Marrying the thief: Is it such a bad idea?

In iHollywood Forum, an industry observer opined that Sprint’s partnership with Google to create a mobile Internet portal for its soon-to-be-available WiMAX service might be one fraught with regrets for the U.S. carrier. With widespread high-bandwidth wireless data dripping from the skies, the argument goes, carriers will have to forgo some of their voice calling income — the bulk of their revenue — as users with unlimited data plans opt for VoIP calling instead. The partnership is “a little like marrying the thief who took all your money because they’re (sic) rich.”

Very sharp analogy aside, it’s not a thoroughly reasoned argument. Voice may be the bulk of revenue, but it’s the expensive foot-in-the-door, too — margins are much higher on allied services. Carriers in the U.S. are already in the position in which they are having to give away “Big Gulp” voice plans at bargain prices, throw in substantial volumes of free long distance and take other price-slashing measures to sell their plans. Unlimited data plans, which are emerging south of the border, are considerably more expensive than than high-volume calling packages.

Users will likely have to have at least basic voice services. With unlimited data, they may opt for VoIP calls instead of dialling long distance, which the carriers are giving away anyhow.

As for business users, taking a chance with a Skype-type application that’s dependent on the volume of network traffic for quality probably won’t be a first choice. Business-class VoIP calls will rely on some kind of dedicated network to ensure QoS. And who’s going to sell the businesses that network for a handsome sum of money?

In Canada, wireless carriers aren’t under the same competitive pressure as many regions of the States. Big Gulp and free long distance packages aren’t as prevalent. Usable high-volume data plans are still prohibitively expensive. We’re trailing on the WiMAX front, too; Sprint says it will reach 100 million people by the end of next year. WiMAX is an opportunity, not a threat, to carriers.

The thing about marrying the thief is, you get your money back, too.

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Jim Love, Chief Content Officer, IT World Canada

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