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TRANSCRIPT
What is VOIP?
1. VOIP = Voice over internet protocol.
2. Can be used instead of POTS
3. Voice sent over internet through cable modem or DSL
4. Uses regular looking telephone with internet device
CWA Page 2
VOIP Quality Good
VOIP with quality service = 99.53%
POTS = 99.999%
Wireless = 97.1% - 98.9%
CWA Page 3
VOIP Offered By
• Verizon, SBC, Bell South, and Qwest through DSL
• Cable companies through cable modems
• AT&T
• VOIP only companies (Vonage, 8 x 8)
• Universities, businesses, cities over private networks
CWA Page 4
Proprietary material for authorized CWA use only. This material may not be reproduced, distributed, or used without permission from CWA.
Cable Modems Beating DSL 2 to 1
-
5,000
10,000
15,000
20,000
25,000
30,000
1999 2000 2001 2002 2003 2004
DSL Cable Modems
CWA Page 5
VOIP Gear Replaces Switches
“The opportunity most VOIP investors have been salivating over has been when VOIP gear replaces voice switches that connect right to customers.
Instead of buying new class 5 switches AT&T, Verizon and the rest will use VOIP gear to connect directly to customers.”
Mike Angell, Investor’s Business Daily
January 29, 2004CWA Page 6
4 of 5 CO’s to Close
Verizon expects to close 4 out of every 5 central offices! The central offices that remain will be filled with computers, servers, and routers.
Similar consolidation likely for every telco as VOIP likely dominant over next 3-5 years.
CWA Page 7
VOIP Gear vs. Class 5 Switches
Class 5 Switches1. Size of refrigerator
and up to $10 million2. Call set-up, routing
and sending
3. Volume: Class 5 switches installed in 25,000 locations in U.S.
VOIP Gear1. Size of server and router
2. Call set-up and routing only. Call sent via high speed internet.
3. VOIP runs over existing high speed internet connection. Additional equipment only needs to be in a few centers.
CWA Page 8
VOIP Cost Advantage
1. Installation costs 50% less than POTS($225 vs. $430 for POTS)
2. Subscriber pays no taxes or subscriber fees
3. Significantly lower monthly bill than POTS
4. Subscriber pays no universal service fund fee
CWA Page 9
Cable & VOIP Only CompaniesHave Regulatory Advantage
Over Bells
• VOIP not regulated
• Cable modems not regulated
• Existing DSL-Fiber to Premise (FTTP) regulated
• New FTTP probably less regulated
CWA Page 10
“It is not a telephone service, it is a voice application, completely indistinguishable from any other kind of application that can run on an IP network”
“If you’re going to say to me that voice over IP is something that needs regulations then you’re going to have to explain to me why e-mail isn’t also.”
Michael Powell, Chair F.C.C.
CWA Page 11
VOIP Allows Cable to go AfterLucrative Voice Market
Video Market = $50 billion
Consumer High Speed Internet = $10 billion
Voice; Local & LD Market = $220 billion(excluding wireless)
2000 } Total Revenue
CWA Page 12
Cable Ahead of RBOC’s on VOIP Expansion
• Cable currently has 2% voice market (30% in areas heavily marketed)
• Cable expected to have 20% voice market by 2005
• RBOC’s running small VOIP trials, but slow to deploy DSL and FTTP
CWA Page 13
VOIP Jobs Non-Union
• Cable industry non-union
• Verizon, SBC, Bell South, and Qwest classify most VOIP related work on routers and file servers as management
CWA Page 14
VOIP Part of Bundling Strategy for Cable
1. Bundling is key strategy to capture and keep customers.
2. 70% of Verizon’s bundled customers say having the bundle makes them less likely to switch.
CWA Page 15
Cable and Bells Both Using Bundling Strategy
Service Cost % of Total Consumer Spending
Local Phone $ 37 25%
Local Toll 2 2% Cable can
Long Distance 10 7% offer this
Cable/Satellite 41 28% bundle
Internet 18 12%
Wireless 41 27% Bell strength
$149
CWA Page 16
Organizing/Bargaining in Cable Tough in Current Environment
Have Contracts
In 1st Contract Bargaining Decertifications
Units Mem Units Mem Units Mem
Comcast 13 907 4 243 15 1, 750
Adelphia 6 381 3 50 6 130
Charter 1 41 -- -- 1 15
Northland 1 11 -- -- -- --
Bresnan 2 42 1 12 1 11
MediaCom -- -- 1 75 2 115
Total 23 1,382 9 380 25 2,021
CWA Page 17
1. RBOC’s behind on VOIP launch
2. RBOC VOIP jobs not union
3. Cable VOIP positioned to take off, grab 20% market
4. VOIP & cable not regulated DSL regulated
5. CWA members don’t currently have skill set
6. Elimination of universal affordable service
1. RBOC’s need significant capital expenditure for high speed internet expansion
2. CWA must bargain to include this work in our bargaining units
3. Real collective bargaining rights for cable workers
4. Treat all high speed internet providers the same. Either regulate or deregulate all.
5. RBOC’s encourage members to get VOIP training. CWA Nett/Academy provides.
6. Mandate high speed internet at affordable price for rural and urban America
VOIP Threat Solution Strategy
CWA Page 18