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Global Market Assessment of Retail VoIP

According to Point Topic, the number of subscribers to retail voice over IP (VoIP) services rose by 83 percent during 2005, from 10.3 million at the beginning of 2005 to over 18.7 million subscribers worldwide by the end of the year.

The global market researcher estimated the number of people paying for PC-to-phone calls during 2005. This figure is over 4.7 million. When combined with the retail VoIP total, this increases the overall VoIP paying subscriber totals to just under 24 million, compared with 14.4 million a year previously.

Japan, France and the USA continue to dominate the VoIP market in terms of subscriber numbers. But other European nations, notably Germany, the Netherlands and Norway are had begun to see a significant number of VoIP subscribers by the end of 2005. Many of these markets were reporting strong growth for early 2006. Many markets, especially in the USA and Europe, should see significant growth in VoIP during 2006.

Asia Pacific has seen the slowest rate of growth in VoIP subscribers. This is mainly due to Japan, the main market, showing a slowdown in VoIP growth. Softbank, the driving force behind Japanese VoIP take-up, has had relatively low subscriber growth during 2005. Even with its high rate of VoIP usage, this has meant a slowdown in overall VoIP numbers.

The retail VoIP market in China has yet to develop, although several operators are trialling services. Government restrictions on VoIP mean that China remains in a trial phase, although some observers think that PC-to-PC and PC-to-phone calling has begun to dent Chinese fixed line revenues.

Retail VoIP numbers more than doubled in the USA and Canada during 2005. Although pure-play VoIP provider Vonage remains the biggest single operator here, it is the cable companies that are collectively adding millions of subscribers. Time Warner cable alone signed up nearly 900,000 subscribers during 2005, or an average of over 17,000 per week. Cable companies typically market VoIP in a way that is simple to understand, and which frequently does not even mention VoIP or IP. "Digital telephone" is their typical way of describing the service.

Point Topic reports that U.S. telcos have begun to deploy VoIP services in some territories, but have not released VoIP figures. Cable companies and VoIP-only providers are using IP voice to take telephony business from the ILECs (incumbent local exchange carriers), and the telephone companies are having to play catch-up.

France continues to be the most important VoIP market in Europe. Point Topic estimates that there are over 2.8 million paying VoIP subscribers there, not including Skype users. France's success with local loop unbundling, and the easy-to-use equipment and easy-to-understand offers of new entrant carriers "Free" and "neuf" made VoIP one part of a good value triple-play offering. But France Telecom -- the incumbent service provider -- responded quickly during 2005, growing its VoIP business from 144,000 subscribers to 830,000.

Elsewhere, the situation is mixed, with cable-based VoIP beginning to take significant market share in the Netherlands, prompting a response from KPN. Telecom Italia has a VoIP product to try to catch the triple-play VoIP of FastWeb. In the UK, BT's VoIP offering had relatively few subscribers by end-2005, but was starting to see fast growth in the early part of 2006.

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