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VoIP Feature Article


January 04, 2007

Keynote Finds Booming Demand for VoIP

Norbert Kovacs, TMCnet Associate Editor

Keynote, the industry analysis group of Keynote Systems (News - Alert), found significant growth in demand for VoIP services in 2006, according to a new report released today.

Keynote reports the number of US VoIP customers increased from approximately 1.3 million subscribers in 2004 to more than 7 million in 2006. Keynote also reports that more than 100,000 traditional land phone lines a month are being replaced by VoIP services in the US. However, the group noted traditional analog telephony still claims more than 132 million U.S. subscribers.

“[2006] was a watershed year for the VoIP market,” said Arun Bhardwaj, senior product manager for VoIP services at Keynote. “A large and growing number of consumers were willing to give VoIP a try. The experience these relatively early adopters have with VoIP will help determine how fast the market grows in the near future,” Bhardwaj commented. “Traditional voice services over Public Switched Telephone Networks (PSTNs) are facing increased challenges from Analog Telephone Adapter (ATA)-based VoIP providers (such as Verizon (News - Alert) and EarthLink).”

However, Bhardwaj noted that both types of voice communication providers are going to be under increasing pressure from the growing base of PacketCable providers (Internet telephony service over the cable network) such as Comcast and Time Warner (News - Alert), and SoftPhone providers such as Skype.

“The PSTN providers and ATA-based providers have been strong in VoIP up to this point, but they will be challenged by the quality of service that cable companies provide and by the ease of switching to cost-effective VoIP services that SoftPhone providers such as Skype (News - Alert) and MSN Live Messenger can deliver,” said Bhardwaj.

Keynote further noted the emergence of cable as a dominant market force and performance issues that are keeping even larger numbers of consumers from turning to VOIP.

“The big challenge for VoIP companies in 2007 will be retaining their customer bases – and protecting and advancing the reputations of their services. All this rests on the consumer’s perceptions of the quality of service,” said Bhardwaj. “Consumers as a whole are still in the very early stages of learning and assessing VoIP services, the experience of the early adopters will really have a tremendous impact on the direction of this market. Of course, quality is important in every industry, but in 2007 quality of service is of paramount importance if a VoIP provider is to make it to the next round of growth in the market.”

Keynote Competitive Research announced the findings today in a year-end report entitled, “Keynote’s 2006 Trends & Observations in a Mobile and Connected World,” examining the state of the Internet and Mobile Services markets in 2006.

Small and medium-sized businesses are increasingly looking to VoIP to help save on telecommunications expenses as well as gain access to a wealth of new and exciting applications that are designed to help them grow their business and help their employees become more productive. If you’re still waiting to learn about the benefits of VoIP for the SMB, don’t delay. Come to INTERNET TELEPHONY Conference & EXPO EAST, January 23–26, 2007 to learn all your need to know to take advantage of the latest in telecommunications. See you in sunny Ft. Lauderdale!


Norbert Kovacs is an associate editor for TMCnet.


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