Abstract

As Major Telecoms Enter VoIP Market, Subs Continue to Grow

In the three major regions, it is clear that the two main conditions for rapid development of VoIP services are opening up of government telecom policies and broadband penetration. Governments view broadband development as extremely important to their nations' competitiveness. Other issues involve progress with government regulation, interconnectivity, competition, and taxation, all of which will affect each nation's VoIP development. The degree to which large telecoms enter VoIP services will affect subscriber growth. For example, in France and Japan, VoIP subscribers are likely to grow rapidly, followed by Germany, England, Korea and other nations.

Regarding PC-based softphone companies such as Skype, Efonica, TelTel, Freepp, and web portals such as AOL and Yahoo, the former bear minimal hardware burdens and low entry costs, while the latter have a large number of registered subscribers worldwide and a wide range of resources. As a result, competition in the voice market will become more complicated and fierce. However, VoIP subscribers and voice applications will also increase and become more diversified.

Overall, global VoIP subscribers are expected to grow from 9.3 million in 2004 to 90 million by 2009 for a CAGR of 57.2%. The share of total worldwide subscribers in North America, Europe and Asia is expected to reach 33.9%, 34.6% and 31.5% respectively.

VoIP Service Trends to Include Voice Integrated with Video

The trend of broadband companies integrating more services is driving broadband technology with higher speeds and hardware equipment with more diverse functionalities. Regarding VoIP equipment, telecoms that abandon traditional telephone to promote VoIP services will be hit by a double whammy, and therefore must find new voice services to help raise ARPU. Besides IAD equipment moving toward integration of data, voice, video and wireless, in the desktop telephone segment France Telecom, BT and major telecoms in Japan are trying to promote videophone services. However, due subscriber usage habits and business model issues, there has not yet been clear growth in subscribers. Still, in the long-term, voice combined with video is a definite trend. In addition to educating consumers, it will be quite crucial for telecoms to successfully integrate mobile and fixed networks and allow mobile phones and home phones to be used for voice and video.

From another point of view, for non-fixed line VoIP service providers such as cable TV companies, even though VoIP services are low priced, the service is still subject to interruptions and communication quality issues. Taking key cable TV companies in the United States as an example, many were quite interested in the FCC's (Federal Communications Commission) auction of wireless frequencies. If in the future companies can successfully obtain wireless frequencies to promote four-in-one services, in addition to connecting IP phones to mobile phones, at times when broadband can not connect to the Internet, or during power outages, mobile phone technology may compensate for this.