How Low Can Voice Prices Go?

Comwave has launched thе "India 1000 Bundle," that, for $10 per month, gives callers 1,000 minutes per month οf overseas calling tο India frοm thеіr сhοісе οf landline οr mobile phone. If that seems unremarkable, consider that, in 2000, a call from the United States to India cost $1.36 a minute. http://www.dot.gov.in/osp/Brochure/Brochure.htm

Another anecdotal touch point is how much else has changed, where it comes to international long distance. In the early 1990s, I once conducted an analysis of the major cost inputs for long distance service, attempting to figure out the "absolute limit" to pricing of long distance. At the time, it appeared that the absolute lowest price was three cents a minute for domestic U.S. calling, for example, since that was the imputed cost of billing for the call.

Almost by definition, even those cost parameters now have been shattered. The investigation of cost inputs was part of a larger exercise looking at the concept of "near zero pricing" and what the implications might be, for telecommunications entities. Already, in the early 1990s, one could see technologies and other forces at work that would continue to put pressure on retail prices.

There were new technologies, including wireless, infrared transmission and optical fiber, Internet Protocol, the continued operation of Moore's Law. Globally, a wave of telecom deregulation was starting to materialize, with pricing competition one of the chief expected outcomes. Under such conditions, the logical question was "how far can prices fall?" and what strategies might be available to a business that was founded on voice pricing.

In retrospect, the obvious answer was that telecom companies would "not be in that business" in the same way, in the future. It isn't that voice is not mission critical, it is simply that voice does not drive revenues in a business that now is multi-product, not single product.

Of course, it also is possible to point out that the implied price of "one cent a minute" does not take into account other policies or behaviors that actually mean the price is higher than one cent a minute. Transaction fees, for example, dramatically affect the real cost of a minute of talking.

In other cases, users buy a bucket of minutes and don't use them all, meaning the actual cost of some minutes of use is not directly knowable, in many cases. In other cases, users buy a package of services, with no direct relationship between the "voice" parts of the package, compared to other components, such as video or broadband access.

Still, the notion of near zero pricing has proven to be the way the voice communications business actually operates.

Comwave’s India 1000 Bundle: Call to India for Just 1 Cent per Minute from Landline or Cell | Open Source IP PBX