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RSS feedsPrivate VoIP applications such as Skype threaten the core business of traditional telephony operators and could take as much as 13 per cent, representing €6.4bn, of the western European residential voice market by 2008, newly published market research has predicted.
According to the latest report from UK research firm Analysys, over 50 million broadband users in the region could be using private VoIP by 2008.
"The recent rapid take-up of one VoIP application variant -ð peer-to-peer VoIP using free downloadable software from providers such as Skype -ð raises the possibility of the appearance of a critical mass of private VoIP users that could unleash a significant structural change in the voice market by the removal of a large proportion of PSTN revenues," said report co-author Stephen Sale.
The report found that home users are increasingly turning to VoIP for longer calls to friends and family, the core telephony business of fixed-line incumbents.
"In combination with increased mobile usage, this could render the PSTN subscription worthless for many broadband users. Fixed-line voice would face not only mobile substitution, but private VoIP applications substitution as well," Sale warned.
The study predicted that, given favourable future regulatory and other conditions, the rapid adoption of private VoIP applications could generate direct revenues of over €3.5bn, the bulk (about 85 per cent) stemming from subscriptions, not call charges.
Analysys expects that, in revenue terms, the impact on incumbent telcos of such a shift in subscriptions from PSTN to private VoIP applications would be great.
In a worst-case scenario, incumbents could potentially lose over €3.3bn of subscription revenues in 2008, and cumulatively about €6.4bn over the period 2004-ð8.
Overall, the total revenues (subscriptions and calls) lost by incumbent PSTN providers could reach as much as 13 per cent of the voice market in western Europe in 2008, the study estimates.
"Private VoIP applications will contribute to an acceleration of existing trends, including a stronger horizontal industry realignment around communities, segments and brands, with lower prices and increased service convergence," explained Sale.
"In the short to medium term, the voice market could even expand as innovative applications provide opportunities for increased usage, slowing the current decline in revenues.
"In the longer term, however, private VoIP applications are likely to further decrease voice revenues. But they will also help tie those voice revenues to other communications services, thus offering voice players routes to potential new revenue streams."
See also:
VoIP firm expands platform coverage to all laptops and desktops 01 Feb 2005
Skype chief executive Niklas Zennström talks to vnunet.com about the company's plans for VoIP 26 Jan 2005
Market to reach $1.7bn by 2008 as business wakes up to IP convergence 09 Dec 2004
Wake up call to instant messaging giants Microsoft, AOL and Yahoo 09 Dec 2004Huge year-over-year growth as providers invest in next-gen equipment 22 Nov 2004Fast fix for internet telephony system after buffer overflow warning 17 Nov 2004Latest application programming interface free for non-commercial developers 09 Nov 2004Gartner backs launch of CallManager 4.1 with enhanced encryption 02 Nov 2004
Firms to co-market Vonage SoftPhone service and Boingo Wi-Fi 19 Oct 2004Will the public sector lead the way in demonstrating the pros and cons of voice over IP? 11 Oct 2004Vonage service requires only a normal phone and broadband connection 07 Oct 2004Broadband Stakeholder Group stresses importance of evolving content and services 30 Sep 2004Voice over Internet Protocol can deliver significant cost savings and management efficiencies. Yet businesses have so far been reluctant to adopt the technology. 14 Jun 2004All Telecoms
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