VoIP:Coming Soon,Coming Everywhere!
By Örjan Eriksson
The major telecoms companies used to have the $190 billion US fixed-line telephony market all to themselves. However, the market is now up for grabs and cable companies, ISPs, Internet portals and pure-play VoIP providers all want a share
"Internet telephony, or voice-over-Internet protocol, and usually referred to as VoIP, is essentially a broadband phenomenon," says Ben Macklin, eMarketer Senior Analyst and author of the new report, Consumer VoIP: A Fierce Battle In a Larger War. "The greater bandwidth that comes with a high-speed Internet connection opens up the possibility of real-time voice communication over the Internet comparable to a traditional landline. As broadband replaces dial-up, the opportunity for VoIP will inevitably grow."
eMarketer forecasts that by 2010, 32.6 million Americans will subscribe to a VoIP service, equating to nearly 40% of all broadband households.
"Consumers are not in the least interested in the technology of VoIP but rather the potential cost savings it offers," says Mr. Macklin. "With most VoIP offers ranging from $20 to $40 per month for unlimited local and long distance calls across the US and Canada, price will be the primary driver for the VoIP industry in the short term."
According to a survey conducted by JD Power & Associates, the average monthly local and long distance residential phone bill in the US in 2005 was $51.
"While VoIP is not the cause of the falling fixed-line market," says Mr. Macklin, "it is acting as an accelerant and the widespread availability and attractive price of VoIP services is compelling to both consumers and businesses."
According to the Telecommunications Industry Association (TIA) revenues and subscribers for the US fixed-line market have been falling for the last five years.
In fact, in 2005 the number of mobile phone subscribers, 194.5 million, surpassed landline phone subscribers, 172.1, million for the first time. Landline subscribers will continue to fall as greater numbers of people substitute their landline for a mobile, households upgrade to broadband and thereby avoid the need for a second line dedicated to dial-up Internet, and more people subscribe to VoIP.
"A fierce battle is emerging in the VoIP market," says Mr. Macklin. "It is only one part of a larger war that is being waged on three (or more) fronts between telecoms and cable multiple service operators (MSOs). At stake is the so-called 'triple-play' of residential voice, video and data services, which is a market worth approximately $300 billion."
A high-speed Internet connection is allowing telecoms to enter the video battle and cable companies to enter the voice game. This has made controlling the broadband connection crucial to the triple-play strategy. Evidence of this can be clearly seen in the rapidly falling broadband prices. Verizon, for example, is currently offering a basic DSL service (768kbps/128kbps) for only $14.99, which is half the cost from 12 months previously.
In late 2005, the war opened up on a fourth front – mobile voice – when a consortium of the three largest Cable MSOs announced a partnership with mobile provider Sprint/Nextel to offer co-brand mobile voice services.
"The quadruple play has emerged," says Mr. Macklin.
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