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...expensive as regular telephone service. The company now has 220,000 subscribers, a pittance beside the 112 million traditional phone lines. But Citron's outfit is adding 1,000 new customers every day. "He's been sort of a nuisance and a prod," says Steve Koppman, a telecom analyst with Gartner. "He has proved out the concept in the marketplace before the big players...
...sure needs a winning strategy. With cable encroaching, the broadcast networks have seen their viewership decline from 56% of households with TV sets in 1980 to 22% last year, according to Nielsen Media Research. "We have had a tremendous crash in terms of audience," says Tom Wolzien, senior media analyst for Sanford C. Bernstein & Co. At the same time, production costs have skyrocketed, from $1 million per one-hour episode in 1990 to about $2 million today...
...Warner Cable plan to have their offerings by the end of the year. These companies will seek to exploit Vonage's Achilles' heel. Because Vonage relies on the public Internet to route its calls, it cannot completely control traffic and its effect on call quality, says Lisa Pierce, an analyst at Forrester Research. AT&T, on the other hand, has its own network. Over time, she says, Vonage will lose out to the telcos' marketing muscle and deep technical expertise. "It's a question of being passed in the far left lane," she says...
...phone companies' quick response to Citron's frontal assault "is a sign that they are worried about losing customers," says John Hodulik, a telecom analyst at UBS. There's a risk of cannibalizing their existing business, but it's one they have to take. Cable companies, on the other hand, can go after an entirely new market, connecting Web phone service to existing broadband customers...
...Skype co-founder Janus Friis launched Kazaa, a peer-to-peer exchange that allowed users to swap music and videos online. Now Zennstrom is at the vanguard of voice over Internet protocol (VOIP), a technology that lets voice traffic travel over the Internet. Gartner Inc. analyst Katja Ruud estimates that about 100 million people worldwide will use VOIP by 2008. Even telecom giants like AT&T, BT Group and Verizon realize they have to offer VOIP. Zennstrom practices extreme VOIP: free calls and free software. He admits that "we have almost no revenue" and that eventually that will...