I heard a great story at Intel Capital's CEO Conference in Beijing, where I spoke two weeks ago. On a panel about VoIP, one of the panelists was from MBS.net, an ISP in Mexico. They offered a DSL service, with VoIP positioned as one of the benefits. Telmex responded by dropping their DSL price (which had been artificially high) by 2/3, making it difficult to compete. MBS.net did something brilliant. Instead of marketing DSL, they flipped the offer, marketing VoIP as the service, with free DSL thrown in. Because VoIP goes right at the Telmex voice business, Telmex could no longer use their size and market power to undercut the MBS offer.
