Consumer VoIP Trends

By: Richard “Zippy” Grigonis

Being an editor in telecom often involves making sense of a continual barrage of hundreds if not thousands of statistics that regularly arrive via email or snail mail. Did you know that about 25 percent of France’s voice traffic from fixed-line phones ends up traveling over VoIP? Or that one of 12 Canadians is using a VoIP service and demand is increasing? Or that Japan has half again as many VoIP users as the USA? And how about the rise in user mobility, with video coming along for the ride?

Consumer VoIP trends are often tied into economics (“Is it less expensive than the PSTN?”) quality of service (“Can I hear what the other person is saying?”) and features and/or ease of use.

Sometimes user trends are constrained or enhanced by government regulation. A couple of decades ago, when making a phone call in France you picked up the handset (placing it “off-hook”) and threw it onto a chair or bed and walked away, coming back to it several minutes later to see if dial tone had appeared. A digital network conversion fixed that, but France’s state-owned monopoly was ill-equipped to enter the modern age of broadband communications. However, thanks to deregulation and “opening up” of the French market in 2006, France’s consumers are rapidly migrating from traditional circuit-switched fixed lines to IP communications.

Many consumers have never taken the VoIP plunge because of concerns over voice quality. A 2007 study from Keynote Competitive Research of San Mateo, California compared the PSTN, PacketCable and VoIP phone services in the New York and San Francisco markets. The study reveals that while packet cable “digital voice” and VoIP services still aren’t quite as good as the PSTN, they are actually “turning out to be highly competitive” with conventional PSTN service providers.

Moreover, users in some countries have taken to IP communications as the proverbial duck takes to water. A report by VoIPGizmos.ca (http://www.voipgizmos.ca) and other Canadian VoIP providers in Canada estimates that 1 out of every 12 Canadians currently uses VoIP. Canadian VoIP adopters are attracted by both a cost reduction in long distance calls and the features it brings, such as PBX (News - Alert)-like call control, auto attendant, call queuing, and voicemail.

As IP adoption increases, the line between consumer and business communications becomes blurred. Broadband IP telephony and Voice-integrated Instant Messaging (VoIM), long associated with residential users, are now increasingly being taken up by businesses of all sizes. Also, the cell phone or similar handheld device is becoming a vital part of the lifestyle of increasingly mobile business users. This follows in the wake of its immense popularity among consumers. Amazingly, 88 percent of 10-year-olds in Norway have a mobile phone, according to Opinion Research (http://www.opinionresearch.com). Even as far back as 2004, 52 percent of 10-year-olds had a mobile phone, and 71 percent of 9-year-olds owned or had access to a mobile phone, compared with 57 percent in 2006. And Deloitte (News - Alert)& Touche reports that 36 percent of their respondents in a recent survey consider their cell phone as an entertainment device, using the IP wireless data services to send and receive pictures and download music. (4G phones will have both packet voice and data).

Of the three major delivery mechanisms that can deliver VoIP to consumers (Cable, Telcos/service providers and Voice-integrated IM), research by The Yankee Group (News - Alert) indicates that majority of U.S. residential VoIP subscribers will subscribe to triple and quad-play bundles from cable companies by 2011. They also see great potential in VoIP traveling over Fiber-to-the-Home (FTTH), mostly as a result of major efforts by Verizon (News - Alert) with FiOS and AT&T with U-verse.

Despite the popularity of VoIP among consumers – particularly among cable triple-play subscribers - the current (2008) bearish economic phenomena, mostly influenced by the U.S. subprime mortgage industry debacle, may en up having an effect on the daringness of consumers to adopt something as radical as VoIP. Not so long ago Comcast (News - Alert) cut revenue and increasing spending forecasts, blaming things on “an increasingly challenging economic and competitive environment.” (It also doesn’t help that FCC Chairman Kevin Martin has wanted to essentially cap Comcast customer base of around 60 million.)

Even so, traffic on the Voice Peering Fabric, that great peer-to-peer Layer 2 Ethernet virtual network and “minutes exchange” constructed specifically for VoIP interconnections, continues to increase rapidly, according to its parent, Stealth Communications (News - Alert) of New York City. The network’s run-rate has passed more than 200 billion minutes a year, up from the 100 billion minutes last measured in October 2006. So certainly IP traffic is not disappearing.

Skype (News - Alert) is still incredibly popular (220+ million users) among those users who have generic IP connections and no “mainstream” VoIP service, though the online auction colossus eBay (News - Alert) is still puzzling now to get back the US$2.6 billion it spent on purchasing Skype Ltd., a company dedicated on delivering free communications to people.

So there you have it: more user-directed mobile multimedia, a blurring of the line between consumer and business services, more triple and quad play bundles, and more people looking to save money. . . IT

Richard Grigonis is Executive Editor of TMC’s IP Communications Group.

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