long-haul carriers that offer VoIP service, according to Standard & Poors. As the proliferating group of U.S. VoIP carriers signs a bigger share of customers (accounting for 12 percent of all telephony revenue in five years, according to a Juniper Research forecast), growing numbers of new signees are learning that services they take for granted may not be offered by their new providers. Directory assistance is one such service.
In Europe, EU regulations obligate carriers of public voice telephony to provide directory assistance, along with other operator and emergency services. No such mandate now exists for U.S. VoIP carriers. The FCC and Congress are monitoring the carriers and IP traffic trends as the converged communications technology evolves. Latest indications from the FCC suggest a wait-and-see attitude. If any federal action on the matter is to be taken, it may happen only after the fall elections.
Meanwhile, some state regulators have taken a hands-off approach, apparently awaiting developments on the federal level.
Others have attempted to rule that VoIP service providers are no different than regulated LECs. Across the board, the various regulatory bodies are addressing this issue quite differently.
The fact some VoIP carriers already have integrated directory assistance into their offerings shows they recognize the competitive impact of the service, regardless of regulatory or legislative conditions.
Without DA, their customers must resort to phone books, telephone directory Web portals, or one of the handful of “retail” 411 services. A downside for directory portals is that the data is stale, often up to 180 days old. Retail DA requires consumers to use their credit cards and that has proven to be a high barrier indeed.
Those VoIP providers offering directory assistance have sought out stable, technically capable sources for the service. Carriers that have made the VoIP investment might be hesitant to connect to a third-party service provider operating on a standard switched network, thus sacrificing the technical quality and operational simplicity offered via the same technology. However, there are providers like INFONXX Inc. that can offer efficient interconnection with VoIP and packetized networks.
Within the VoIP services package, directory assistance yields revenuesupporting advantages - provided the service is flexible to customer needs. For example, customer retention is improved for carriers that feature directory assistance and other third-party services sought by consumers. While VoIP providers are promoting their lower-thanthe- traditional-phone-company pricing, their new customers still are seeking traditional phone company services, including directory assistance. While these services will increase a provider’s operating costs, they will help build a portfolio that will attract and keep customers, thus creating a profit center.
Also, the provision of enhanced information services - including maps, driving directions, movie schedules and concierge assistance - along with traditional number lookup provides a potential revenue driver, especially important where VoIP carriers may be operating on razor-thin margins. Some IP carriers are getting creative and, for example, considering a business-to-consumer service that enables participating business listees to be named first on directory assistance results lists.
As VoIP carriers transition from their current position as an alternate or secondary-line service to competing as a primary telephony offering for both residential and commercial applications, there can be little doubt that they will need to match or exceed the feature functionality of traditional wireline service.
Directory assistance is at least one tool among those that will help to hone their competitiveness.
Clayton Liabraaten is senior vice president, sales and customer operations, and Chris Landes is vice president, products and marketing, for INFONXX Inc., a provider of directory assistance and enhanced information services to communications companies, businesses and consumers.
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