Communications and Technology Industry Research

VoIP is rapidly taking hold in the residential consumer market, as evidenced by the findings of a new report from market research firm ABI Research (News - Alert).

 

ABI's new study, "Residential IP Telephony," predicts that residential VoIP subscribers will balloon to more than 267 million, worldwide, by 2012. That's a significant increase from the approximately 38 million subscribers worldwide measured by the firm last year.

 

According to ABI, the sharp uptake in residential VoIP services is mainly attributable to the roll out of these services by the cable companies. This is what is fueling the mass migration from traditional phone service for residential users. However, the major phone companies, such as AT&T (News - Alert) and BT, are now gearing up to roll out low-cost VoIP services to consumers as well, and because their subscriber bases are so large, this will only accelerate the adoption of residential VoIP exponentially.

 

However, as the report points out, the major phone companies are going into VoIP cautiously, because as they roll out new, low-cost calling services, they stand to ravage their existing traditional subscriber lines, thus moving away from what has been, for years, a steady, predictable and profitable business formula to one that is ... well ... less predictable, and perhaps less profitable. The big telcos have made major investments in their TDM networks over the years, and each has a formula in place for recouping on those investments through the delivery of traditional phone services to residential customers over time. The rollout of VoIP services requires the telcos to not only build new IP networks at tremendous cost, but also to offer their customers competitive rates in order to get them to migrate over to those networks. They are up against cable companies, most of which have already established low cost residential VoIP services. These services were rolled out more quickly and easily because the cable companies basically already had the infrastructure in place to deliver these new services.

 

Michael Arden, principal broadband analyst for ABI research, said in a press release that he expects the cable companies to continue to hold the upper hand for the next few years.

 

"Hosted service providers, the pioneers of commercial VoIP, are going to grow to some extent, but it will be cable operators and other broadband providers trying to leverage their high speed data networks who will really push VoIP in the future," he said. "These operators want to add value to their broadband "pipes," and they want to generate new revenues over and above what they earn from their basic data services."

 

Interestingly, the development of VoIP markets continues play out differently in the world's major regions.

 

"In the US, it's driven by competition: cable operators are offering VoIP, hoping to take some customers away from the telephone companies," Arden said. "Eventually the cable operators will start offering converged services, and to compete, the telcos will have to go to VoIP as well."

 

Arden pointed out that in Europe, most of the telecom operators are currently upgrading and implementing Ethernet networks for increased operational efficiencies (BT, for example, is doing this on a huge scale right now.) "When they do so, they're taking VoIP into consideration and making it part of their network upgrade," he said.

 

"Meanwhile in Japan, the drive isn't coming from the telecom operators or even from the cable operators, it's really the third-party broadband players such as SoftBank," he added.

 

For now, the main reason most consumers are migrating to VoIP is because of its low cost. But in the near future, VoIP will come bundled with other next generation services, such as IPTV, online gaming and other "interactive" services, thus giving consumers more reasons to switch.

 

The study is part of ABI's Broadband Networks Research Service. For information visit www.abiresearch.com.