Free for All - Will Telco's Adapt?

Free phone calls. Will they prove to be a passing fad or will the telecommunications companies have to learn to adapt to a world where people expect to communicate for free (or nearly so)?

First it was Skype, then it was Jajah and iChat, but we also can't forget the impact that Vonage has had despite its financial struggles. The tech savvy are becoming used to phone calls and video chats being extremely cheap, if not free. As this segment of customers grow and consumers of traditional telecommunications services shrinks, what will become of traditional telephony businesses?

People have been exploring the idea of ad-supported mobile phone networks to provide free phones to people willing to listen to advertisements before making calls. So, what is next?

Don't tell anyone, but in one important way, the tech bubble never burst, entrepreneur's enthusiasm to generate the next web business churns forward at a frenetic pace. The big difference between the 90's and now is that the Web 2.0 world allows people to build compelling web franchises with smaller financial inputs.

Enter Pudding, a web business that offers tools that allows IP communications providers (VOIP, etc.) to analyze call content on the fly and serve up relevant information and advertising in real time.

If a customer is talking with a friend about having a pizza party, up pops an advertisement for Pizza Hut on their screen. Use of the word "thirsty" might switch the advertisement to a Jones Soda ad. Conversations are not stored in any way. Privacy advocates take comfort in the fact that conversations are listened to by a machine for the express purpose of serving up information and advertisements only.

The question becomes, if phone calls become free, then what product or service is next? Is your business ready to compete in a world where your product or service might need to be free or have a free option?

What do you think?