AT&T enters Internet calling arena; Verizon, Qwest to follow

I want to cover a number of developments that touch on issues we’ve been discussing in this newsletter. Case in point: AT&T’s launch this week of its voice-over-IP service.

Accept challenges so that you may feel the exhilaration of victory.George S. Patton

Dear Vorticians,

The rain is cascading from the sky as New England enters its second season: Mud season. While my colleagues in the Valley have enjoyed record temperatures, we Bostonians have endured the Spring snow, cold and, now, pouring rain. Tell me again, why do we live here? Oh, right, it’s the Red Sox.

I want to cover a number of developments that touch on issues we’ve been discussing in this newsletter. Case in point: AT&T’s launch this week of its voice-over-IP service.

You’ll recall that we spent a good deal of time talking about IP voice providers like Vonage and Skype, the free service company, and the rapid growth these companies were enjoying. We also discussed the regulatory issues that threaten to stall VoIP services (https://www.nwfusion.com/newsletters/vortex/2003/1010vortex1.html).

Now, AT&T has entered the game. Using Ma Bell’s new CallVantage service, customers in certain parts of New Jersey and Texas with broadband access to the Internet can get unlimited calling from a penny under forty bucks a month. AT&T says it plans to roll CallVantage out to 100 markets by year’s end. Slapping AT&T’s trusted moniker on Internet calling is likely to give a big boost to VoIP, which is busting out all over.

Verizon and Qwest are also planning to roll out VoIP services and the cable companies continue to add thousands of new telephony customers who are taking advantage of their broadband connections. It’s clear that this shift will have a major, disruptive impact on the business models of traditional carriers. (By the way, if rolling out VoIP service wasn’t enough of a tectonic shift for AT&T, consider that this icon of American business was also removed from the Dow Jones Industrial Average this week. It’s a new world.)

Switching gears, you’ll also recall that I’ve complained many times in the past about the lack of a national broadband policy. Well, there was a glimmer of hope on that front in a recent presentation by Pres. George Bush in Albuquerque. In a speech that mostly focused on promoting home ownership, the president added, “We ought to have universal, affordable access to broadband technology by the year 2007. And then we ought to make sure that as soon as possible thereafter consumers have plenty of choices. . .”

The president didn’t go into any detail on his thoughts, nor could his statements be construed as the launch of a broadband ‘policy.’ Still, it’s good to know that broadband is at least on the administration’s mind these days. With luck, from this little seed of mention could grow a mighty broadband plan.

On the topic of outsourcing, which has consumed our media for the past few months, a couple of items for your consideration. First, Democratic presidential candidate John Kerry recently unveiled an economic proposal that he claims would stem the loss of U.S. jobs to other countries. (Kerry has labeled firms that outsource jobs ‘Benedict Arnold’ companies. He should know better.) Kerry’s plan, which he says would create 10 million new American jobs during a four-year Kerry administration, would eliminate a provision that allows companies to defer taxes on income from their foreign operations. That change would be combined with a reduction of the corporate tax rate and some incentives for hiring new workers.

Economists were mixed in their reaction to the proposals, which you can judge for yourself at:

https://www.johnkerry.com/pressroom/releases/pr_2004_0330d.html

Finally, one more outsourcing item for your perusal. A study by the Information Technology Association of America has determined that – hold on to your hats – the outsourcing of high-tech jobs from America has actually led to the creation of thousands of new jobs in the U.S.

According to ITAA, the cost savings from outsourcing keep inflation low and productivity high and, thus, boost business and consumer spending. These positive aspects of outsourcing should produce more than 300,000 new jobs and add $125 billion to the GDP by 2008. The group also claims that outsourcing has led to marginally higher wages for workers, a trend that will continue. Once again, economists were mixed on the report, but you can

weigh its insights for yourself by visiting:

https://www.itaa.org/itserv/docs/execsumm.pdf

That’s it for me. I’m grabbing my umbrella and heading out. You can always reach me at jgallant@vortex.net.