The Arthritic Worm can still turn

The newly merged SprintNextel is the old style Telco that still makes a significant portion of their revenue from voice, the Arthritic Worm has turned on Vonage and two other related VoIP companies by means of a court action.

They have a suit based on seven patents and are moving to block the VoIP provider(s) from using their network. They have also filed for an unspecified amount of damages.

This seems to be a very public attempt to salvage their voice revenues from the churn to VoIP calls. Something similar was aired in Europe about the then new kid on the block Skype. The decision there was that the olny way Skype was going to be stopped was to shutdown the Interent. The perception was that it was already too popular and the public backlash would be too great.

It will be interesting to see the outcome of the case, filed in Kansas, it will be seen as a gauge on the risk from VoIP technologies to the dinosaur voice carriers.

Time will dictate that voice is not special. It is simply a form of data content that travels some sort of network. The carriers that can react and adjust to this reality will be the ones to survive, natural selection will remove those that insist on harking back to the old days of high profits from charging for voice calls.

It is probably a timely move on the Telco's part as domestic VoIP is still not that widely used, despite the press about the technology. The group that will lose the most from a verdict in favour of SprintNextel will the SME Business users. This group tend to be early adopters of such technology as mobile and low cost telephony solutions, as they have the most to gain from cutting costs.

Combine the likes of Vonage with Asterisk and you have a very low cost solution for your telephony needs to run a business. If the SprintNextel network is closed to them, there will always be someone willing to carry the data, it just means that SN won't get the revenue from it.

There is still a lot of room in the market for pure IP providers, however they still require the basic telecom backbone in order to supply network access.

A decision against Vonage could see a new round of network build out for IP access. This won't have to be a national network but will most likely consist of small interconnected networks. So who will win? Ultimately I would say hardware and interconnect setllement providers.

Of course as Google Net starts to take shape and form there are ideally placed once more to pick up the demand.