Ma Bell head Dave Dorman sat down with us for an hour today to talk about how he's turning the company around after the collapse of its cable business, the sale of the wireless business, and his own withdrawal from the traditional consumer phone business. The future is VoIP, he says. On the business side, he's got twenty-some billion dollars of revenue from data and wholesale products, and that's still looking good. But forget about consumer infrastructure, he's happy to work with the cable companies from now on.
That means that on the consumer side, the company's not an infrastructure provider anymore. They're an application company, like Vonage but much, much bigger. Dorman compared it to the old AT&T WorldNet ISP days, when the company abandoned the dial-up market early on to AOL and EarthLink, and then kicked themselves later. Never again, is his motto with VoIP.
Ultimately he sees the consumer VoIP business, along with some wireless offers, being a business worth several billion dollars a year for AT&T, he said. Most of the companies offering it will be big carrier-class operations that can offer Bell-level quality of service, which is tough today.
Still and all, it seems that's a market that will get squeezed from both sides in the not-too-distant future. Cable companies and Bells are ultimately going to want to offer their own VoIP, and will try to figure out how. Then as networks get better and computers faster, there'll be indie programmers (multiply Skype by 10,000) doing things like peer to peer voice that doesn't cost anything. I'd say Dorman's got a tough road ahead.