Phone companies feeling the pinch from VoIP

BBC News: Dutch phone company KPN has announced plans to cut 8,000 jobs over the next five years after it reported a sharp drop in annual profits. The firm made a pre-tax profit of 1.84bn euros (£1.26bn) in 2004, down from 2.25bn euros in 2003. […] The company’s chief executive Ad Scheepbouwer said the redundancies would mainly affect KPN’s fixed line business, which has been hurt by tough competition and corporate clients switching to internet-based phone services.

The bold text is my emphasis. KPN’s news is a telling signal for any phone company today that internet or VoIP phone services are what people are going to be be using more and more as high-speed internet connectivity reaches more and more people. Whether that’s wired or wireless.

Look at the take-up of services like Skype, for instance. Even though Skype has increasing customer service problems – which may likely be much to do with their ability (or otherwise) in dealing with the rapid growth in service demand – people everywhere have downloaded over 78 million copies so far of its free internet telephony software. No matter that the majority are individuals and small businesses, not big companies.

Not only Skype, either – new internet phone companies like Teleo are gathering customers as they trial their offering. (If you want to dive more into understanding what VoIP’s all about, a good information resource is the VoIP Guide.)

In its press release, KPN’s CEO said:

Starting in 2005, we intend to have a big push in broadband and VoIP. […] In the all-IP world things will become simpler and cheaper, offering the opportunity to achieve significantly lower structural costs. It also means that our services can be delivered with considerably fewer people. We anticipate that annual reductions in headcount of between 1,500 and 1,750 employees will unfortunately be inevitable until 2010.

Does he really believe he’s got until 2010 to complete his big push? Wouldn’t have thought so.