Cable Telephony - the Bigger Picture

James Enck had an interesting post about cable telephony on his blog yesterday, EuroTelcoblog. He cites that in the Netherlands, 6% of households have cable VoIP instead of POTS. On top of that, he notes that an additional 15% of Dutch HHs have dropped POTS in favor of wireless, meaning that 1 in 5 homes there no longer use the PSTN.

That's a pretty impressive number, and there's no doubt that both trends - wireless substitution and cable telephony - will continue to grow, which can only spell bad news for the ILECs/PTTs. Of course, many carriers are offsetting their wireline losses with wireless gains, but not all carriers have both lines of business.

It's not hard to envision the Dutch scenario unfolding across the EU, at least where cable penetration is high, and in time, in North America as well. As the adoption of cable telephony grows, James raises the very interesting question about VoIP peering, an idea whose time will undoubtedly come as VoIP reaches true critical mass. This to me is the bigger picture/threat to the telcos. If all the cablecos agreed to free on-net calls under some form of federation, they could offer a stronger overall value proposition by creating a much larger footprint than any of them could offer on their own. This may not be evident today, but cable telephony is growing quickly, and if the telcos really push to collect additional "tolls" to carry other people's traffic, peering among the cablecos just might start to make a lot more sense in a hurry.