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VoIP growing in unexpected ways

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Although 16 million consumers were using voice-over-IP technology by the end of 2005, most consumers still don’t know the meaning of VoIP and may never need to, according to a new survey from InStat, which is projecting VoIP will grow to 55 million by 2009.

Because VoIP has readily become just one service in a triple-play offering, 73% of VoIP customers are buying the service without "consciously making a decision on the technology," said analyst Keith Nissen.

"The point of the research is that consumers don’t need to know about VoIP, that it is, for the most part, transparent to them," Nissen said in a telephone interview. "That is significant. We always are talking about the technology, and the grandiose things that technology will give us. It ultimately will translate into features and functions and new services. What we are beginning to see is that technology is not enough--it has to be transparent to the user, and that is the way you get the mass adoption."

A separate study from Sandvine, a provider of broadband network management software, says most of the growth in VoIP is from broadband service providers that dominate the North American and European VoIP markets. The company said it analyzed data aggregated from its customers in those two markets and concluded that broadband service providers carry the majority of minutes of VoIP traffic, by a slim margin.

In North America, that margin is 53% for broadband service providers, followed by Vonage with 21.7% of VoIP minutes and Skype of 14.4%, to lead independent VoIP providers. Furthermore, the broadband providers that offer networkwide VoIP are capturing 81.8% of VoIP minutes on their networks, Sandvine claims. In Europe, broadband service providers carry 51.2% of VoIP minutes, but Skype is close behind with 45%. Vonage has only one percent of VoIP minutes in the European market, according to the Sandvine study.

The InStat report, "Global VoIP Has Arrived; Just Not As Expected!" notes that North American cable operators are marketing VoIP as ordinary telephone service, while in Europe, broadband ISPs including Free Telecom in France and FastWeb in Italy are offering VoIP as part of their triple-play service.

The highest penetration of VoIP in Asia is in South Korea, where broadband ubiquity is greatest, followed by Hong Kong and Singapore, InStat reports.

For VoIP customers who have bought the service as part of a bundle, quality is not usually an issue -- at least not yet, Nissen said.

"Voice quality can be a negative, but as long as it’s not a negative, it’s not a big positive," he said. Because consumers are not making a conscious choice to buy a new technology, the issue of quality only arises when the service is truly poor.

Most U.S. cable companies are marketing VoIP as digital telephony, a primary line replacement service that is part of their triple-play bundle, Nissen said.

"They have a little bit more slack in that--even if voice customer is upset--they are not about to leave as readily as an ILEC customer who is only getting voice service," he said. As cable companies build up their customer base, however, it will be more important for them to engineer their networks to protect voice quality.

"One of the reasons they are marketing triple-play services so aggressively is that they have this window in which they can maximize their triple-play customers, and that really insulates them from competitive pressures, once AT&T and Verizon are deploying fiber," he said. "The telcos are going to have to do something of significantly better value in order to pull those triple-play customers away."

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© 2008 Penton Media Inc.

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