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VoIP Offers Carriers the Good, Bad and Ugly

New research shows that global PSTN voice revenues will decline over the next four years as incumbent telcos switch to voice over IP (VoIP). According to a new report from Informa Telecoms & Media, PSTN voice revenues will decline to $500 billion by 2011, representing a decrease of 16.7 percent or $100 billion from the total revenues at the end of 2005.

Fixed line operators are still hanging onto their PSTN networks because traditional voice services remain the main revenue generator for them, but this gradual decrease in revenues will force operators to take action and deploy more efficient networks. In 2005 operators made almost $600 billion from PSTN voice services whilst broadband services accounted for only 25 percent of total revenues. These falling PSTN revenues are a key driver for IMS as operators benefit from deploying VoIP over broadband, over the same period, 2005-2011 total broadband revenues are expected to reach $410 billion from $202 billion.

In developed regions like Japan, South Korea, Western Europe, and North America, the decline will be even more pronounced due to the tough competition surrounding the fixed voice communications market from mobile phone third party service providers who use VoIP at the core and PSTN at the edge of the network, and now increasingly from VoIP providers such as Vonage or Skype.

In Japan, Informa expects to see revenues from PSTN voice declining at an average rate of 7 percent year on year, whilst Japanese operators are expected to make more revenue from broadband services than PSTN for the first time in 2010. In Western Europe and North America, incumbent PSTN are forecast to lose over $201 billion and $114 billion cumulative revenues respectively from PSTN voice over the period 2005-2011. In these regions, broadband service revenues are expected to exceed these of PSTN voice by 2009 or soon after.

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